Trading Plan for 9/19

Did expiration give cover… to bad stuff coming over the weekend? Or, has the Expiration Indicator inverted?[pay]

Pattern points… (Setups and technicals)
Friday’s expiration ticked higher into the close, similar to Thursday’s close. Not to new highs, unlike Thursday, but above most prior highs. Although the cash session close was 1209.50, futures ticked higher to 1212.75.

The higher futures close would be irrelevant to my analysis on any day, and more so on expiration. The cash session close wasn’t very relevant, either – when the afternoon’s bias environment started lapsing at 2:30, I had noted that this pattern on a normal Friday would have already signaled trending was done for the day.

But that’s of no interest, or of substantially less interest, than how this may affect the Wednesday Expiration Indicator. Perhaps its downward bias prevented a rally Friday afternoon. It wouldn’t be the first time that Friday afternoon was not biased per Wednesday’s indication. These exceptions are rare, but Monday mornings have then tended to trend down with a vengeance.

Monday’s open can gap up, considerably, and then trend down sharply to fulfill the indicator. In fact, after last month’s expiration trended down into the weekend, Monday’s opening gap up retraced it all, and yet reversed back down to that Friday’s low.

Regardless, I would consider buying if Monday’s open — gap up, or not — is still not trending obviously down coming out of the open’s 15 minutes of volatility. While Friday’s session essentially closed above 1201.50 without still overlapping it, gapping down under 1201.50-1202.25 would still trigger a session-long decline.

What’s Next… (Outlook and opportunities)
Friday’s Market Wrap is linked here… Don’t forget about Saturday’s Strategy Session, linked from the blog’s sidebar. It starts at 9:30am ET.[/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.