Trading Plan for 5/18

Another overnight bounce refueled sellers… to produce yet another new trend extreme. This one fulfilled its required intraday retest without much delay — only another brief refueling bounce. Bounces are getting shallower, and briefer. Have buyers become more patient, or broke?

Pattern points… (Setups and technicals)[pay]
I do not doubt the street’s desire to have priced Facebook into a rally. So, Thursday’s sharp decline to new lows should be considered evidence that the market cannot be manipulated.

I don’t doubt that the deal’s underwriters might have reduced their selling pressure. This might have had the same effect of making price rise. But this would presume that nothing else would encourage selling. Apparently, something did.

Meanwhile, Wednesday’s Expiration Indicator was actively bearish. It indicated that big money intends to distribute both into and out of the weekend. Of course, it is possible that the substantial decline since triggering the signal may have accelerated that selling pressure forward already, leaving little selling pressure by Friday afternoon. So, be aware that window could invert. Look out below if it does not.

Other than gapping up Friday above 1317.00 resistance, 1298.00 support is probably the next opportunity to delay testing this leg’s 1290.00 target, by inserting a counter-trend bounce. It was attacked to within 3 points after Thursday’s close. Regardless, I do still expect 1290.00‘s eventual test, and its eventual break, next targeting 1260.00-1261.00.

[/pay]What’s Next… (Outlook and opportunities)[pay]
Being a Friday — expiration, no less — the morning’s bias signal is likely to persist through the noon hour. As difficult as it is to stop early trending, it is also difficult to start it. [/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.