Trading Plan for 5/2

Tuesday afternoon’s decline wasn’t… on the same page as the morning’s rally. Not unless the decline was all about refueling buyers. The pullback did reach the refueling point, but hasn’t yet reacted up from it.

Pattern points… (Setups and technicals)[pay]
Tuesday’s 1411.75 high left outstanding overbought 1-minute and 3-minute RSIs that require a retest. There is no timing requirement since Tuesday’s close was back under the prior consolidation’s lows (the morning’s last Rising Wedge from 1405.50-1408.50).

Tuesday afternoon’s reversal from attacking 1412.00, and its break under 1406.50, targeted 1401.00. It was the pre-close low. Probing it ahead of the close could have suggested holding short through the close. That was not signaled.

Recall the potentially bearish pattern I described in Tuesday morning’s post. It described a plateau reversing down to 1401.00. Any lower would retrace all of Tuesday’s gains from 1391.00. Meanwhile, 1401.00 could launch another rally leg.

So far, 1401.00 has held. It was probed by 1 point down to 1400.00, but not until after the cash session close. The attraction back up to the high’s overbought RSIs could help 1401.00 to launch another rally leg.

[/pay]What’s Next… (Outlook and opportunities)[pay]
Back above 1404.00-1404.50 would suggest the recovery was underway already. Otherwise, failing to hold 1401.00 support through Wednesday’s open would target the 1391.25 origin of Tuesday’s rally. And probably resume the decline. High-profile pre-open econ reports should trigger a reaction.[/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.