Trading Plan for 6/10
[pay]Pattern notes.
Tuesday’s afternoon’s new session high at 947’00 was rejected to close back under 943’00, positioning the market to resume Wednesday where Monday morning’s decline had left off. My last comment noted that S&Ps dipped a little further – at that moment, only 1-2 points. This pessimistic discount would undermine the decline’s resumption, reflecting selling pressure that the cash session did not.
S&Ps slid another 6 points to 837’25 through the Globex open, widening the discount that would attract price higher. At this moment, three hours past midnight, that discount has already attracted price higher. And higher, to 950’50, probing last Monday and Tuesday’s prior highs and Friday’s 950’25 opening tick. This also threatens Friday’s 952’00 post-open high and the pre-opening surge’s 957’50 peak.
Friday’s Gotcha! setup already identified announced that intraday rallies were all about momentary distribution, making bounces likely to fail through the close. Tuesday’s failed rally attempts put that to the test, and passed. Assuming these overnight gains hold up, there’s a bigger test in store for Wednesday. Pullbacks have room down to 947’50-948’50 before suggesting the overnight gains won’t hold up.
Tuesday’s session gapped up, only briefly visited negative territory, and all intraday probes of prior highs became failed rally attempts. The “ineffectual optimism” tells the same story as the Gotcha setup. Rejecting the overnight gains would be yet another version. Buyers don’t gain traction by probing a prior day’s high intraday and then failing to close above it. So, closing above any prior high that is probed would start to give buyers traction. Until then we’ll continue looking at intraday rallies for selling, and buy intraday dips until one isn’t accompanied by technicals diverging positively at support.
Indicators and Internals.
Speaking of which, the 1-minute RSI diverged negatively overnight for the rally’s latest 3 points. That’s not a sell signal, but it does reflect some recognition of the resistance at 947’00-950’50, between last week’s initial highs and Friday’s open. The overnight surge is still connected to that pattern, and not responding to some new influences.
Wednesday’s opportunities.
The morning’s econ reports aren’t very high-profile. And then there’s the afternoon’s Beige Book at 2:00. With anticipation growing for a potential rate hike, the data will be controversial, and likely to generate several reactions. The timing window leading up to its announcement might be much less inhibited than usual. [/pay]