Trading Plan for 9/18

[pay]Pattern notes.
The last opportunity to truly recover positive territory Thursday was just before its last half-hour. A quick 2-1/2 point surge was stopped cold, and sent back into what had been an hour-long 1062’00-1064’00 range. Then below it, to 1059’00. But the 1062’00-1064’00 range was recovered into the close.

Ranging so narrowly just before an expiration session tends to foreshadow more of the same into the weekend. Probably not a 3-5 point range, but probably no less frustrating. It’s common with expiration session.

The pattern can be broken by an immediate break under 1058’00 that extends quickly through 1056’00. This would put into play 1050’00-1052’00, and potentially 1037’50 by Monday morning. Simply firming into positive territory would suggest a flat to higher range through the noon hour.

Indicators and Internals.
RSIs diverged negatively into the last half-hour’s initial 2-1/2 point surge. The reaction down was more than sufficient to fulfill the signal. Technicals left no unfinished business at the close.

Friday’s opportunities.
No econ reports are due Friday. The rally has fed on news, either reacting to it favorably, or else quickly absorbing it. Expectations for higher highs Wednesday morning were largely a function of how pre-open news was all but ignored. Expectations for Thursday’s higher highs weren’t abandoned when pessimistic reactions came slowly after pre-open news.

Friday’s open won’t have a similar Wall of Worry to climb. And it won’t have the momentum of rising prices – in addition to being flat, Thursday’s close rejected two steep probes above prior highs. At any other time than expiration, this would be very bearish. Its still might be. But expiration makes a narrow range likelier. [/pay]