Trading Plan for 6/21

[pay]About that close (How the prior session ended)
Friday afternoon’s action was choppy, but ultimately range bound, between 1110.00-1114.00. And Friday’s close was within 1-2 points of Tuesday, Wednesday and Thursday’s closes. Therefore, according to the transitive property of expiration characteristics (don’t bother to google it, I just made it up), Friday afternoon’s characteristic narrow ranging is likely to persist through Monday morning.

Pattern points (And technical influences)
If Monday morning’s action doesn’t prove to be a duplicate of Friday afternoon’s action, then it will probably be the inverse. So, the morning should either range relatively narrowly, or else trend sharply. By the way, gapping open sharply in either direction could still become narrow ranging.

Having closed within 1-2 points of the prior three closes (all circled red), Friday’s session proves the implication of Wednesday’s close: Tuesday afternoon’s breakout (circled green) didn’t gain traction. Not trending by Wednesday’s close made trending unlikely through expiration.

 

Four days without extending a breakout doesn’t speak well of buying pressure. It also suggests that sellers weren’t ready to retake control. Perhaps buyers or sellers have been waiting for expiration to lapse. Waiting for that, or for a steep surge or dip whose rubber band effect kick starts a reaction in the opposite direction.

Assuming that Monday morning’s price action is range bound, then the afternoon should try to trend. There is more vulnerability to trend down, and less vulnerability to to trend up. Plenty of unfinished business below (such as the outstanding gaps circled orange) has characterized the recent upleg’s sponsors as weak hands. The question is whether sellers are weaker.

Bottom line (My underlying premise)
What if last week’s narrow ranging above prior highs was the rubber band effect? After all, expiration’s influence can skew price action. Regardless, the general premise remains constant, that buyers have missed every opportunity to exploit the probe of new highs. They’ll have one more opportunity Monday, but then it should be all about sellers if a rally still hasn’t gotten underway.[/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.