Trading Plan for 8/20

Join me for the… Saturday Strategy Session. Bring your stock requests (there’s not session next week) and we’ll also talk about this week’s new highs.

Pattern points… (Setups and technicals)[pay]
The passively bullish Wednesday Expiration Indicator had held price aloft Friday afternoon, but no timing window signaled trending up. Even the shallowest upward bias would still fulfill the signal. A late surge removed any doubt that the signal was influential, but that was unnecessary.

Having fulfilled the signal Friday in the least possible way, Monday morning should compensate for the delay. Even if the open were to gap down, the morning’s post-open action should be biased upward.

There was no second consecutive higher close Friday to confirm Thursday’s close above 1407.00. Friday’s closing surge up to 1416.75 was still testing Thursday’s 1415.50 highs. Fresh highs Monday are possible, but not required and vulnerable to being reversed back down.

Fresh highs would target 1419.00 and 1421.25. Any downdraft for whatever reason — whether in reaction to fresh highs, or just an overnight drop that produces a gap down — could target 1403.00.

[/pay]What’s Next… (Outlook and opportunities)[pay]
It’s interesting that the Friday’s last-minute surge neutralized the overbought RSIs at the morning’s pre-open high. The retest was not required, but the retest held. And a higher target put into play at Thursday’s close was not confirmed. None of which is a sell signal, but all of which does make the market vulnerable to its trend reversing 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.