Trading Plan for 5/27

[pay]Pattern notes.
Tuesday morning’s rally was the only alternative if sellers weren’t immediately productive, because that would have left a void. The market detests voids, and it would have sucked in buyers to fill it. In fact, it did. Similar principles were at work Tuesday afternoon, but this time there was no void. The technical negative divergence produced only a modest pullback, but it was still a pullback. No void was left open for buyers to fill.

So it’s interesting that the cash session’s last-minute dip probed the morning’s 905’50 highs as support. The bounce into the close was a squeeze much like Monday morning’s Globex close, and it also held relevant resistance at the 909’00 bias-up target. Slightly higher highs printed after the cash session close, but no new ground was covered.

There is room up to 914’25 before considering buyers are gaining any new traction. That wouldn’t be considered otherwise, because Tuesday’s mid-day running correction suggests its next trending attempt should be the upleg’s last leg up. So 911’00 shouldn’t be exceeded through any relevant timing window.

Indicators and Internals.
There was no unfinished technical objective at Tuesday’s close. The early-afternoon negative divergence at 909’00 finally produced a meaningful pullback to nearly 903’00 after first touching 911’00. That said, oversold was never reached during the pullback. Since the last-minute bounce peaked under 909’00, the 903’00 low’s retest is possible. And since oversold never printed, the low’s retest cannot produce a positive divergence.

Wednesday’s opportunities.
The econ calendar isn’t empty, but it’s not very high-profile. Existing Home Sales might not confirm the extreme readings of Tuesday’s Case Shiller report. The EIA Petroleum Status report may be delayed one day. Generally the market should react to its own buying and selling interests, and less to external news. There is no specific required reaction to opening flat, weak, or failing an opening bounce. But a gap up above 914’25 would put into play a test of last week’s 923’50 high, whose eventual break higher would target new highs above 940’00. [/pay]