Trading Plan for 6/9

[pay]Pattern notes.
Friday morning’s pattern left no alternative but for new lows in the afternoon, and for the session to end trending down. That much we knew, and the rest was just a matter of haggling over price. My target was ESm 1362’50, whose touch produced a small bounce with less than 15 minutes remaining in the cash session.

I had said a close under 1360’50 might be worth considering whether to hold short over the weekend, although my own preference is always to consider re-entering Sunday night instead. Sellers took seriously their requirement to trend down into the session’s end, ranging between 1360’50 as resistance and 1359’00 as support after the cash session close.

Gapping up above 1360’50 Sunday night without trading any lower than that would have potential for a steep corrective bounce up to 1366’00-1368’00 (represented by two notches in the nearby chart) before resuming the decline. Otherwise, any lower low Sunday night would be a “new Globex trend extreme” requiring a retest during regular trading hours. The “Friday Factor” says we’ll see the latter scenario, because the opening and closing 15 minutes each trended down, which makes Monday’s opening 15 minutes likely to replicate.

Indicators and Internals.
MACD & RSI began diverging positively into the last-minute probing of new lows under 1359’00. That was mostly and most obvious on the 1-minute chart and not until after the cash session close, so it certainly isn’t predictive. But it would help to justify a firm open as being at least temporarily sustainable.

Monday’s opening setup.
The earlier chart depicts the S&Ps longer-term trend reversal underway, putting into perspective the new ground covered Friday. This nearby chart shows only the past two weeks. Notice how prior lows around 1370’00 seem so far out of reach. A gap above them wouldn’t be permanent, but it would triggered only by developments strong enough to create several days worth of optimism. Otherwise, an econ report is due at 10:00 Monday morning, and the trend in-play after that could persist into Wednesday’s open.[/pay]