Trading Plan for 5/11

A second session of ignoring Friday’s bearish setup… followed by a third Wednesday, and pretty soon there’s a real rally underway. Extending much higher intraday – extending almost any bit higher at all through the close – would suggest a bigger rally underway.[pay]

Pattern points… (Setups and technicals)
Tuesday’s morning and afternoon bias environments combined to form a Complex Ascending Triangle. It tends to produce a final upleg, before reversing down sharply. The pattern’s 1351.00 breakout met its minimum 61.8% objective at 1353.50 while RSIs diverged negatively.

But timing saved the day – fresh highs as the last hour began are difficult to reverse. In fact, the next higher 161.8% target at 1356.00 was met. And that was throughout the 3:10-3:20 window, timing that further marginalized sellers.

A pullback into the close was still in the process of testing 1353.50. Without closing decisively above it, no higher target is necessarily in-play. And no prior pullback refueled buyers. Extending higher uninterrupted to meet it would be extra vulnerable to reversing down sharply.

What’s Next… (Outlook and opportunities)
The next higher target is 1358.75, but higher highs are not required. They’re likely, nonetheless, so long as 1351.00-1351.75 holds as support through any relevant timing window. [/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.