Trading Plan for 5/14

If Monday morning’s probe of fresh highs is repeated Tuesday… then either a breakout attempt is underway, or else the rubber band is about to snap back down sharply. Unlike the pattern since Wednesday morning, the sideways ranging is much less an option.

Pattern points… (Setups and technicals)[pay]
Friday’s late surge above the pivotal 1627.25 level was probably weak-handed. Monday’s open proved it. The only way to extend higher was by expending all available near-term selling pressure down to 1623.25 — early, through the 10:15 bias timing window, before counter-trend  buying pressure would become too inhibited.

Similar to Friday, Monday’s surge to its 1633.25 objective was probably also weak-handed. Monday afternoon proved it, as the balance of the session ranged sideways.

So, the consolidation since last Wednesday wasn’t ready to roll over, and still isn’t. But neither was it ready to launch a rally, and still hasn’t. Thursday and Friday’s impatient buying at its lows didn’t prevent probing a fresh high. It only prevented a fresh high from extending.

[/pay]What’s Next… (Outlook and opportunities)[pay]
Monday ended at 1631.00 resistance. Its recovery could have put into play 1640.00. Not reacting down from it early Tuesday could just as well extend higher to 1640.00, anyway. Otherwise, any new downside Tuesday must either quickly reject a fresh high, or else extend down under 1627.25.[/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.