Trading Plan for 5/30

If sellers regained traction Wednesday… then does that preclude Thursday from trying to bounce before resuming the decline? No, and it’s almost required — except that a bounce might gain traction for something far bigger if not rejected quickly.

Pattern points… (Setups and technicals)[pay]
My warning before Wednesday’s gap down was that probing back into Thursday-Friday’s range wasn’t itself bearish. It could have been spit back out above 1651.00-1653.00 through a relevant timing window and become bullish. The open’s reaction up held 1651.00, and the afternoon’s bounce held 1653.00.

So far, not bullish. The principle is similar to Friday’s gap down and opening pressure that failed to extend down. Its consequence was a 37-point rally. without extending down. That was a one-day setup. It can be a two-day setup, too, if a rally Thursday morning were immediately productive. Its minimum objective would be 1665.00 and then a retest of 1686.00.

Otherwise, bouncing Thursday morning could still resolve down. That would be likelier. Or, simply extending down through the open could already resume the decline, next targeting 1631.00 and 1627.25.

[/pay]What’s Next… (Outlook and opportunities)[pay]
The expectation for an early downleg Wednesday was that it would bounce temporarily from 1638.00. Regardless of the bounce’s size and duration, whether through the next timing window or the next day, its failure should extend down. So, the next attempt to extend down must succeed, or else new highs could soon be in-play.[/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.