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Trading Plan for 2/13 – If, Then… Market Timing

Trading Plan for 2/13

By Rod David | February 12, 2015 - 4:23 pm

If this were expiration week… then the WedEX would have been bullish into and out of the weekend. However barely mildly bearish it was Wednesday, was totally invalidated by gapping up Thursday. There are differences in applying the WedEX setup ahead of a three-day holiday weekend, but the expectation would still be bullish into the weekend.

Pattern points… (Setups and technicals)
The rally is entrenched. By exiting Thursday”s bias environment above the noon hour”s high, and then by entering the final hour above the bias environment”s high, buyers earned the reward of controlling Friday morning”s bias environment.

The weekend”s impending illiquidity can leverage that entrenchment, since counter-trend sponsorship is difficult to generate. All the more so ahead of a three-day holiday weekend. The entrenchment, which marginalizes sellers — not necessarily the gain, since Friday afternoon”s can suddenly stop trending and start ranging narrowly.

Usually, the reward is produced by literally trending above prior highs during the morning, even if the open were to gap down. A similar setup Wednesday was less rewarding, or at least delayed the reward until the afternoon. Perhaps that was news-related, but the likelihood is still for probing higher highs.

This particular Friday has less exposure to headlines. But being a Friday, the morning”s bias tends to persist through the noon hour. So, triggering bias-down in the morning could still produce downside. And considering all of the bullish setups, not trending higher in the morning would suggest a deeper afternoon drop is possible.

What”s Next… (Outlook and opportunities)
Don”t forget there is no Saturday Review on holiday weekends. Please be sure to request stock chart analyses during the day Friday. Also, we”ll review the bigger picture during Friday”s post-close Market Wrap, which all Saturday Review attendees are welcome to attend. We”ll be discussing the ongoing template that looks for aggressively probing new highs and then rejecting them just as aggressively.

Posted in Market Wrap, S&P