Trading Plan for 6/16

[pay]About that close (How the prior session ended)
Tuesday behaved like a session-long rally. The 1111.50 high printed during the cash session’s final minutes, after filling the gap back to May 19’s 1111.00 cash session close. The futures close dipped to 1108.75, erasing the last half-hour’s gain. It wasn’t enough to reverse momentum down, or to rob buyers of their traction.

Pattern points (And technical influences)
Several intraday bearish challenges were ignored Tuesday. The morning’s stagnant RSI said no new buyers were being attracted, and then the 1097.50 target gave way to a new upleg. Negative divergences said a final upleg would follow, and then two legs followed.

Several other bearish challenges still threaten. This week-long rally originated prior to probing prior lows. The rallying hasn’t retraced any of its prior lows. A lot of energy was expended gapping twice on the way back to the range’s upper-end. And only one afternoon has traded above prior highs. That same afternoon, Tuesday, filled an outstanding gap.

Tuesday’s breakout attempt can be confirmed by closing higher on Wednesday. Expiration related, or not, that could marginalize sellers through Monday morning. Second consecutive breakouts aren’t often confirmed, and Monday’s intraday round trip just failed to confirm Friday’s breakout.

Session-long rallies are likely to extend higher the following morning. So, higher highs are expected at some point Wednesday, unless the open gaps under Monday’s 1101.75 high. If early gains aren’t retraced into Wednesday’s close – or if an early dip resolves up into the close – then a much bigger bear market rally is underway.

Bottom line (My underlying premise)
For those subscribers that recall our discussions here going into Memorial Day, this is the rally that would have sealed a bottom. Then. This would be very bullish, if it followed a probe of May’s lows. Instead, Tuesday’s highest level in four weeks is probably a false break. It is probably just a pre-expiration rally. And it is probably headed a lot higher first, if buyers don’t lose traction by Wednesday’s close, and sellers gain it by 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.