Trading Plan for 6/4

[pay]Pattern notes.
It made sense Tuesday morning to consider price action through the lens of stretching buyers thinly. The perspective wouldn’t have made sense during the afternoon’s 20-point drop. A 14-point bounce ahead of the close makes the question valid again, especially after a last-minute dip retraced nearly half of the bounce.

A bounce to ESm 1375’00 before the last hour had already reached high enough to begin a drop to new afternoon lows. Lehman’s denial of earlier rumors converted that opportunity into a surge to new afternoon highs. A second pump reached higher still, and could have put 1385’00 into play if the second pump weren’t retraced entirely back down to its 1376’50 origin.

Indicators and Internals.
Internals weren’t very lopsided for a day that contained so much drama. There is only a minor obligation to reward Tuesday’s sellers for their relative productivity. Either the drama wasn’t meaningful, or else sellers left room for follow-through Wednesday.

Wednesday’s opening setup.
Several econ reports are due throughout Wednesday morning. A test of 1385’00 would be signaled back above 1380’00. Otherwise, under 1375’00 would signal that Tuesday afternoon’s first pump – like Lehman’s rumors – had been denied, and that new lows were in-play. After the 1363’50 bias-down target, the next downleg could reach 1342’00 or 1335’00 before pausing. [/pay]