Trading Plan for 6/14

Wednesday’s last-minute bounce… was the product of 3-minute RSI finally making a higher oversold low, while 1-minute RSI diverged positively. At least, that put the brakes on the decline. But it also drew a line in the sand, that should give way under only one condition.

Pattern points… (Setups and technicals)[pay]
The sponsorship of late Tuesday’s breakout was weak hands. But they at least earned control of a timing window. Typically that would mean probing fresh highs. But Wednesday’s gap down allowed them a 12-13 point rally through the morning’s bias environment.

This rally tested Tuesday’s intraday and overnight highs, without buyers gaining traction for their effort. That’s not very bullish on any given day. On Wednesday ahead of expiration, the Wednesday’s Expiration Indicator is bearish.The indicator is passively bearish. Sellers might increase their efforts going forward, but they did not apply enough pressure when it mattered in order to trigger an actively bearish signal. Assuming that the signal is productive, it may yet produce only a corrective dip to 1292.00 that refuels for a rally next week. Or, it may resume the decline to 1280.00, 1254.00 and 1225.00.

Wednesday’s signal can be invalidated by Thursday’s open immediately recovering Wednesday’s 1321.00 highs. Perhaps Wednesday afternoon’s drop was just an initial negative knee-jerk reaction to Egan-Jones Spain downgrade. Moody’s seconded after the close, and the price effect has been inconsequential.

[/pay]What’s Next… (Outlook and opportunities)[pay]
So long as 1311.00-1313.00 were to hold tests as resistance overnight, Wednesday afternoon’s decline should resume Thursday morning. Anything higher could probe above 1321.00, but still be likely to reverse down so long as 1321.00 were not recovered at Thursday’s open. [/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.