Trading Plan for 6/24

[pay]About that close (How the prior session ended)
Wednesday’s late-afternoon 12-point round trip wasn’t unusually volatile for the aftermath of an FOMC report. But it was unusual for having fluctuated sharply from negative to positive territory and then back again. And the volatility was unusual for only narrowly avoiding a flat close.

Pattern points (And technical influences)
Like the “date with 1108” created from Friday afternoon’s pattern, Wednesday afternoon’s pattern created a target at 1083.00. They’re similar for not resolving in the same session.

A 19-point bounce delayed 1108’s eventual test until Monday, trapping more buyers to fuel its break to 1108.25. Only an 8-point bounce has delayed touching 1083.00. But oversold RSIs at Wednesday’s 1180.25 low make 1083.00‘s break likely, which would next target 1076.50.

More important than the path lower is that the path is just that, lower. Tuesday’s trend change wasn’t invalidated Wednesday, so all patterns are expected to resolve down. Counter-intuitively, the immediate reward to avoiding invalidation is being able to absorb a corrective bounce.

If buyers were to gain traction, then a bounce would likely target 1105.00. Otherwise, breaking under 1076.50 would next target 1058.25 and 1046.25.

Bottom line (My underlying premise)
If the trend has reversed so that all patterns resolve down, perhaps that’s because the narrative has reversed, too. The recent surprise in Retail Sales might not have been a one-off, now that Tuesday and Wednesday’s horrid home sales figures are setting a new trend. One more negative metric could push the market over the edge. [/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.