Trading Plan for 6/18
[pay]Pattern notes.
Wednesday’s price action represented two solid efforts to break from Tuesday afternoon’s trading range. There was the morning’s dive to 899’25, and then the afternoon’s climb up to 914’25. Yet, neither attempt gained traction, and the close was still in the process of testing Tuesday’s 906’50 low as support.
Shouldn’t this be de facto bearish since the close was negative, and since the rally was the most recent failed effort? It’s certainly not accumulation, and in that respect it isn’t bullish. But sellers had the optimal setup, i.e. chipping away at support, failed rally. At least the most recent failed effort was buyers making an effort. The most recent failure was sellers refusing to exploit an opportunity. No excuse.
When no signal is a signal, don’t lose sight that it was the market’s second choice. Price is the product of supply and demand. Strength from here would be due to less supply (fewer sellers), and not necessarily from increased demand (more buyers). We definitely want to know which way the wind is blowing, but we should know when it is only a breeze.
Indicators and Internals.
Technicals left no unfinished business Thursday. More so, the market resolved its divergences without much delay intraday.
Thursday’s opportunities.
Opening strength Thursday has room to test 911’50 or even 914’00 without buyers gaining traction, perhaps only refueling sellers. Gapping up above either would likely signal a session-long rally next targeting 921’00. Probing both but reversing back under 911’50 would put down sharply to resume the week’s decline by a relatively wide margin under Wednesday’s 899’25 low.
Perhaps the most bullish scenario would gap down several points (902’00?), probe Wednesday’s low, and recover through 10:15. It’s the same path that Wednesday followed, just too late to attract durable buying. The risk in opening weaker, of course, is in not recovering. And that’s a growing risk, given this week is expiration, and sellers have been the dominant influence.
Jobless Claims before the open tends to incite a reaction. But two econ reports are due at 10:00, timing that often tends either to accelerate or to reverse any trending already underway. Extending the decline through Thursday’s bias window might as well extend it into Friday afternoon. Extending it further into the weekend would point lower into Wednesday’s open.[/pay]