Trading Plan for 5/20
[pay]Pattern notes.
It’s (still) alive! That is, the bearish scenario is still alive. That would be the bearish scenario likely to resume at Friday’s opening tick – and it did, dropping S&Ps 13 points through the morning. Friday afternoon’s recovery retraced it, and Monday’s rally through early afternoon extended it.
The bearish scenario seemed all but dead. Okay, it seemed to be dead, but then S&Ps dropped 21 points all the way back down to last Wednesday’s high. One-third of the drop was retraced by a bounce into Monday’s close. Since Friday’s pre-open prior highs did hold as resistance, the last minute bounce didn’t negate the drop. But Tuesday’s open can’t delay resuming the decline.
On another note, the nearby chart depicts May’s recovery attempts. Just before the first of these probes began, I had described here the potential for a 
brief, false breakout targeting either ESm 1425’00 or 1446’00. Any of the subsequent attempts seemed to fit the template, but the best attempt at resuming the decline did not. Monday’s failed surge is the template’s next chance to form.
Indicators and Internals.
The chart also depicts MACD & RSI diverging negatively at Monday’s highs. Whether or not the afternoon’s drop fulfilled the setup, technicals were mixed at the low, such as on the 9-minute chart shown here. MACD & RSI made higher lows on the 3-minute chart, but RSI’s higher low was still in oversold territory and indicating at least a retest.
Tuesday’s opening setup.
Half of Monday’s last-minute 8-point bounce happened after the cash session close. The Globex open gapped down only 2 points but that will need to keep sliding if the decline intends to resume at Tuesday’s open. Three of the pre-open econ reports regard retail sales, and one of the other two is 30 minutes after the open. There’s not much excuse – if any – for delaying any trending in either direction.[/pay]