Trading Plan for 3/22

[pay]About that close (How the prior session ended)
The market didn’t immediately reject the no-bias environment’s last-minute blip-up to 1156.25 at 2:30. Trending down through 3:10-3:20 would have been optimal. But the market didn’t plunge until  3:30. That’s too late for any new sponsorship to gain traction.

Sellers weren’t satisfied easily, just quickly. A 10-minute plunge to within 1 tick of the 1150.00 bias-down parameter was retraced entirely after 1-minute RSI diverged positively at the low. The noon hour’s 1155.00 upper-end was recovered into the cash session close. The afternoon’s 1156.25 high was recovered into the futures.

Pattern points (And technical influences)
Friday’s narrow range at its lows – from 1155.00 down to 1152.00 – was already relevant before the morning’s drop even entered it. Wednesday afternoon’s brief failed rally put it into play, with potential to 1150.00, too. Testing each of these levels reacted like an inflated balloon pushed under the water’s surface. Even Thursday morning’s 1156.25 low. Each push down soon popped back up.

Each pop up also pushed back down. Friday’s last push down to 1150.00 could have greeted Monday’s open with pent-up buying pressure. The week could have started with a bullish element. Instead, the last pop up replaced an oversold condition with overbought.

To be sure, Friday’s late low fulfilled the maximum objective created by Wednesday afternoon’s brief failed rally. And last-minute price action doesn’t get a benefit of the doubt. This applies triply to the final 15-minute bounce, for being on a Friday and also on expiration. Similarly, Friday’s opening gap up was “clearly related to expiration’s rotation.”

Expiration’s characteristics tend to persist through Monday morning. Friday’s trending suggests that Monday’s open will try trending, too. Friday’s downtrend suggest that Monday morning will trend down, too. The session might also begin with a head-fake similar to Friday’s open, and its resolution could be very predictive of direction for the next several sessions.

Bottom line (My underlying premise)
No doubt this weekend’s legislative showdown has influenced recent price action. Rather than judge its merits, my purview is to assess any impact from anticipation of the event, and then to anticipate the reaction when the event becomes history. In my work, price doesn’t discount the legislation, it discounts the attention span. The character of last week’s price action suggests that attention has been straining to look up. After this event has exploited all available optimism, which may be sorely missed immediately after the event.[/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.