Trading Plan for 5/29

If this week wanted to duplicate last Wednesday’s intraday reversal… then Tuesday’s reaction down could not have offered a better opportunity. So, unless Tuesday’s reaction down were the first half of a two-day setup, another strong morning rally could soon be underway.

Pattern points… (Setups and technicals)[pay]
Despite closing in positive territory, buyers only prevented sellers from regaining traction Tuesday. The afternoon’s bounce out of the bias environment’s 1653.50 lows never got aggressive while extending up to 1661.00. Room up to 1662.25 was hardly attacked. A sell signal at 1659.00 was avoided until too late to trigger.

Price did dip, back to within 1 tick of the bias environment’s 1653.50 lows. An hour-long rally was retraced in half the time.

But the late drop was no more relevant than the bounce preceding it. Each originated too late to gain traction for its effort. And the last effort to waste its time was the post-close drop.

This doesn’t preclude sellers from being immediately productive at Wednesday’s open — Tuesday’s late drop did not probe a fresh low and recover it, so sellers did not extend themselves. By the same token, if Tuesday’s 20-point intraday drop doesn’t attract strong selling sponsorship early Wednesday, then at least a retest of Tuesday’s high becomes likely.

[/pay]What’s Next… (Outlook and opportunities)[pay]
The only unfinished business left outstanding is below at the gap back to Friday’s 1648.00 cash session close. Its test would be considered bearish if the timing window testing it failed to recover above 1651.00. Meanwhile, if that unfinished business below couldn’t attract sellers early Wednesday — in addition to Tuesday’s deep retracement — then this week could still print new highs. [/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.