Trading Plan for 5/14

[pay]Pattern notes.
Just failing to close above the ESm 1406’00 area Tuesday’s indicated that buyers didn’t gain traction. The cash session close just under 1403’50 almost indicated that sellers were gaining traction in their place, but under 1399’00 would have sent a clearer message. S&Ps firmed back to 1405’00 after the cash session close, which I regard as being too little and too late to indicate actual strength.

That said, a rally attempt is still possible at Wednesday’s open. I suspect that Tuesday afternoon’s false break offered a glimpse of how that would resolve. The potential for another rally attempt relies almost exclusively on Tuesday’s pre-open high at 1410’75 that wants to be retested. Gapping or spiking down through 1397’00-1399’00 would shift the balance to sellers, at least to retrace Monday morning’s no-bias rally back to its 1387’00 origin.

Indicators and Internals.
MACD& RSI were mixed to higher into Tuesday afternoon’s false breakout, after having been dull and listless since mid-morning. Internal spreads were evenly weighted at 12%, both for NYSE up volume vs. down volume, and also for advancing issues vs. decliners. Wednesday’s market isn’t obligated to reward either buyers or sellers for any outperformance.

Wednesday’s opening setup.
CPI isn’t the only econ report due but it is the highest profile. EIA Petroleum Status an hour after the open will be of interest with Crude Oil trying desperately to maintain a break above Friday’s 126’20 high (click here for an update in Crude’s comments section). Price action will very soon become heavily influenced by position jockeying ahead of Friday’s expiration, so trending probably can’t be delayed past Wednesday’s close unless it will be delayed through the weekend.[/pay]