Trading Plan for 6/26

If another probe above last week’s highs were attempted… then is there a reason why it should resolve any differently? Sunday’s overnight surge was retraced entirely before Monday’s open, and Tuesday’s intraday surge was reversed more substantially. Now the market is poised to try again.

Pattern points… (Setups and technicals)[pay]
Wednesday’s rally confirmed Tuesday’s drop was a one-day wonder — at least, that Tuesday’s low was the drop’s momentum low, and that its retest by lower lows Wednesday would launch a really. Wednesday’s opening probe under Tuesday’s lows was reversed immediately. The balance of the session trended upward.

Was Wednesday’s rally a one-day wonder, too? There remains no attraction above, the last objectives having been neutralized at Tuesday morning’s high. The only unfinished business above is to produce a new trend high close above 1955.50, which would relieve last Friday of holding that status.

Wednesday’s fresh low spent hardly any time probing Tuesday’s low before recovering. And the fresh low was at least 2 points shallower than the likelier objective to retrace all of last week’s FOMC reaction. Neither condition was required before rallying, but rallying so quickly does reflect optimism that can undermine the rally’s durability.

[/pay]What’s Next… (Outlook and opportunities)[pay]
Tuesday morning’s reversal from fresh highs snuck up on the market. The actual price peak was less relevant than the pattern, which had ranged narrowly intraday for two sessions. Attempts to extend higher are vulnerable to the same sudden surprise.[/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.