Trading Plan for 2/20

[pay]Pattern notes.
It took a few hours after yesterday’s cash session close, but S&Ps dropped to new lows and have continued falling overnight. As was suspected, the 774’00 target wasn’t recognized as support on the way down, but did get a work out as resistance before resuming the decline – the cash session might enjoy the exercise as well.

Also as was suspected, the week’s earlier price action has bled into expiration. This introduces a vulnerability to trending sharply. Not a requirement, but a vulnerability. Whatever the resolution, the character of an expiration Friday tends to be repeated the following Monday. And big money probably isn’t considering the impending two days of illiquidity as reasons to buy today.

Indicators and Internals.
The 3-minute RSI has largely avoided becoming oversold overnight while price has continued dropping. This would be constructive to a recovery if it were an intraday occurrence. In any case, it does not reflect accumulation that might convert a bounce into something more substantial.

Friday’s opportunities.
Currently a 5-point bounce off of 764’25 is deciding whether to extend back above 770’00 to revisit yesterday’s 774’00 target as resistance. Interim resistance at 771’25 could derail the attempt prematurely. Maintaining a break back under 767’25 would suggest the decline is already resuming, confirmed under 765’25, and next targeting 756’00.

Any lower than that would target new lows, as the Dow has already done (why should it get all the fun?). CPI is at 8:30, and psychologically perhaps the longest weekend ever is at 4:00.[/pay]