Trading Plan for 5/24

Hurry up! And wait… Sunday night’s slide to new lows didn’t extend intraday. But neither was it recovered, making lower lows likely. [pay]

Pattern points… (Setups and technicals)
Monday’s choppiness was unusual, and the morning was filled with several false starts at resuming the decline. Ultimately, a 9-point mid-day rally stretched the rubber band tightly. The afternoon’s probes above 1319.00 would have snapped back down harder at the open, but the snap back down is still underway at 1314.00.

Although sellers didn’t attract any new sponsorship to extend Sunday night’s decline, neither did buyers. And since no relevant support’s test reacted up above a relevant resistance (like 1319.00), the burden of proof is on buyers.

RSIs never probed oversold territory, so sellers never broke a sweat. What few overbought probes there were eventually diverged negatively, leaving no unfinished business above.

Extending the decline Tuesday down to 1307.00 or to 1299.00 could complete the decline’s next leg. That’s big support with a three-day holiday weekend impending. Bouncing first would only refuel sellers for a much bigger slide, which would be signaled anyway under 1299.00.

What’s Next… (Outlook and opportunities)
1316.75 was the last productive bounce limit of Monday afternoon’s 6-point slide. It became productive upon testing 1314.00. There is no bearish reason for revisiting 1316.75. The decline would require a new distribution pattern to form, and to trigger.

Meanwhile, revisiting 1316.75 would be exposed to buyers gaining traction for a bigger bounce. A bounce has room up to the 1319.00 area.  Gapping up any higher would trigger a “session-long rally” setup.

Otherwise, the decline’s momentum remains intact. Breaking under 1312.00-1313.00 through any relevant timing window could extend down to 1299.00 before the close.[/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.