Trading Plan for 10/24
Saturday Strategy Session reminder… Its link is in the blog’s sidebar (it’s not in the daily chartroom), and you may login up to an hour prior to its 9:30am start.
Pattern points… (Setups and technicals)[pay]
Clearly, the most interesting thing about Friday was its exclusive ranging in positive territory. Not just positive, but above prior highs. Not probing above prior highs, but gapping up.
All the more interesting is this bullishness occurring within the context of Wednesday’s distributive Expiration Indicator. It suggests that price action will trend down into and out of the weekend. Friday morning’s gains were not inappropriate to the signal, so long as Friday afternoon had retraced it — preferably also reversing back into negative territory.
Obviously, that was not the case. Of course, the afternoon’s buyers only repeated what the morning’s buyers had done. All of it, rallying right back up to the morning’s 1235.75 high. This came after missing the opportunity to decisively reject the afternoon’s bias-down. And 1232.50 wasn’t even touched again until 7 minutes prior to the close, Friday’s close — expiration, no less — which undermines its ultimate recovery.
1232.50 is relevant because its recovery would almost equate to to consecutive closes above 1221.25. And that would put into play the next higher objective at 1245.00. But 1232.50‘s last-moment recovery is suspect. Not rejecting it immediately Monday would suggest 1245.00 will be tested, regardless.
[/pay]What’s Next… (Outlook and opportunities)[pay]
When the Expiration Indicator doesn’t influence Friday, it tends to influence Monday morning with a vengeance. If Friday afternoon’s buyers and 1232.50‘s recovery were just noise, if the afternoon’s bias-down is unfinished business below, then Monday’s open should probably gap down under the afternoon’s 1221.75 low to trigger a session-long decline. Opening at or above 1224.00-1226.00 would likelier recover to resume rallying.[/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.