Trading Plan for 5/1

If Tuesday’s opening dip were delayed until the afternoon… then the afternoon’s fresh high could have formed a meaningful top. Instead, Wednesday might need to give that pattern a try.

Pattern points… (Setups and technicals)[pay]
Monday night’s narrow sideways ranging eventually put in a lower low. Its recovery into Tuesday’s open was blind-sided by a much lower low. Their cumulative recovery into Tuesday afternoon barely touched Monday’s high.

The market just does not absorb big and repeated dips only to touch the origin of those drops. Its late recovery to fresh session highs was not surprising — only its delay.

A bigger question now is whether the ongoing higher lows have made a new rally leg likelier than just to retest prior highs. That potential would depend upon whether an accumulation pattern has formed. And none has. At least, no new one.

The pessimism of teasing the highs would have been more bullish (from a contrarian perspective) had Tuesday not ultimately rallied to close at its new high. None of which means a productive or durable downdraft is forming, only that a downdraft would be more credible for being productive and durable.

[/pay]What’s Next… (Outlook and opportunities)[pay]
Testing 1594.75 overnight would neutralize its attraction. Probing fresh highs with any complexity would leave in its place a “new Globex trend extreme” requiring retest intraday — not always the same day. In any case, there is no close under a prior low, nor is one threatened, so the trend has not reversed down.[/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.