Trading Plan for 9/17
[pay]Pattern notes.
After Monday and Tuesday’s sessions, there were fewer possibilities for trending. Whether up or down, the push would need to be dramatic. No more ranging around prior highs, and no more retracing new highs. The open’s gap up reacted down, but never turned negative, and the balance of the session rallied,
Actually, the rally all but stopped with two hours remaining before the close. So the afternoon wishy-washiness hasn’t been overcome entirely. But none of its gain was retraced. If the market intended to decline from Wednesday’s highs, then the last two hours of stagnation were the very definition of prone. Higher highs may be probed only briefly, but they should be probed.
The influence of Friday’s Quadruple-Witch expiration may inhibit intraday trending, so beware of early gains that aren’t maintained through the opening sequence. Extending higher without interruption would next target 1069’25. So long as pullbacks from there were to hold 1066’25, then above 1071’00 would target 1082’00.
A failed opening surge wouldn’t necessarily reverse momentum down – sideways ranging is once again an option. Breaking under Wednesday’s 1058’25 noon hour low at any time would suggest that a corrective dip down to the 1052’00 area was underway. A gap down under 1050’00 would reject all of Wednesday’s gain and reverse momentum down hard. It would actually serve by proxy to reject the week’s entire gain, making a rest of Friday’s 1037’50 close just a formality.
Indicators and Internals.
3-minute RSI barely managed to become overbought Wednesday. Its only two instances were followed quickly by negative divergences. None was well-timed or substantial enough to trigger a reversal, but they do undermine the quality of higher highs since then. And overbought 1-minute RSI has accompanied the higher highs since then. Until an early rally Thursday is maintained past the opening sequence, it would be vulnerable to reversing down. Meanwhile, recovering from an opening dip would compensate for the weak technical situation.
Thursday’s opportunities.
Expiration influences tend to be locked in by Wednesday’s close. And expirations rarely reverse trending underway to new extremes. Sellers could be marginalized through Monday morning unless Thursday’s open rejects recent gains by reversing down under levels defined above. The morning’s econ calendar offers ample opportunity.
PROGRAMMING NOTE: Long ago and far away, previous versions of this blog referenced S&P Cash (SPX), as well as its futures. To easily distinguish between them, I replaced the futures quote’s decimal point with an apostrophe. Since SPX coverage has long been isolated to the Bias-parameters, it may finally be time to bring back the decimal point. Unless this inconveniences anyone, Friday will be the apostrophe’s last day.[/pay]