Trading Plan for 6/19

If not for FT’s taper headline… then Monday’s session might have produced Tuesday’s rally. There had been some firming before the plunge appeared from nowhere. Recovering it into Tuesday’s open was then extended to fulfill upside potential.

Pattern points… (Setups and technicals)[pay]
Potential up to 1646.50-1648.00 was fulfilled Tuesday afternoon. Three tests of 1648.00 each reacted down more than the last, to as low as 1643.50, before closing at 1646.00.

The close was back under the noon hour’s highs, so buyers gained no traction for their efforts. But the close was also above the past several sessions’ highs, so new sponsorship can still arrive to resume the rally.

Since buyers gained no traction on Tuesday, new sponsorship capable of extending the rally must begin by gapping up. Simply trending up, or recovering from an early dip, would be very likely to reverse back down into negative territory before the close.

1654.25-1655.00 is the next higher objective for extending the rally. Otherwise, momentum reversing down would first target 1634.00, and then much lower low. More so, the downleg that does gain traction — and not just retrace for the next rally leg — should be very aggressive.

[/pay]What’s Next… (Outlook and opportunities)[pay]
WedEx will trigger at the close, indicating whether there is a bias into and out of expiration. Whether or bullish or bearish, there is still potential for it to be active, and not passive. But first is the afternoon’s FOMC policy statement, followed by Bernanke’s Q&A session.[/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.