Trading Plan for 6/24

[pay]Pattern notes.
After the morning’s recovery from new lows, Tuesday afternoon’s ranging walked the tightrope between optimism and pessimism. Despite ranging exclusively in positive territory above 888’00, the afternoon never probed prior highs – not the opening high, the overnight high, nor Monday afternoon. Taken out of context, this might seem like pessimism. But the context in this instance is that the afternoon never returned back into negative territory, and that’s optimism. So, the afternoon qualifies as “ineffectual optimism.”

Chipping away at resistance would have cleared the way for an immediate rally Wednesday. That work can be supplanted by gapping up above prior highs, if that gap up can be maintained. A gap up that is maintained above Tuesday afternoon’s highs would also trigger a session-long rally setup. Not maintaining a gap up could slide quickly down to new lows. A gap up Wednesday would be suspicious anyway, since Tuesday afternoon’s high didn’t print until the last last half-hour.

If buyers don’t regain control Wednesday morning, the bearish fallout might still be limited. However small the margin, Tuesday’s new relative lows did recover to close in positive territory. It doesn’t mean buyers gained traction, but it does undermine sellers that sponsor another dive to new lows. If sellers don’t regain control Wednesday, the fast-approaching end-o’quarter portfolio window dressing could marginalize sellers through the weekend.

Indicators and Internals.
Tuesday afternoon’s narrow range saw technicals extend once each in either direction, and only among the 1-minute indicators. Otherwise, the lack of volatility left no unfinished business.

Wednesday’s opportunities.
Whether diving immediately at the open, or after failing a bounce up to 894’00-895’00, sellers might be no more productive than to retest Tuesday’s 884’25 low by 3 points. A gap up maintained above 894’00-895’00 through at least the 10:00 econ report (New Home Sales) would get a benefit of the doubt for extending higher. It would also get a tight stop, being ready to enter short on a failure. [/pay]