Trading Plan for 5/29
[pay]Pattern notes.
There was only problem with extending Wednesday afternoon’s decline. The drop originated during a no-bias environment, which usually requires its complete retracement. It wasn’t a deal-killer for sellers, not if they could extended the decline without delay. The open’s gap up didn’t matter so long as the decline resumed from there, and it did.
The decline’s resumption was productive, turning negative and retesting overnight lows. But the overnight lows held as support through 10:15-10:30 to rob sellers of their traction. The balance of the session retraced Wednesday’s decline to its origin.l
With no unfinished business above the market, another downleg is free to begin. The retracement’s target was met with 90 minutes remaining Thursday, which is sufficient time to reverse down. Resuming the decline Friday would compensate for the delay by starting aggressively and productively. Therefore, modest weakness would suggest the decline was not resuming.
By the same token, extending the Thursday’s recovery should begin by gapping up above 911’00 for buyers to gain traction. Simply firming would still have potential to test 914’50, but the probe would be vulnerable to reversing back down. In either case, maintaining a rally’s gains Friday would be very likely to extend higher into next week for a brief probe of new recovery highs. No rally, or not holding its gains, would keep the door wide open for sellers.
Indicators and Internals.
RSIs deteriorated into Thursday’s highs. The most obvious consequence was to dip 7 points. But the setup also denied the rally an extra 7 points that would have been in-play on any higher high.Regardless, there was no technical business left unfinished at the close.
Friday’s opportunities.
Several econ reports are due, two pre-open, and then Chicago PMI and Consumer Sentiment post-open. Their relevance is enhanced by their staggered timing at 9:45 and 9:55. Look out for the rope-a-dope. This being a Friday, the morning’s bias signal is likely to persist through the noon hour’s exit.
Reminder.
I will be available next Friday only through the opening hour-plus. After tracking the Employment Situation report’s reaction past the first hour, it is unlikely that I will be back on-line before the close (unless there is an otherwise dramatic move). [/pay]