Trading Plan for 4/18

Good to the last pop… Expiration strangled Friday afternoon’s price action, which ranged narrowly for three hours. A tumble began at 2:30 when the bias environment started lapsing, and that was that. Oh, except for the 3-point post-close surge into the futures close. [pay]

Pattern points… (Setups and technicals)
Wednesday’s expiration indicator offered context for any bounces through Monday morning. As in a bias-down environment, bounces aren’t avoidable, but they should be absorbed. Absorbed back to the range’s lower-end, which is Tuesday and Wednesday’s 1305.00 low.

Closing Friday above 1315.50 could have invalidated the expiration signal. Friday’s last bar during the cash session was still testing 1315.50. Being the product of expiration, the post-close surge up to 1319.00 is not relevant. That assumes it is rejected through Monday’s open.

Rejecting Friday’s post-close surge will not, itself, reverse momentum down. A downleg must be triggered below 1315.50. Its confirmation must also break under 1310.25. Testing Tuesday and Wednesday’s 1305.00 low would satisfy the expiration signal.

In practice, 1305.00 should be probed down to Thursday’s 1302.50 opening print before any obligatory bounce. And the real objective is Thursday’s 1298.25 low, which should be tested down to 1295.50.

What’s Next… (Outlook and opportunities)
If 1315.50 is not breaking lower through Monday’s open, then a detour to fresh highs above 1320.00 remains possible. But it must be rejected without delay – there happens to a 10:00 econ report – to keep the expiration signal on-track for retracing back to last week’s lows.[/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.