Trading Plan for 5/10

The decline resumed after… Tuesday’s close, and extended sharply lower through the morning. Although it didn’t extend down intraday, the decline has not been invalidated. But it is running out of time to resume trending before the weekend’s impending illiquidity encourages shorts to cover.

Pattern points… (Setups and technicals)[pay]
At the risk of being redundant… Yet again, buyers failed to gain traction for their efforts Wednesday. The morning’s dive to test 1339.50 launched a rally to attack 1357.00. Its pullback to 1348.50 was recovered to almost 1361.00 in the afternoon. But the close fell back under the morning’s high. The last round of buyers was weak hands.

Not that sellers were any stronger. They did succeed in keeping the session in negative territory, but without resuming the decline. The session’s last three timing windows repeatedly traded back to and through 1353.00-1357.00. The ranging was supported by 1349.75. Closing under it would have put into play 1332.00. But it was only touched just after the cash session close.

Nothing is preventing the drop from resuming Thursday morning. But only a gap up above 1360.00 would be credible for extending higher intraday.

[/pay]What’s Next… (Outlook and opportunities)[pay]
Interesting econ reports, ranging at trend lows, impending illiquidity… Thursday should be fun. But it wouldn’t be surprising for a relatively narrow range to develop, especially if a no-bias were signaled.[/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.