Trading Plan for 6/17

Another probe of fresh lows… and another recovery back above prior lows. Thursday’s recovery even ended in positive territory. It this area isn’t a significant low, then it will soon launch a significant downleg.[pay]

Pattern points… (Setups and technicals)
Wednesday’s expiration indicator was borderline bullish. The lower-end of the range had held through Wednesday’s close. Now two days of probing under Monday’s 1259.50 low have failed to gain traction. In fact, Thursday’s new low was recovered to close in positive territory.

The decline must attract new sponsorship immediately, or else a bounce off the range’s lower-end happens next.

Thursday afternoon’s decline had originated during a no-bias environment. Any trending under the 1261.00 bias-down signal required being retraced. It was. For the same reason, there is potential (only potential, not a requirement) for the retracement to also test the 1266.25 last relative high.

Extending the bounce would also target filling the gap back to Tuesday’s 1283.00 close. And Tuesday afternoon’s 1290.00 bias-up target remains unfinished business above. The market is unlikely to range here narrowly. Not rallying would leave only the potential for extending the decline.

What’s Next… (Outlook and opportunities)
Thursday’s oversold RSIs at its 1252.25 low require a retest eventually. It could be neutralized overnight or Friday morning, presumably down to 1251.00, or delayed until a bigger bounce has ended. Of course, the risk in probing a fresh low is that sellers could gain traction. And new lows on a Friday morning, quad-witch expiration, could extend down very sharply. [/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.