Trading Plan for 8/23

[pay]About that close (How the prior session ended)
Expiration’s influence put the market in a headlock late Friday. Firming up to fresh session highs had opened the window to a short-squeeze, but none developed. It could have launched a slingshot back down, but that never triggered either. The last 60-90 minutes just ranged narrowly – just under Thursday’s close.

Pattern points (And technical influences)
Friday’s session gapped down, and traded entirely in negative territory probing new trend lows. That’s pessimism. It closed back above the prior session’s lows. That might seem ineffectual.

But the setup doesn’t live up to the spirit of “ineffectual pessimism” since sellers weren’t really put to the test. Recovering from an afternoon probe under the morning’s lows would have been more revealing. Instead, Friday’s ranging was only that.

The reluctance to trend was likely the product of expiration’s influence. That’s quite a difference from the week’s earlier expiration influences. The wild swings, and repeatedly trending up to resistance until a last-minute reversal. Friday’s low did trend down right until reversing at noon, but that was the closest thing resembling earlier weirdness.

If the market got expiration’s influence out of its system already, then Monday morning should trade normally. The normal resolution would be to resume the decline soon after the open – whether bouncing first to the 1075.00 area, or quickly breaking under the 1065.00 area.

Otherwise, Monday morning’s character would likely duplicate Friday’s, and only range sideways. The extended ranging would become likelier to launch an attack on the 1085.00 area before resuming the decline.

Bottom line (My underlying premise)
Lower targets remain outstanding, from Friday morning’s outstanding 1060.25 bias-down target to 1053.50. Friday’s delay has increased the potential for extending even lower. A bounce into Tuesday would increase the potential even more. [/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.