Trading Plan for 3/8

Wednesday’s bounce retraced… much of Tuesday’s plunge. It probed above Tuesday’s intraday range. And it recovered to what had been Tuesday’s minimum objective. But was that enough to invalidate Tuesday’s drop, or even to suggest the drop had ended?

Pattern points… (Setups and technicals)[pay]
The easy answer to both questions above is, “no.” Gapping up left outstanding a gap back to Tuesday’s 1336.25 (basis Jun) close that wants to be filled. That, alone, tells us Wednesday’s bounce was sponsored by impatient buyers, weak hands.

Impatient buyers also rallied above the morning’s 1340.75 bias-up signal, after triggering no-bias. While this invalidated the objective of reversing down to test Wednesday morning’s 1333.75 bias-down signal, it still requires a retracement back down to the morning’s bias-up signal. Again, weak hands.

The afternoon’s probes of higher highs each retraced back under the morning’s 1345.75 high. That is not itself necessarily bearish. Neither is closing back under the morning’s high (which was actually still being tested). But it does mean that buyers gained no traction for their efforts. Their repeated efforts. Impatient buyers, weak hands.

There is potential to extend up, anyway, since sellers also gained no traction — not that they put out any effort. So long as Thursday’s open is not already in decline, the rally is probably extending back up to “higher prior lows” at 1353.00-1354.00. Opening Thursday already in decline probably means the drop has resumed.

[/pay]What’s Next… (Outlook and opportunities)[pay]
The ES front-month rolls forward at Thursday’s open to Jun. Its difference from the Mar contract is (-)5.75. All quotes above are basis Jun. [/pay]

Look for at least one update overnight or ahead of the Morning Market Tour… My thoughts on the day’s econ calendar are linked here.