Trading Plan for 5/16

Tuesday’s low was 20 points… under the overnight high. It could have been much deeper. But each intraday probe into negative territory was recovered until the afternoon bias environment began lapsing. And that kept its loss mostly to single digits. The second consecutive session of new trend lows had little else holding it up.

Pattern points… (Setups and technicals)[pay]
Tuesday was also the second consecutive close under last week’s range, confirming Monday’s breakout. At least a third lower close is required, not necessarily consecutive on Wednesday.

There was nothing bullish about Tuesday’s last hour ranging under 1331.00, under all prior lows. But this did deny us the luxury of a “hold-short through the close” signal. There is still a likelihood of extending down, when the confirmation session breaks late to new lows.

More so, extending down overnight would be likely to accelerate into Wednesday morning. Whether it can be called “capitulation,” or the other “c” word, the “hope springs eternal” rallies have probably ended.

If any more optimism needs to run its course, then it should be only temporary. Unless Wednesday’s open were back above Tuesday afternoon’s 1338.00-1340.00 highs, the trend remains down, next targeting 1290.00.

[/pay]What’s Next… (Outlook and opportunities)[pay]
FOMC Minutes are due in the afternoon. Any stress ahead of its release should help to accelerate any trending in the morning. [/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.