Trading Plan for 6/25

[pay]Pattern notes.
A close under 894′00-895′00 Wednesday would have trapped the morning’s buyers and pointed down Thursday. A close under 891′00-892′00 would have made that resolution likely to begin by gapping down. Both parameters were tested before the close, and both parameters held as support through the close. Sellers gained no new traction.

A close above 897′50 would have begun signaling that buyers were gaining traction from the afternoon drop. The close was still testing 897’50, so there is no increased likelihood for gapping up Thursday.

So, neither buyers nor sellers gained traction. Tuesday’s signal that sellers had lost traction was essentially proved on Wednesday. Expectation that buyers wouldn’t gain traction was also proved out. The week-long decline had begun attracting end-o’quarter portfolio window dressing, which is just real enough to absorb selling, but not real enough to produce a durable rally leg.

Indicators and Internals.
Simultaneous positive divergences at Wednesday’s low did produce almost a 7-point bounce into the close. The setup doesn’t require any further gain to prove itself. And having closed at a bounce target (897’50), there is no unfinished business above to held recover from breaking under the bounce’s 891’00-892’00 origin.

Thursday’s opportunities.
The end-o’quarter portfolio window dressing can still influence Thursday’s session. So long as any interim weakness holds the 894’00-895’00 area, there’s potential for attacking Wednesday’s highs, perhaps even probing them up to 907’50. That or something like it would be expected unless Thursday’s open were to gap down under 891′00-892′00, which would target new relative lows down to 881’00, and then much lower Friday. [/pay]