Trading Plan for 5/24

[pay]Pattern notes.
Friday’s last-minute dive was a great reward for those who stuck around. The false break upward only touched the 896’00-898’00 target’s lower-end, but it did the job of a rubber band nevertheless. Weak-handed buyers that would still bother buying were suddenly reminded how thin they were, and their frantic selling kick-started 12-point dive through the close.

The dive fulfilled its likeliest objective by testing 884’00, but stopped 2 points short of its potential to probe new session lows. That margin would be optimistic, except the dive was already very productive before it ran out of time. It’s irrelevant anyway, because the session already reeked of optimism for five hours of treading water intraday.

“Reeked,” as in past-tense. The last-minute dive undid the earlier ineffectual optimism. It also avoided closing under a prior low. A gap up above Friday morning’s 894’50 high would put sellers back on defense. Buying might only fill the gap back to Wednesday’s close up to 901’50, or perhaps probe Tuesday and Wednesday’s “higher prior lows” around 908’00. But anything that doesn’t close above 915’00 is probably all about refueling sellers.

Sellers could already be making serious progress under 880’00 Sunday night. Apart from a “lower prior high” around 871’00 and the fleeting obligatory support of prior lows, there’s not much untested left in this 11-week old rally.

Indicators and Internals.
Both 1-minute and 3-minute RSIs were oversold into Friday’s last-minute low, and a bounce from lower lows didn’t recover. MACDs also deteriorated along with price. So, there is no signal for any kind of opening bounce.

Sunday night’s opportunities.
The focus seems to be the U.S. credit rating, still highly rated, as was Fannie Mae at one time. The Dollar is the highest profile barometer of sentiment on this topic, and it satisfied two long-standing targets last week. Those targets could extend to sharply lower new lows if no recovery is underway by Monday night. The news and rhetoric both have been reaching for a crescendo, with Sunday news shows also firing away. Tuesday’s U.S. open could have the clearest picture available to it, and that might not be a good thing.

S C H E D U L E.
I will be available Sunday night and Monday morning. A new Trading Plan and all other coverage will be updated for Monday night’s Globex open. The normal 8:55am Morning Market Tour will resume Tuesday.[/pay]