Trading Plan for 9/22

[pay]Pattern notes.
Gold had its worst day Thursday since 1980. Just to put that into perspective, Gold’s best day since 1980 was one day earlier on Wednesday. A steep move doesn’t prove the environment is more conducive to that direction. It does prove the environment is conducive to steep moves. By the same token, the gargantuan rally from Thursday’s low is less evidence of a trend reversal, and more evidential of a volatile environment.

Similarly, gaps prove the environment is conducive to gapping. Gapping down under ESz 1228’00-1230’50 would target 1189’00-1194’00. Gapping up above 1263’00 would target infinity-gazillion. By 11:00am. Maybe not quite that high or fast. But Monday’s open probably shouldn’t gain more than 20 points without some more heavy-handed intervention, such as outlawing all shorting, or all selling of any kind. Thursday’s 1136’25-1137’50 “V” bottom requires an intraday retest, Friday’s 1268’00-1271’00 open is likelier than not to be retested above, and in this environment both could happen on the same day.

Did we witness the birth of a new bull market Friday? I’m not yet sure we saw the bear market’s death. Credible cases can be made for either, but a better case can be made for being agnostic. During the next several days the pursuit of a longer-term opinion could be a counter-productive distraction for traders.

Indicators and Internals.
Intraday trending on an expiration session tends to be repeated by the subsequent session after the weekend. Friday’s Quadruple Witch expiration session traded down from its opening tick and never retested the open’s high. The Friday Factor identifies another tendency, for the next session’s open to match Friday’s first and last 15 minutes of trending. To the extent that this indicator points in either direction, it also points down.

Monday’s opening setup.
The week’s econ reports don’t start coming until Tuesday, although ongoing intervention largely undermines the relevance of lagging data. The State Street Investor Confidence Index will be interesting Tuesday for seeing whether there is any – both investor confidence, and State Street. Bias Parameters haven’t regained their relevance yet, but I continue to monitor price action and timing windows for their return to normality. Join me in the charting room for Sunday night’s open. [/pay]