Trading Plan for 6/23

[pay]Pattern notes.
Saudis committed to ouput hikes over the weekend. Psychologically that has to have an immediate effect on Crude Oil, and that would to have an impact on stocks. How interesting, then, that Friday’s session behaved pessimistically throughout. Even at the close when two last-minute short-squeezes were rejected from trying to rally.

Friday’s open gapped under prior lows and extended lower. A bounce also tested the prior lows as resistance before resuming the decline and then closed under the morning’s lows. The last characteristic is important because it’s not accumulative and makes a recovery attempt unlikely to be maintained anytime soon. Meanwhile the Friday factor suggests that Monday’s open will also trade down (from the opening tick, even from gapping up higher).  saudis commit to ouput hikes. I will be assessing price action within this context, confirming or invalidating whether sellers are losing traction and buyers are gaining it.

The bigger picture doesn’t change the context, except to further confirm it. Now two prior gap-ups have been filled, which tends to reflect substantial selling pressure. Not that the selling can’t be corrected, but buyers will need to maintain early gains to avoid S&Ps melting down further.

Indicators and Internals.
RSI was oversold at Friday’s last low, requiring its retest. A close above Friday’s high would neutralize the obligation – possible, but difficult. If somehow sellers control Monday’s open and produce new lows while RSI diverges positively, then I would be open to nibbling at a long position. But a stronger long position would need overbought technicals to accompany breaks above resistance levels.

Monday’s opening setup.
Friday afternoon’s bias-down target was ESu 1318’00 which held as support at the close, so there is no near-term unfinished business below to attract prices lower. But there’s not much of a pattern to be considered accumulative at the lows, which makes me suspect any rally attempt’s ability to hold.

No econ reports are due Monday. This week’s highlight is Wednesday afternoon’s FOMC interest rate decision. A case has been made for raising rates, and the argument just got stronger thanks to this weekend’s news from the Saudis. So, economic forecast revisionis could still be a factor Monday despite an otherwise empty calendar.[/pay]