Trading Plan for 6/22

All eyes awaiting Greece’s results… The market may expect an orderly result, suggested by its steep rally. But that rally met its target, and ultimately held it through the close. So the market has also priced in an orderly result.[pay]

Pattern points… (Setups and technicals)
Extending Monday’s rally put into play 1281.50. Exceeding the target through Tuesday’s open put into play 1290.00 Tuesday’s high tested it, neutralizing its attraction.

Closing above 1290.00 would have put into play higher targets. Closing under its 1286.00 interim low would have rejected 1290.00. There was plenty of time intraday to accomplish either. Tuesday’s close still testing 1290.00 wasn’t arbitrary. It reflects the level’s attraction. And that is “equilibrium.”

An equilibrium close tends to produce two trending attempts in opposite directions the next day. Each one is retraced entirely, and then a third trending attempt extends substantially. Gapping below or above the  1286.25-1292.75 prior high and prior low can gain traction and extend without delay.

Interestingly, closing back under the morning’s high also suggests that buyers gained no traction for their efforts. Extending a rally without traction requires gapping up. Not gapping up Wednesday would suggest a later probe above Tuesday’s high will be rejected by a bigger downleg. And closing above Tuesday’s high would next target 1307.00-1310.00.

What’s Next… (Outlook and opportunities)
The watched kettle eventually boils, too. And everyone has been talking about Greece. Wednesday afternoon’s FOMC announcement and Bernanke’s conference hasn’t been discussed very much. And being a new format, which produced volatility last month, it could have a bigger impact Wednesday than Greece. [/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.