Trading Plan for 5/16

If Thursday’s open isn’t obviously weak… then a bullish slant into and out of the weekend would become much likelier — even if Thursday were to weaken later, or not too deeply.

Pattern points… (Setups and technicals)[pay]
The timing to reject Tuesday’s rally by Wednesday’s close took on different possibilities as the rally evolved. For example, Wednesday’s gap down could have formed a Pivot Reversal by rejecting a fresh trend high intraday to close back under the morning’s lows. That didn’t happen.

Another opportunity to reject Tuesday’s rally came with Wednesday afternoon’s dip back to Tuesday’s 1648.75 high. This created a new element, whose reaction back up to 1654.50 allowed that any close inside that leg would be noise around Tuesday’s high. Its upper-end was probed, but the close fell back to 1654.50 in the final minute.

Ultimately, Tuesday’s rally leg wasn’t rejected. But it was only fulfilled, by closing at its 1654.50 target. The clear opportunity to close above it, and to put into play 1671.75, was rejected.

[/pay]What’s Next… (Outlook and opportunities)[pay]
That’s similar to how Wednesday morning’s no-bias trending undermined the afternoon’s bias-up signal. It leaves the door open for Thursday’s open to serve by proxy where Wednesday’s close failed. Trending down immediately under 1644.50 and 1642.75 would be an obvious start. Just trending down immediately under 1651.00 and 1648.50 would threaten the bullish WedEx indicator. Otherwise, any later or shallower intraday weakness would likely trend up into and out of the weekend to test 1671.75.[/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.