Trading Plan for 3/21
The Wednesday indicator told us what to expect… At least, what to expect directionally: down. It tells us what to expect Monday, too. We can infer from how much down there was – actually, how little – what to expect on Monday. (Hint: a lot more of the same.) [pay]
Pattern points… (Setups and technicals)
Wednesday’s expiration indicator expected downtrending into and out of the weekend. In fact, every relevant timing window Friday did trend down. In fact, the entire session trended down despite gapping up sharply to new relative highs. So, why is that excess optimism?
Friday’s lows probed dipped briefly under Thursday’s highs. Friday’s 1270.75 low avoided filling the gap back to Thursday’s 1268.25 close. And Friday’s last 45 minutes firmed firming back up above Thursday’s highs. But it’s all “ineffectual optimism” since buyers gained no traction. Even the late firming ended while still in the process of testing Thursday’s highs as resistance.
There are two potentially bullish elements. First, the 1284.50 open’s gap up may attract price back to it, although it was only a retest of Tuesday’s prior. Second, the 1287.50 pre-open high, may be attractive too, although its retest isn’t required.
But Friday’s session was a second consecutive “inside day” relative to Wednesday’s wide range. Retracing from the range’s lower to upper-end tends to resolve bearishly. Wednesday’s expiration indicator still expects more downtrending coming out of the weekend. Unless Monday’s open is gapping up to new relative highs, Friday’s drop should extend aggressively.
What’s Next… (Outlook and opportunities)
Since buyers didn’t gain traction Friday, the only way to rally Monday morning is to gap up above Friday’s highs. Anything less would be likely to resume Friday’s slide. Under Thursday’s 1268.25 close is another gap back to Wednesday’s 1252.50 close. Oversold RSIs at Wednesday afternoon’s 1243.25 low is also attractive. [/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.