Trading Plan for 5/15
[pay]Pattern notes.
A gap up, extending to higher highs, and the entire session spent in positive territory. What’s not positive about that? These three factors don’t reflect the afternoon’s 2-hour tumble that shaved off 14 points from the ESm 1421’50 high. The net 5-point gain pales in comparison.
The intraday pattern is reminiscent of a slide you’ve probably seen me use of Dec S&Ps (shown nearby) in my MACD & RSI Basic Skills tutorial. The early afternoon rejection of the gap up morning had stunning results – that was Oct 11 last year when the bull market peaked while retesting July’s prior highs. 
There are some differences from now, but not substantial:
October’s was a Thursday and this was a Wednesday, which I consider more similar to each other than if one were a Monday or Friday. October’s actually probed prior highs but this one nearly did. One standout might be that October’s reversal turned negative on the day and ended sharply lower. But that difference might be bullish, because Wednesday’s positive close left a lot of selling pressure on the table for Thursday’s open to absorb.
Indicators and Internals.
At Wednesday’s close MACD & RSI diverged positive only the 1-minute chart and made higher lows on the 3-minute chart. That’s exploitable by buyers, and I will judge them by how well they do. That was at 1408’00 and it didn’t prevent the Globex open’s dip to 1405’00, which has since recovered back to as high as 1408’00. Meanwhile 75% more NYSE up volume than down volume produced only 50% more advancing issues than decliners, obligating Thursday’s session to reward Wednesday’s sellers for their relative productivity.
Thursday’s opening setup.
Two econ reports are due one hour before the open, another 15 minutes before and then one more 30 minutes after. Bernanke begins speaking while the market is opening. There’s on shortage of catalysts. Wednesday’s close back under the open’s gap already indicates distribution, so a bounce is likely also to fail. The most bullish hope might be to initially drop and get selling out of the way. Then the most bullish move would be to recover back above Wednesday’s 1409’25 open. I will believe it when I see it, but there’s not much bullishness to believe otherwise.[/pay]