Trading Plan for 6/5

If Tuesday’s low intended to launch a durable recovery… then it should have probed Monday’s low first. Instead, it stopped short of touching Monday’s low, which itself had stopped short of a nearby prior low. The impatient buying might produce another bounce, but only another temporary bounce.

Pattern points… (Setups and technicals)[pay]
Tuesday’s 1621.50 low was recovered up to 1635.75. But that was too close to Monday’s 1620.75 low not to eventually break lower. Back above 1638.00 through any relevant timing window — like through Wednesday’s open — would start to signal a bigger bounce underway first.

Friday’s Employment Situation report is an interesting wild card. As with a three-day weekend or expiration, price action at Wednesday’s close might offer some insight into sentiment ahead of the report. Getting a bigger bounce through Tuesday’s 1645.75 high out of the way could refuel sellers. Testing and recovering from 1620.00 could trap shorts.

Unless Wednesday’s open is gapping up above 1638.00, at least a retest of recent lows is likely, probably into the teens. Gapping up above 1638.00 would suggest a rally is underway into and out of the afternoon’s Beige Book release.

[/pay]What’s Next… (Outlook and opportunities)[pay]
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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.