Trading Plan for
[pay]Pattern notes.
Expiration’s influence appears to have already clamped down on volatility. After Thursday afternoon’s bias environment lapsed, a small blip-up was quickly retraced. The retracement quickly stopped. And a blip-down of equally small size was retraced, as well.
The afternoon’s choppy narrow ranging had already predicted a difficult close. Noise can be traded, but not when it ranges so narrowly. More important than trending, the challenge became whether the morning’s 1093.50 low would be recovered, or if the close would still be in the process of testing it.
Regardless, it wasn’t recovered – not until a 3-1/2 point surge after the cash session close. Whether sellers lost traction is of secondary importance. The burden of proof was on buyers to regain traction. It’s expiration and anything can happen, but it would have to happen at the open. Otherwise, the prevailing trend down will likely persist into expiration.
Thursday’s 1090.75 low barely filled the gap back to last Tuesday’s close, so it could produce only a temporary obligatory bounce. It should still be probed down to at least 1087.50. And having been delayed until another session, its ultimate test is likely to extend down. In other words, resuming the decline at Friday’s open would essentially resume the decline off of Dec 4’s high.
Indicators and Internals.
Oversold RSIs at the noon hour low didn’t require a retest. The last-minute low came within 1 tick anyway. Since the reaction didn’t recover any relevant ground, the test isn’t considered to have held, and an attraction below the market remains outstanding. It can be rendered moot by gapping up above prior highs.
Friday’s opportunities.
Thursday’s last-minute dip was retraced after probing the afternoon’s 1091.75 bias-down signal, leaving selling pressure to be pent-up overnight. The selling pressure was uncorked, so Friday’s open is likely to be in decline. A gap up Friday above 1098.00 would put a cork back in the bottle. Expiration is unlikely to reject the prior session’s trending. But expiration is also likely to extend any initial trending, whether or not it is the same as the prior trend’s direction.
PROGRAMMING NOTES: The charting platform upgrade experienced difficulty maintaining an ongoing broadcast stream, and its audio was scratchy. We will not be moving to it without resolving these issues. Unfortunately, the Windows 7 and Mac issues persist, so we will test a couple of other platforms next week. Thank you for your patience![/pay]