Trading Plan for 6/2

If a new trend high close on Fridays can’t end a trend… then does that require new highs on Monday? Not necessarily. The trend is always likelier than not to extend. But not immediately extending a Friday’s new high close is likely to detour for several days.

Pattern points… (Setups and technicals)[pay]
Friday was a new high close, which on a Friday preserves the uptrend. It doesn’t require the rally to extend higher without delay, but an immediate decline would be likely to recover — usually after several counter-trend sessions, but recover nonetheless.

And the rally is vulnerable to an immediate decline, because Friday afternoon’s buyers didn’t gain traction. Not only because buyers gained no traction, but also because the rally extended higher anyway. Rather than compensate for not gaining traction, that only stretches the rubber band.

Some of the same factors that facilitated Friday’s rally could facilitate its immediate reaction down. It was the last day of the month, and now it is the first day of the month. New highs were being greeted into the weekend, and now the weekend is done. Sellers weren’t gaining traction, buyers gained no traction.

An immediate pullback would target 1897.50. Extending higher without a pullback is not well-defined. Each of Friday’s legs overlapped the relevant 1918.00, so there has yet to be a breakout or a new target put into play.

[/pay]What’s Next… (Outlook and opportunities)[pay]
REMINDER OF EARLY START TIME: This weekend’s Saturday Strategy Session begins a half-hour early at 9:00 AM ET.[/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.