Trading Plan for 5/13
[pay]Pattern notes.
Monday’s path of least resistance (yes, pun intended) was up. That didn’t prevent the open from dipping to test the bias-down signal. And two consecutive no-bias signals didn’t prevent S&Ps from extending to higher highs. Optimism’s reign was so supreme that sellers couldn’t regain traction despite the bias-up target being met, and not being improved through the session’s last hour.
It is difficult to reverse an uptrending day that enters the last hour above noon hour highs. It’s also difficult to extend higher during that last hour as we saw. And generally it is difficult to avoid reversing down the next day. We’ll see. Monday’s last update here noted there was room up to the ESm 1406’00 area just as noise – the Globex session high at 1406’50 reacted with a 3-point drop and no net gain as of midnight.
Let’s be clear: The bias-up signal puts into play a modestly higher target, but high enough to start a domino effect that could probe new highs above 1427’00. 
Timing is critical to maintain the near-term bearish case.
Indicators and Internals.
The nearby 3-minute chart depicts Monday’s regular session, and shows MACD & RSI diverging negatively into the last hour’s highs. That’s not a sell signal, but it does indicate that a higher high would be launched from a base to weak to sustain it. Generally the only way to overcome that would be to gap up and not look back while extending higher.
Tuesday’s opening setup.
Several econ reports are due pre-open, and another 30 minutes after the open. The nearby chart identifies the ESm 1406’50 overnight high as of midnight, and its possible resolutions. Almost any higher would trigger the morning’s bias-up targeting 1410’50 and possibly 1414’25.
Otherwise, failing to improve would allow retracing one or both of the no-bias rallies: either a temporary pullback to 1397’00 where the afternoon’s no-bias was signaled, or a break under 1394’00 that extends down to 1387’00 where the market stood when signaling the morning’s no-bias. Any lower than that would put into play a retest of Friday’s pre-open low under 1382’00.[/pay]