Trading Plan for 6/23

Bernanke’s no-confidence vote… was more influential than the Greek confidence vote one day earlier. Wednesday’s probe of Tuesday’s highs failed, and its reaction down fell at an accelerated pace. Has the corrective bounce ended?[pay]

Pattern points… (Setups and technicals)
1290.00 was probed twice Tuesday, and then through much of Wednesday. Closing above it could have signaled the week-old corrective rally was extending higher. Closing under 1283.00 suggests the rally has ended.

Tuesday’s cash session close equated to 1282.00. Futures extended down to 1279.00. A lot of selling pressure was expended since testing 1292.00-1293.00 just two hours earlier. A lot of pessimism was expressed by extending straight down throughout, and by extending lower after the close.

Meanwhile, 3-minute RSI was oversold, and 1-minute RSI diverged positively. A gap up is possible at Thursday’s open. But there is no unfinished business above, and no accumulation pattern, so any bounce would likely be only a correction.

I notice also that the Dow and NDX did not probe Tuesday’s highs, while SPX did. The Down’s outperformance Monday had meant bigger money was essentially forced to buy. But reluctant buyers aren’t even buying anymore. That would be bullish if NDX were now outperforming, but it isn’t

What’s Next… (Outlook and opportunities)
The drop has room down to the 1278.00 area, while still being able to retrace Wednesday afternoon’s dip up to 1284.00. But a break under 1272.50 through any relevant timing window would leave only one support remaining on the way down to retesting oversold RSIs at last Thursday’s 1252.25 low. [/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.