Trading Plan for 6/7

Friday’s drop didn’t immediately extend down… and that only made Monday a bigger surprise. Intraday starts and stops defined trending down to the next target. But that suggests this is not a durable bottom, regardless of the immediate reaction. [pay]

Pattern points… (Setups and technicals)
1284.50 could have been a hold-short-through the close signal, but the cash sesion closed there. It was probed a little later, and could extend down overnight, but the bounce potential is no worse since 1284.50 held as support through the cash session close.

1286.25 was the next major target under 1299.00. Monday’s last hour was a 5-point swing around 1286.25. So, 1286.25 wasn’t really broken, despite closing under it. Relative to the range’s measurements, closing under 1284.25 would have been far enough under 1286.25 to qualify as a break.

A bounce has room up to 1295.00 without the downleg losing traction. Closing above 1299.00 would signal a new rally leg underway, confirmed above 1303.00. Otherwise, an air pocket lies just under 1280.00, whose break would next target 1256.00 and 1251.00. (That’s 12-5-6)

What’s Next… (Outlook and opportunities)
This is the decline’s third instance of meeting a major target at the close. Closing under a target would signal the downleg was extending. But closing AT the target does NOT signal a rally is beginning. The pattern remains vulnerable to extending down sharply. [/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.