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Trading Plan for Friday, June 19

This has been one of the slowest trading weeks in the last couple of months and the trading plans really haven’t amounted to much this week. We are stuck in a trading range and the only trades available in this environment are very short scalp trades. Unfortunately, there isn’t really much that can be done until this market breaks out of this range and shows some kind of trend. Trying to trade a range like this is just going to get most traders chopped up with nothing to show but a bunch of wasted commissions and stopped out trades.


I don’t see much developing today either. I’d guess we finish the week with another low range day that isn’t really tradable, but surprises do occur in this market. It looks like SPY is going to gap up above Thursday’s high, but it probably just traps some eager bulls and then drifts right back into yesterday’s range. The only trade that might possibly present is a gap up and a test of Thursday’s highs, which holds, and then a move up to finish the week with a move toward 316 and possibly a move into the gap to 319. I’d be willing to try a long on a test of Thursday’s high from above with a stop of no more than 50 cents or Thursday’s close of 311.74.


There’s probably not much to do on the short side Friday because there just aren’t any sellers out there. The lack of sellers is just causing a natural drift upward. The market will keep auctioning up until it finds supply. I’d guess the first supply comes in around 316 and then 319. They are pretty much pushing this market wherever they want on the upside because there’s nobody there to stop the move. There’s no reason for the buyers to stop the drift, so the short side is probably not in play today. The only way I’d get involved short today is if the SPY volume spiked abnormally high and took out Thursday’s lows around 309.50. Otherwise, we continue to drift sideways to up.


As for energy, there’s just nothing there right now. Thursday was a solid green day and it looks like there’s a big gap up developing this morning, but I have no desire to chase energy names going into the weekend. I’m guessing we get an XLE gap up to around 41 and then a drift back down to Thursday’s high of 40.61 for a test. If the test holds, price likely bounces to the 41-41.50 area. If the test of Thursday’s high fails, then it likely drifts sideways between 39.50 and 40.50 for the rest of the day. I don’t see a situation where this takes out 39.50 for any reason since there just aren’t any sellers out there.


The only real play for me today will be very short scalps in IWM. It’s sitting 143.75 right now but I think it probably drifts back down and retests the 142.75-143 area. This gap up breaks the trendline that I posted Thursday, but premarket breaks aren’t the most dependable. Price closed well below that trendline Thursday, so it probably comes back down to close this overnight gap in this situation. Thursday’s 141.79 close was right on the week’s VWAP, which also suggests that the gap closes. I’d also keep an eye on last week’s VWAP of 143.39.


As for individual energy names, I’m not interested in chasing any of these on a gap up. There’s just too much danger of the market failing and falling back into Thursday’s range. Sometimes the environment just isn’t conducive to good trading and the better plan is to be patient and wait for things to develop.


Unfortunately, today looks like a wasted trading day and I’ll probably be shutting it down at lunch. There’s better things to do than sit and stare at a market that is consolidating. But this market can surprise, so don’t get too comfortable. Good luck.


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