Trading Plan for 5/24

Will the real sponsorship please stand up?… Tuesday afternoon’s drop had found new sponsorship. Wednesday afternoon’s rally suggested that Tuesday’s drop was weak hands, after all. Perhaps they’re both weak into the weekend…

Pattern points… (Setups and technicals)[pay]
Tuesday’s last-minute recovery back above 1312.50 had suggested the afternoon’s sellers were weak hands. Wednesday’s recovery back above 1312.50 suggests the same of the morning’s sellers. The first recovery obviously doesn’t prevent another round of intraday selling, but there is no bullish reason for another dip.

So, Wednesday’s close ahead of a 3-day weekend does not offer an overtly bullish signal, essentially since no prior low was tested. Only relevant support was tested, twice, and held. If that was artificial selling pressure — selling that was accelerated or fabricated to avoid the holiday weekend’s impending illiquidity — then it should be finished.

Any further selling Thursday would suggest declining into the weekend. And as with Wednesday’s open, extending higher would be likely to begin by gapping up Thursday.

[/pay]What’s Next… (Outlook and opportunities)[pay]
To reiterate: Wednesday’s 3-day weekend indicator was neither bearish nor bullish. There is a basis for being bullish, not only for having recovered twice back above 1312.15, but for completing that sequence through Wednesday’s close. Rejecting this recovery immediately at Thursday’s open would still be bearish.[/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.