Trading Plan for 8/19

If the bearish WedEX indicator is valid despite being triggered late… then Monday morning may simply remain under pressure since Friday afternoon already trended down. That’s not necessary, but it may be the most bullish option while still being bearish.

Pattern points… (Setups and technicals)[pay]
The afternoon bias-down environment probed under 1652.00 three times, deeper each time — attacking, testing and then probing well under the 1651.25 bias-down target. It was still being tested coming out of the bias environment at 2:30.

Only afterward was a bounce underway, too late to be strong-handed or to trigger a short-squeeze. In fact, the bounce had retraced down 3 points from 1657.75 to 1654.75 when expiration’s customary influence sucked price down another 4 points to 1650.75.

The main problem with rallying — perhaps why the last bounce came too late to be strong-handed sponsorship — is the afternoon’s lows weren’t low enough. They bottomed short of touching “lower prior highs” at 1648.00. And lower prior highs really need to be probed.

Throw in the late bearish WedEX influence, and a Friday afternoon rally was going to be difficult, anyway. Now a confirmed trend change signal is going to undermine any rally effort Monday.

[/pay]What’s Next… (Outlook and opportunities)[pay]
Not that a rally can’t develop immediately Monday, it’s just difficult and unlikely. Join us this weekend for the Saturday Strategy Session where we’ll discuss signals for a rally, as well as the consequences and behavior to simply extending down.[/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.