Trading Plan for 5/31

Is the 3-day weekend indicator alive?… Wednesday’s close indicated that trending was unlikely or unsustainable. So, trending on Thursday and Friday is not the product of strong hands. Will they correct the correction upon their return?[pay]

Pattern points… (Setups and technicals)
Friday’s rally fulfilled the 1333.50 bias-up target. But the bias-up signal wasn’t recovered in-time to trigger. And closing under the morning’s high, basically unchanged from the 1328.75 open, means buyers didn’t gain traction. The market gained no ground beyond its gap up.

Wednesday’s 3-day indicator already said a rally’s sponsorship would be weak hands. That would explain why the intraday pattern suggests buyers didn’t gain traction for their efforts.

The signal’s minimum requirement could have been to close back into 1312.00-1320.00 range Thursday. Failing that, it could have required closing down to the range’s lower-end Friday. Avoiding both by extending higher into the weekend now creates the potential, if not the likelihood of trading to the range’s lower-end.

How about through the range’s lower-end? The performance must now compensate for the delay by dropping aggressively, and by targeting any unfinished business below. That is at least a retest of last Tuesday night ‘s 1302.25 overnight low. Maintaining a gap up Tuesday would offer a path higher, being the only way to rally when intraday buyers haven’t gained traction.

What’s Next… (Outlook and opportunities)
Sunday night’s Globex action will lack the same liquidity that allowed weak hands to rally Thursday and Friday. The rally could extend higher. But any probe of 1337.50 should hold, if 1337.50 were touched at all. Pullbacks have room down to 1325.25 before the rally’s momentum would be jeopardized. Back under 1323.00 and 1320.50 would signal and confirm momentum reversing down. [/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.