Trading Plan for 6/13

Don’t forget about the “Strategy Session” Saturday morning… After discussing Friday’s new lows, we’ll have a brief workshop on properly drawing trendlines.[pay]

Pattern points… (Setups and technicals)
Simultaneously oversold 1-minute and 3-minute RSIs accompanied Friday afternoon’s 1261.75 low. That requires strong hands. That left only weak hands to sponsor the corrective bounce up to 1273.75.

That doesn’t mean strong hands sponsored the bounce’s failure back down to 1262.75. But the burden of proof is on buyers, and they failed.

If any day could have made this pattern turn very ugly, it is a Friday. The weekend’s impending illiquidity can bring fearful sellers out of the woodwork to sponsor a new downleg. A short-squeeze should have exploited the same fear to an opposite effect – fear of being short to trigger a surge.

But the fear of being short produced two surges that could not get away from the noon hour’s 1269.75 high. That was weak enough, without also reversing back down to 1262.75. Stopping optimistically short of actually touching the low wasn’t weak enough.

Opening the new week at new trend lows with unfinished business below. A bottom would require probing fresh lows. So would extending the decline. Not recovering through the open could be the difference between them.

What’s Next… (Outlook and opportunities)
The next lower objective under 1262.75 is only 1259.25. The larger pattern’s longstanding objective continues to be March’s 1243.00 low, and then 1237.00. Somehow recovering 1280.50 Monday through a relevant timing window could trigger another bounce.[/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.