Trading Plan for 2/21

However we characterize Friday afternoon… “biased downward” it was not. So, did Wednesday’s Expiration Indicator misfire, or was it skewed by the three-day weekend? If it’s the latter…

Pattern points… (Setups and technicals)[pay]
If the Expiration Indicator’s full effect was skewed by the three-day weekend, then perhaps the 3-day Weekend Indicator was skewed by expiration. Each is already an unusual event — not abnormal, just not usual — but even more unusual to coincide with each other.

If the indicators influenced Friday’s price action at all, it was to contain the afternoon’s range within the open’s surge to 1361.25. At least the Expiration Indicator can be credited for retracing all of the open’s surge back to Thursday’s 1355.00 close.

In fact, the open’s surge fulfilled the required intraday retest of Wednesday’s 1358.00 “new Globex trend extreme.” Its retest was likely to touch 1360.25, which was essentially Friday’s opening and closing prints.

A lot of energy was expended in avoiding negative territory, without gaining any traction for the effort. Either leaving the open’s 1360.25 gap unfilled, or closing above it, would have created “unfinished business” above to attract price higher after the weekend. Instead, the attraction was simply neutralized.

Sellers gained no traction for their effort, so the burden of proof is still on them. Wednesday’s indicators suggests they will make an effort when the week begins. Almost any initial weakness would be credible for trending down Tuesday morning. Regardless of Tuesday’s opening gap being up or down, not trending down through the opening 15 minutes of volatility would likely rally into the afternoon.

[/pay]What’s Next… (Outlook and opportunities)[pay]
These parameters could apply to Sunday night / Monday morning Globex action, or even to Monday night. Since Friday’s action was self-contained, leaving no unfinished business, immediately breaking under 1357.00 could be enough to retrace at least to 1346.50 — any lower would start putting into play 1327.00-1330.50. But maintaining an opening probe into positive territory would suggest 1371.00 is in-play. [/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.