Trading Plan for 5/29
If Wednesday’s second test of resistance couldn’t break higher… then why should a third test Thursday have any better chance? Actually, it’s chances would be worse. A pullback without delay would be more bullish.
Pattern points… (Setups and technicals)[pay]
Wednesday’s close was at 1907.50. This was the target for retesting the two-week old high. The two-week old high’s retest did extend to 1907.50, on Tuesday, and every intraday leg overlapped it. Closing right at 1907.50 is irrelevant and coincidental, but it makes a neat story. It is only relevant that the 1907.50 target was being overlapped for a second consecutive session.
That undermines the upside momentum. But it’s not a sell signal.
Having held 1907.50 through two consecutive sessions, the vulnerability to a pullback is higher. That pullback would likely target 1897.50.
By the same token, having held 1907.50 through two consecutive sessions, extending higher prior to a pullback would be vulnerable to reversing down sharply. Picture Wyle E. Coyote chasing Bugs Bunny off of a cliff, and then suddenly noticing his spinning legs doing nothing while he slowly realizes there is no ground under them.
Now, picture that animated suspension after rallying intraday to test Tuesday’s 1914.00 “new Globex trend extreme.” There is no time frame required to retest it, and its retest need not reverse down. We won’t be skeptical of being able to extend higher, just suspicious that it won’t.
[/pay]What’s Next… (Outlook and opportunities)[pay]
There is one path to retesting the “new Globex trend extreme” that might escape the vulnerability to reversing down. That would be to gap up above Wednesday’s 1912.50 high. That high printed during the afternoon’s bias environment, and Wednesday’s closing action trended down. So, gapping up to and through 1912.50 would trigger a session-long rally setup. It would be at risk of inverting back down, but otherwise may be the only opportunity to resume the rally.[/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.