Trading Plan for 6/4

[pay]Pattern notes.
Wednesday’s drop through the noon hour didn’t try to resume the decline until the session’s last half-hour. Its 2-tick probe under the 923’00 prior low lasted less than a minute. Five minutes later the 924’25 bounce limit was recovered. Another twenty minutes later the recovery was 10 points, and thoroughly probing 930’00-932’00 resistance.

This area attracted price up to it in Monday’s gap up, and attracted price down to it as Wednesday’s bias-down target. The area’s third visit stopped short of rejecting all the price action below it, which means its sellers do not represent pent-up buying pressure. A break maintained under 927’75 would start to signal the bounce had ended, and extending down under 925’00 would confirm momentum had reversed down to resume the decline.

Price hovered optimistically for two hours of ranging before the late surge. Optimistically, because price refused to dip another couple of points where the gaps back to Friday’s close could have been filled. The momentary 2-tick dip that preceded the late surge certainly didn’t trap sellers. And the late surge that followed neutralized any oversold condition, which might have otherwise forced the buying into Thursday’s open to extend higher.

Thursday’s open might yet try to duplicate Monday’s effort, and immediately extend the prior day’s closing surge. Monday’s effort found this optimism to be unsustainable, and so would a repeat effort Thursday. That said, the 938’00-939’00 area could be probed first, perhaps even Tuesday’s 943’00 close. But buyers don’t regain control without closing back above 939’50 – and then possibly only to probe higher highs up to 950’50.

Indicators and Internals.
RSI did not diverge positively at any time during the formation of Wednesday’s low. MACD deteriorated into negative territory to confirm the late 2-tick dip. The late surge’s slope already gave away its sponsorship’s identity as being weak hands. No other type of buyer is attracted when technicals and timing are both lacking. RSIs diverged negatively after the late surge’s peak, a little too late to be predictive, but appropriate nonetheless.

Thursday’s opportunities.
Jobless Claims will highlight the day’s econ reports. The metric differs from the Employment Situation report, but any surprise is sure to shake things up in case of a surprise Friday.  Bernanke is scheduled to speak 15 minutes later… Reminder: I will be away from the market and not updating Friday after 11:00am (I’ll return in case of unusual developments).[/pay]