Trading Plan for 6/7

[pay]About that close (How the prior session ended)
Friday’s 1059.25 low printed during the last hour, as is appropriate for a session-long decline. It was the session’s first low not accompanied by oversold RSIs. A bounce into the futures close tested 1067.50, shaving the day’s loss from 44.25 points to 37.50. The Dow’s 323-point loss was itself a 42-point improvement off the low.

Pattern points (And technical influences)
The last-minute bounce was only noise, since the bounce peaked below prior highs. The bounce did recover back above prior lows, the only factor that might have argued against holding short through the close. It could still be considered, but the percentages weren’t their most optimal as might be desirable for being exposed through a weekend’s illiquidity.

Two of the four pieces of unfinished business below were neutralized during Friday’s decline – the gaps back down to Tuesday’s 1071.00 close, and to the prior Wednesday’s 1061.00 close. Two more pieces remain outstanding from the prior Tuesday’s 1046.00 cash session open, and its 1036.75 pre-open low whose RSIs were oversold.

Wednesday’s 1056.00 post-open low might fight back if tested. But its support should be only obligatory and temporary. Having delayed the retest below to probe the range’s upper-end, the other unfinished business below is also likely to be retested by the same downleg. And also thanks to the same detour, the retests of unfinished business below is likely to be more than just a retest.

Bottom line (My underlying premise)
Last month’s low held a retest of February’s prior low. Its eventual break is a formality – its timing is less assured. This area has fought back previously, and may fight back again. Friday’s drop overcame a similar challenge at 1070.00. But then, what better opportunity is there to finally break under relevant support, other than the Friday afternoon of a session-long decline? Well, the Monday following a session-long decline. So, this week either starts out ugly, or it gets pretty, pretty fast.[/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.