Trading Plan for 6/12

[pay]Pattern notes.
Sellers fed buyers yet more rope to hang themselves Thursday. The first half-hour’s opening surge up to 945’00 tried to extend higher intraday. Interim volatility both higher and lower gained traction only once, on the auction results coming out of the noon hour. The 953’00 bias-up target was met (within 1 tick) just 30 minutes later, and a drop from there greeted the last half-hour back at 945’00.

In other words, there was no net gain between Thursday’s first and last half-hours. This isn’t necessarily meaningful in a flat market, but it is significantly meaningful to confirming an opening surge. Opening surges seem hollow with nothing to show for an entire session spent probing higher highs. With the noose tightened securely, the trap door fell open after position-squaring subsided, and the drop resumed.

Thursday’s opening surge was made more meaningful by its retest of last Monday-Tuesday’s highs in the 943’00-945’00 area. Closing any higher would have jeopardized last Friday’s Gotcha! setup, since one of its biggest elements was its rejection of those very same prior highs. The Gotcha’s influence remained intact also by erasing yet another session of intraday gains. This can persist indefinitely in theory, so long buyers maintain no traction. In practice, this will eventually end, and it will end more dramatically to compensate for the delay.

Indicators and Internals.
RSI made new low oversold readings while price was falling to new relative lows into Thursday’s close. Almost any other timing intraday would have provided bounce protection, meaning any recovery attempt would likely fail. It’s more of a polite suggestion when occurring in the closing minutes. Already, the drop extended into and out of the cash session close, touching 937’00 before the Globex open.

Friday’s opportunities.
There isn’t much room to bounce, not even overnight, not if sellers are retaking control for sliding into the weekend. A bounce isn’t required, but should hold the 943’00-944’00 area. Back above 945’00 could immunize the session from selling pressure. There’s room down to 931’00 before sellers gain more traction, but only obligatory support below there on the way down to 907’00. Of two scheduled econ reports, Consumer Sentiment at 9:55 has potential to trigger volatility. This being a Friday, the morning’s bias should persist through the noon hour. [/pay]