Trading Plan for 6/11

[pay]Pattern notes.
Tuesday’s late dip attacked the afternoon’s lows, and then extended lower after the cash session close. In the eight hours since then, S&Ps have gyrated a couple of points either way around Tuesday’s close, twice probing under Tuesday afternoon’s lows. Neither dip has extended down to fulfill the required retest of Monday’s night’s “new Globex trend extreme.” But neither has Tuesday’s late dip recovered.

If not for the new lows overnight, Tuesday’s price action would have been an inside day, trading exclusively within Monday’s range. But optimism kept buyers too impatient to allow the cash session to dip, and kept sellers to fearful to force it. The overnight drop had similar optimistic characteristics. This is not the stuff of durable bottoms.

While not the stuff of bottoms, the market could stuff a bounce into the picture before resuming the decline. Delaying new lows much longer would have little choice but to exploit Monday and Tuesday’s basing with a more substantial recovery attempt. Regardless, the eventual resolution remains down.

Indicators and Internals.
30% more NYSE down volume than up volume produced twice as many declining issues as advancers. Wednesday’s market is obligated to reward Tuesday’s sellers for their relative productivity. Meanwhile, MACD & RSI haven’t been very volatile, which is unusual, making volatility likely to increase very soon.

Wednesday’s opening setup.
Some lower profile econ reports are due Wednesday morning, but the bigger news will be the Beige Book data at 2:00 ET. Whether in anticipation of or in reaction to the afternoon’s event, meeting this decline’s target(s) down to ESm 1342’00 and/or 1335’00 would be the stuff of durable bottoms. [/pay]