Trading Plan for 6/17

[pay]Pattern notes.
Obviously golf’s US Open playoff was a factor in Monday’s trading. Tiger Woods and Rocco Mediate were a distraction, but did that distraction delay the inevitable decline, or suppress what could have been a blow-out rally?

I’m only half-kidding. The market is in large degree a function of the events that captivate its participants, but the Open doesn’t captivate enough. It wouldn’t have prevented trending from being obvious Monday if trending wanted to begin at all.

Lehman’s earnings are a more interesting answer to this question. Crude Oil’s opening surge and intraday reversal is also a candidate, but not as compelling to me. So this morning’s question was whether the ESu 1354’25 bias-down signal would break, and the noon hour’s question was about the 1358’00 bias-down signal. Both held.

The question going into this afternoon’s close was whether Friday morning’s high would hold as support, and it did not. Repeated probes through Monday afternoon produced only more higher highs that also failed to hold on a closing basis. Excessive optimism and ineffectual optimism haven’t yet denied this recovery from extending itself higher. And they haven’t denied that their eventual resolution will be down.

Indicators and Internals.
Monday’s cash session close was essentially even with Friday’s cash session close, so internals are moot. That’s too bad for bulls, because the spreads would have diverged positively, with the ratio of NYSE advancing issues to decliners exceeding the ratio of up volume to down volume that produced it. Technicals offered no new information.

Tuesday’s opening setup.
Does anyone expect Goldman’s earnings to disappoint. That would be a bearish surprise, but a bullish surprise isn’t likely. More chances for a surprise come from the usual Tuesday retail sales reports, as well as PPI at 8:30 and Industrial Production at 9:15. Every tick, swing and pattern will be considered as either further inflating the optimistic bubble, or else deflating it – the latter unlikely to be without drama.[/pay]