Trading Plan for 3/9

Spinning wheels, got to go down… Tuesday morning’s rally expended a lot of energy, even without including the open’s 4-point dip. Yet it was an inside day, contained entirely within Monday’s range. This is “ineffectual optimism,” meaning that buyers didn’t gain traction for their efforts.[pay]

Pattern points… (Setups and technicals)
A bearish setup triggered during Tuesday’s last half-hour. It just satisfied a lot of sellering pressure. And its sellers didn’t gain traction.

Once a relevant price is tested, it must maintain its break avoid losing traction. Tuesday’s cash session closed while in the process of testing the pattern’s 1321.50 connector. A post-close plunge probed the 1319.50 anchor, which then held through the futures close.

That’s quite a contrast to the morning’s rally, which also did not gain traction. Besides direction, the difference is that Tuesday afternoon’s drop fell 7 points. Not too productive compared to the morning’s 16-20 point rally.

Noon’s RSIs were overbought 1325.75. Noon hour extremes don’t require a retest, but their retest is likely. As is this one, so long as no prior low is broken on a closing basis.

What’s Next… (Outlook and opportunities)
The last relative low is 1316.00, from Tuesday morning’s plateau. Its 1319.00 upper-end was tested by the post-close dip. Gapping under its 1316.00 lower-end would require big selling sponsorship. But rallying through Tuesday’s highs would put into play the 1330.00 area. And its recovery would signal a multi-session rally underway. [/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.