Trading Plan for 2/19

If expiration’s influences interfered to prevent Friday from trending… then did it undermine sellers, or buyers? Sellers made more attempts, diving twice, recovering twice. Those recoveries represented buyers expending energy. They held support, but didn’t gain traction for their efforts.

Pattern points… (Setups and technicals)[pay]
Expiration sessions tend either to trend, or die on the vine. Rarely is there a “happy” medium of choppy ranging. But Friday’s expiration ranged choppily — probing above 1 point above Thursday’s high to 1521.75, and attacking Thursday’s low to within 2 ticks at 1511.25 — ending the day by barely touching Thursday’s 1518.50 close.

That’s the fourth consecutive session of closing about 1 point either way of 1517.50. It’s also the third consecutive session to probe temporarily under 1515.00 “lower prior highs,” but not then extend back above prior highs. The first dip Wednesday could have extended its recovery through Thursday’s close to be bullish. The second dip Thursday could have extended its recovery immediately Friday to be bullish. But after closing almost unchanged Friday despite recovering from under support, patient sellers are starting to look like very strong hands.

Friday was also interesting for failing to close at new highs, which is a common tactic for rallies to entrench their momentum into the following week, so that an interim dip could be easily absorbed. Not closing at a new high may undermine buyers, but not closing at a new high despite probing fresh highs intraday reveals that buyers are undermining themselves. That’s the opposite of a self-preservation tactic.

Like Thursday’s bearish close, a “hold-short” setup was missing only a trigger. Having failed to trigger Friday, now there is room down to 1509.00 before signaling momentum is reversing down. Any shallower dip would be no less capable of recovering were than last week’s shallow dips. And any higher high that gains traction would target 1533.00

[/pay]What’s Next… (Outlook and opportunities)[pay]
There is no Saturday Strategy Session on a three-day weekend. But please don’t hesitate to post any questions or chart analysis requests to this blog post. The Chartroom will re-open Sunday night with the Globex open. [/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.