Trading Plan for 5/8

If Wednesday’s intraday recovery can’t be converted into a rally… then Wednesday’s intraday dip only chipped away at support. The afternoon’s rally disappointed the morning’s sellers. Reversing down would disappoint the rally’s sponsorship, which would find little or no support remains.

Pattern points… (Setups and technicals)[pay]
After multiple sessions of trending down, Wednesday’s gap up was reversed deep into negative territory. Recovering to close above the morning’s 1871.50 high formed a Pivot Reversal setup.

Pivot Reversals tend to be very productive, very quickly. At least, the setup establishes a base to launch a new rally leg. Occasionally, a bigger sell-off invalidates the Pivot Reversal and resumes the morning’s downtrend.

This pivot might not continue its reversal very quickly. Closing above the morning’s high at 1876.00 was valid, but it was due to a surge that did not develop until Wednesday’s last half hour. A pullback into the base should still recover, but extending higher immediately would be suspicious.

Nevertheless, the premise is to resolve up, until disproved.

Resolving down tends to be obvious immediately. It might follow a firm open that reverses down relentlessly. Regardless, not trending down during Thursday’s opening 15 minutes of volatility would be unlikely to trend down, at all.

[/pay]What’s Next… (Outlook and opportunities)[pay]
Wednesday’s late surge has been retraced overnight back down to the morning’s 1871.50 high, and then back up to 1876.00. No signs, yet, of a deeper dip, other than not yet extending higher.[/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.