Trading Plan for 6/4

It took only one week… for the corrective rally to peak, and only three days to plunge through prior lows. It wouldn’t be wrong to prepare for the drop having fallen too far, too quickly, making it vulnerable to a bounce. But the rush to exit ahead of the weekend — in fact, ahead of Friday afternoon — is more than a little alarming.

Pattern points… (Setups and technicals)[pay]
Friday’s close narrowly missed signaling to consider holding short. The afternoon’s 1276.00 bias-down target had been thoroughly tested, chipping away at its support. But impatient buyers kept up appearances and held off fresh lows

Until the cash session closed.

Literally.

The next 2 minutes probed fresh session lows down to 1274.25 before bouncing. Futures closed by sliding again to 1273.50. But 1276.00‘s prior low had not been probed yet 3 minutes before the cash session close, so its later plunge was too late to trigger my hold-short setup.

None of which prevents extending down sharply Sunday night and Monday. There are plenty of reasons for starting the week by gapping down. But there is also a vulnerability to massive, weekend coordinated intervention, which would have immediate effect. Temporarily, since bottoms don’t happen on Fridays, but massive.

Meanwhile, the next lower objective under 1290.00 is in-play at 1261.00. And it could be met very quickly, if it is going to be met at all. Two years since calling for a thousand-point plunge, is it time for a 2400-point down day, yet?

[/pay]What’s Next… (Outlook and opportunities)[pay]
Saturday Strategy Session is at 9:30am ET. Its link is found in the blog’s sidebar (not held in the chartroom). Bring stock requests, and a cushion to sit on.[/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.