Trading Plan for 5/28
[pay]Pattern notes.
The afternoon’s test of this morning’s high could have closed higher to form a “Pivot Reversal” setup that would have pointed higher for 1-3 days. Or the higher high could have been rejected by a close back under the morning’s high to rob buyers of their traction and doom to failure the next rally attempt. In either case the required retest at Tuesday’s ESm 1370’50 pre-open lows would be the minimum target.
In fact, S&Ps did probe a new session high momentarily during the session’s last hour. The new session proved to be part of the last hour’s consolidation, and the last hour’s consolidation proved to be no more than a retest of the morning’s high. The retest didn’t break higher and neither was it rejected. A higher high can’t be ruled out, but its rejection would be credible.
Indicators and Internals.
The ratio between NYSE up volume to down volume was weaker than the ratio of advancing and declining shares it produced. This would be a positive divergence if S&Ps had declined, even with Tuesday’s depressed volume; instead it’s a non-event. MACD & RSI diverged negatively among 1-minute and 3-minute intervals into the last half-hour’s highs, as they had done on the highs one hour earlier and 6 points lower – the technicals aren’t a sell signal, but they won’t inhibit the decline from trying to resume.
Wednesday’s opening setup.
Everything about Tuesday’s session characterizes it as a correction. Exiting Wednesday’s 10:15 bias under 1381’50 would be credible for resuming the decline. Meanwhile there is room to fill the gap back up to Thursday’s 1393’00 close first. Four econ reports due pre-open could incite volatility capable of testing both parameters. A more substantial rally won’t be signaled without closing above 1396’25.[/pay]