Trading Plan for 3/24
[pay]Pattern notes.
Before Thursday’s session retraced all of Wednesday’s loss, it needed to recover from probing negative territory, and that was after its open had gapped up. Oh, and that was after having recovered from even lower lows overnight. I warned one week ago in this space about weird price action due to Thursday’s odd timing for a quadruple-witch expiration, combined with the impending three-day weekend. And yet I still feel surprised by how relentlessly these factors influenced – I should say “destroyed” – normal timing windows.
Thursday’s rally rejected or ignored nearly every MACD & RSI setup except for two, and their profits depended upon adjusted stops, which triggered long before trending could get underway. The rally peaked upon testing Tuesday’s close around ESm 1332’00-1333’00, retracing all of Wednesday’s loss. Wednesday’s high was about 11 points higher at ESm 1343’50, and it was never attacked, but it will probably be probed Monday if the open isn’t obviously intent upon retracing (and ultimately rejecting) Thursday’s rally. And since the rally ended in a last-hour double top, the rally’s continuation should itself be obvious by gapping up above Thursday’s highs.
Indicators and internals.
MACD & RSI diverged negatively into Thursday’s last-hour double top. The cash session hasn’t confirmed the signal, but it probably will unless Monday’s open were to gap up above the double top. Internal spreads were evenly weighted between up and down volume vs. advancing and declining issues. Total volume was huge due to expiration, but a little light when that extraordinary activity is deducted. Regardless, there is no obligation to reward either buyers or sellers for any outperformance.
Monday’s opening setup.
S&P futures dropped 9 points after the cash session close, which had ended back at session highs. There is a tendency to fill these vacuums, which is bullish for a higher open Monday. It also makes a lower open bearish. The cash session close equated to ESm 1332’00, but a bullish open should gap up to or through 1334’00. Meanwhile the pullback’s low at 1323’50-1324’50 will try to limit opening weakness, but its break through a relevant timing window could quickly retrace the day’s gains.[/pay]