Trading Plan for 5/15

Another “hope springs eternal” bounce… resolved down nonetheless Monday. Opening price action had offered three separate elements confirming sellers were the strong hands. That didn’t prevent a corrective bounce, but it meant its sponsorship was weak hands. In fact, post-close action has already fulfilled the 1332.00 target to within a tick…

Pattern points… (Setups and technicals)[pay]
1332.00 remained outstanding at Monday’s close, and the close was under prior lows. So, holding short through the close was somewhat compelling. But there is still no greater likelihood of extending down below it.

Testing 1332.00 forcibly Monday morning would have been vulnerable to extending down, since initial trending during that first window tends to attract sponsorship. Testing 1332.00 at all late Monday afternoon would have been vulnerable to extending down, since that is a difficult window to attract counter-trend sponsorship.

But now testing 1332.00 overnight or early Tuesday could launch sizable corrective bounce back into last week’s range. Already, its test right after Monday’s close has reacted up 3 points. And it is not yet considered a “new Globex trend extreme” that would require being tested intraday. Recovering 1346.00 Tuesday could start to trigger a bigger rally.

[/pay]What’s Next… (Outlook and opportunities)[pay]
Regardless, Monday was a breakout from last week’s range. A second consecutive lower close Tuesday would confirm. While only one more lower close would fulfill the setup’s minimum objective, we would assume that 1290.00 was also in-play. Not confirming the breakout, after testing 1332.00, could form a bottom.[/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.