Trading Plan for 5/13

[pay]Pattern notes.
Sellers couldn’t just make a splash Tuesday if they were regaining control. They needed to produce a tidal wave. The open’s gap up wasn’t exactly in that spirit. The opening strength’s rejection, and extending it down into last Monday’s range, that was the spirit. But it was still just a splash – a big splash, but only a splash.

Sellers weren’t making their move, but the market’s new sponsorship isn’t buyers. Sellers still accomplished almost three things. The most obvious is the chipping away at support. There really aren’t any “lower prior highs” yet to be tested as support, which could otherwise mean the difference between buy and sell. Tuesday’s bounce began upon touching last Tuesday’s prior low, obligatory support at best.

So the sellers’ second accomplishment was to neutralize another support level from stopping a later sell-off. None of which matters without that later sell-off, which was nearly their third accomplishment: triggering a sell-off. Nearly.

A close beyond the 906’00-908’00 range would have left Monday’s equilibrium behind. Despite surging to 912’25, the last half-hour fell back down to 903’75. A last-minute bounce recovered 906’00 to avoid triggering a sell signal, and held 908’00 as resistance. Buyers didn’t gain anything other than living to fight another day.

Indicators and Internals.
The technical non-confirmations at the afternoon’s peak were essentially fulfilled by the 8-point drop that followed. RSIs never got oversold at the last-minute drop’s low, so there was no positive divergence when futures blipped down momentarily.

Wednesday’s opportunities.
Of several econ reports due in the morning, none is very high-profile. Intel (INTC) made some favorable news before Tuesday night’s Globex open. This might have been bullish if the futures post-close price action had developed before the cash session close. Its optimism could still influence near-term price action, if only by off-setting selling pressure. Meanwhile there remains potential for attacking Friday’s highs. Sellers shouldn’t yet pose any significant threat without clearly breaking under 898’00. [/pay]