Trading Plan for 6/27

If Wednesday’s late dip had reversed down from any higher… then sellers might have gained traction into the close. But the afternoon’s shallow probe of higher highs reflects patient buyers, and potentially higher highs.

Pattern points… (Setups and technicals)[pay]
Tuesday’s template was repeated Wednesday in almost every relevant way. 1. An overnight rally 2. extended into the open 3. and got ahead of itself, 4. requiring a corrective dip 5. that was recovered to a fresh session high 6. during the final hour 7. that was rejected into the close.

There are differences, like Tuesday’s pattern overlapping the prior day while Wednesday’s did not. But the two are similar enough that they should now resolve differently.

Where Wednesday’s open could gap up to Tuesday’s high and still reverse down, Gapping up Thursday would all but ensure extending higher intraday. Gapping down Thursday is also possible, but less likely to reverse the trend down if not substantial. Gapping down relatively little Wednesday would have been bearish.

[/pay]What’s Next… (Outlook and opportunities)[pay]
Extending the rally would next target 1607.00. There is no assurance that it would necessarily be the bounce’s peak. Closing above 1598.00-1600.00 would have left 1607.00 actively in-play, but closing under 1598.00-1600.00 means only that this bounce — whether or not extended to or through 1607.00 — is only a correction, and the previous downleg will resume.[/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.