Trading Plan for 6/3

Thursday began with bounce potential… but Goldman’s subpoena derailed it at 1317.00. A complete recovery back to 1317.00 was derailed, too, by a bigger drop to new lows at 1304.25. The afternoon’s rally never touched 1317.00, so maybe it was never derailed.[pay]

Pattern points… (Setups and technicals)
Anxiousness ahead of Friday’s Employment Situation report was obvious. Thursday afternoon’s bias environment ranged sideways between 1310.00-1316.25. Then so did the subsequent 90 minutes into the close. And the close was essentially unchanged back at or around 1312.00-1312.50.

It is potentially bullish that the afternoon’s consolidation peaked twice just 2-3 ticks under the morning’s 1317.00 highs. That reflects pessimism. It is “ineffectual pessimism” since the fear was never justified by reacting down. This would normally resolve in a higher high, perhaps testing the 1317.75 overnight bounce, or the low 1320‘s.

Also potentially bullish  is the day’s two big sell-offs. Each recovered back into positive territory, so sellers gained no traction for their efforts. Buyers have yet to be rewarded for absorbing those drops, and another larger drop could still develop. But fresh highs would get a benefit of the doubt for extending higher.

Regardless, much lower objectives remain outstanding. Thursday’s low stopped optimistically short of even touching last Tuesday’s night “new Globex trend extreme” at 1302.25. The original detour to its retest already suggests a bigger break down to 1277.00. Thursday’s premature bounce confirms.

What’s Next… (Outlook and opportunities)
Being a Friday, the morning’s bias signal tends to persist well through the noon hour. The weekend’s illiquidity could most influence the morning’s price action, magnifying the reaction to the Employment Situation report.[/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.