Trading Plan for 5/7

If Monday’s range had avoided touching Friday’s highs… then its positive close could have gotten a benefit of the doubt for confirming Friday’s breakout. But the prior high held its intraday test, as did the afternoon’s probe above the morning’s high.
Pattern points… (Setups and technicals)[pay]
Sunday night’s weakness extended Friday afternoon’s pessimism. The dip stopped short of gaining traction. But it created room to absorb buying pressure. Monday’s 1615.25 high held a test of Friday’s 1614.25 high.

Monday’s fresh high close doesn’t clearly confirm Friday’s breakout, since Friday’s high was probed intraday. Despite spending the entire session in positive territory, buyers gained no traction for the effort. Closing in positive territory means sellers gained no traction, either.

This pattern often repeats with another two-day pair. Trending to fresh highs again Tuesday, then not closing higher Wednesday, would make Thursday very predictable, and usually Wednesday afternoon, too. Immediate weakness Tuesday instead of extending higher also leads to reliable setups, although less definable until Tuesday’s close.

[/pay]What’s Next… (Outlook and opportunities)[pay]
Early strength in positive territory Tuesday would get a benefit of the doubt for extending higher, at least during the morning. But initial weakness would be credible, presumably gapping down under the 1608.00 area, for retesting last week’s “lower prior highs” down to 1592.25. [/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.