Trading Plan for 6/29
[pay]Pattern notes.
Friday’s price action changed the analysis, opinion and parameters not one bit. Sellers were unable to regain traction, and buyers were unable to exploit it. The morning’s pessimism kept alive potential to probe a higher high, whose rejection was limited by quarter-end influences.
The session dripped with pessimism. An opening gap down, a probe under the prior afternoon’s lows, ranging exclusively in negative territory. Several minutes probing Thursday’s prior highs during the irrelevant last half-hour didn’t constitute optimism. The “ineffectual pessimism” retains the potential – if not the likelihood – for probing Thursday’s highs intraday Monday.
The end-o’quarter portfolio window dressing has become much less influential. Quarter-end derivatives might have a momentary effect Tuesday. And then the impending three-day holiday weekend will begin inhibiting sponsorship of a new leg. If either buyers or sellers push price beyond its recent range, their effort should obvious by Tuesday’s close. Because it may need to end by Thursday’s open.
Starting the week on a sour note would have to be pretty sour to extend down meaningfully. S&Ps have ranged within an 8-9 point band since noon Thursday, and trending doesn’t start from a standing stop. So an early drop Monday could have the most bullish resolution, while initially surging would stretch the rally’s rubber band tightly.
Indicators and Internals.
RSIs were simultaneously overbought during the formation of Friday’s last-minute high. This setup at almost any other time intraday would make any sell-off likely to recover. That continues to be the premise, anyway, but a gap down under prior lows would invalidate this case for it.
Monday’s opportunities.
No econ reports will influence the day’s price action. Between this, and the holiday-shortened week, a lot of other reports will be crammed into the week’s remaining three days. An opening surge would still target 920’50, and pullbacks might have room down to 910’25 before considering whether momentum has reversed down. Even then, “lower prior highs” at 905’00 could be probed by a couple of points as support, and still retest Friday’s highs. Regardless, this particular Monday’s opening volatility might be predictive of the week’s ability to trend.[/pay]