Trading Plan for 6/10

[pay]Pattern notes.
Monday morning’s gains had tried to reject Friday’s new lows. Monday afternoon’s dive to new lows rejected the morning’s gains. Monday’s last-minute surge tried to reject the afternoon’s dive. See the pattern? Buyers are trying, but sellers are succeeding.

The last-minute surge did succeed at closing back above Friday’s prior low close, and back above Monday morning’s opening lows. The surge stopped 1 point short of closing above the open’s 1364’00 print which would have given buyers traction. So a gap open above Monday afternoon’s ESm 1368’50 highs would signal momentum extending higher; back under Friday’s 1358’50 low would signal momentum reversing down.

S&Ps have been weakening since the Globex open, and currently range a couple of points under the 1358’50 bias-down signal. Much can happen overnight and the decline isn’t required to trade any lower. There is room down to 1351’50-1353’00 without confirming a new downleg underway, but it had better be underway by Tuesday’s open if sellers have any chance at regaining control in the morning.

Indicators and Internals.
MACD & RSI are not confirming the new lows overnight around 1355’00. This suggests that sellers once again have lost traction, but it doesn’t mean buyers have gained it in their place. Regardless, a bounce up to 1360’00–1362’00 still won’t give buyers traction, so buyers have their work cut out for them if they want to recover.

Tuesday’s opening setup.
Pre-open econ reports will almost certainly exercise some influence over a pre-open trending attempt. More important than the open will be the close – that’s always true, but more so Tuesday because Monday just confirmed the prior week’s break to new lows. A second consecutive lower close would make a third consecutive lower close very likely Wednesday, and probably as a session-long downtrend. Otherwise, I wouldn’t mind participating in a signaled bounce, but I would be suspicious of it and quick on the stop-sale.[/pay]