Trading Plan for 6/1

Tuesday’s late surge seemed bullish… and maybe it was. Gaining 8 points in 20 minutes, probing fresh highs, taking RSIs overbought. But a lot of energy was expended, so failing to extend higher could be very bearish.[pay]

Pattern points… (Setups and technicals)
Resistance at the afternoon’s 1338.75 bias-up signal limited the upper-end of Tuesday no-bias environment. Its test eventually reacted down to 1336.75, ranging sideways well past the bias environment lapsing. Nevertheless, another rally leg probed fresh afternoon highs, and its brief consolidation launched an 8-point surge up to 1345.75.

What’s not to like? Nothing, so long as the rally extends higher Wednesday. That would indicate new sponsorship had arrived. But extending higher would require new sponsorship because Tuesday’s surge satisfied what little there was already.

Tuesday’s late 8-point surge was impressive, but originating after 3:10-3:20 means its sponsorship was weak hands. The surge created no new buying pressure, ending the cash session back at the morning’s 1344.00 high. Higher highs printed only after the cash session close.

1337.50‘s first test peaked at 1344.00. Closing above it Wednesday would confirm 1337.50‘s recovery by a rally leg targeting new highs. Closing back under 1337.50 Wednesday would suggest the rally had peaked. Closing back under the 1333.25 interim low would signal momentum reversing down.

What’s Next… (Outlook and opportunities)
An overnight dip has room down to 1341.00-1342.00 before sellers could start to gain traction. Back under 1337.25-1338.00 would reject Tuesday’s late surge, probably very aggressively to compensate for the delay. But almost any open above 1343.25 would marginalize sellers through Wednesday morning.[/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.