Trading Plan for 6/26
[pay]Pattern notes.
Today’s closing gain belies the intraday drama that played out after the FOMC news. Preceded by the morning’s failed probe of Tuesday’s highs, Wednesday afternoon’s much higher highs were also reversed to close back under Tuesday’s highs. All but the session’s first 10 minutes of trading was retraced within 30 minutes of printing session highs at the top of the last hour. And the session’s last half-hour only ranged sideways at the afternoon’s lows.
Had the last half-hour actually probed the morning’s low – which had gapped up well above Tuesday’s close – this would have reflected pessimism capable of forming a bottom. Instead the market optimistically avoided probing the open’s lows, while those optimists were ineffectual at staging a recovery.
There is no unfinished business above the market, and only unfinished business below. This begins with filling the gap back to Tuesday’s close around ESu 1315’00, and then retracing the rest of Tuesday morning’s no-bias rally back to its 1309’00-1310’00 origin. At this stage, those achievements would probably let sellers continue their control to retest the week’s lows. Otherwise, a close above 1332’00 is the minimum requirement to extend the rally.
Indicators and Internals.
Wednesday’s internal spreads weren’t narrow, which isn’t surprising considering that the session was spent entirely in positive territory, and probed new highs after gapping up. But the spreads weren’t lopsided, showing sellers expending effort equal to buyers. And Tuesday’s bearish spreads were never awarded by trading in negative territory, although they did help to foreshadow the new high’s instability. MACD & RSI diverged positively on a 1-minute chart twice during the last hour’s decline, which buyers seem unable or unwilling to exploit.
Thursday’s opening setup.
Overnight strength might challenge prior highs around ESu 1328’00-1330’00, but anything less would leave the door wide open for sellers to regain control. Now overnight strength is required, and a gap down back to Tuesday’s 1315’00 area close wouldn’t be surprising. A recovery from gapping down would be surprising, and a busy econ report calendar offers a lot of potential for a catalyst.[/pay]