Trading Plan for 5/9

If Wednesday afternoon’s drop had gained traction… then a much steeper slide was likely to close under the morning’s low. The drop’s complete retracement doesn’t prevent that lower close for Thursday. And it doesn’t make it any more difficult. It does make the upside more substantial otherwise.  

Pattern points… (Setups and technicals)[pay]
The multi-session pattern of upward momentum into Wednesday morning was fulfilled up to its 1627.25 high. Although a dip down to 1622.50 was recovered to fresh highs at 1629.50, the morning’s high was still being retested. Probed, but retested. So, the pattern of upward momentum into Wednesday morning has yet to extend any higher.

To be sure, the pattern of upward momentum has not been reversed. An opportunity to form a Pivot Reversal ended prematurely when the afternoon’s aggressive drop proved to be brief. And the multi-session upward momentum’s potential to 1631.00 was never fully realized.

But the late bounce probed above the noon hour’s high only AFTER the 3:10-3:20 timing window. Its sponsorship was not strong-handed, despite extending higher. Weak hands extended higher, AND fulfilled buying pressure at 1629.50.

This allows Thursday’s action to be combined with Wednesday’s to form a two-day setup. Combining two sessions does raise the burden of proof on any setup, so delaying a reversal down Thursday probably won’t reverse down at all. Reversing down with being aggressive would be suspicious, too.

[/pay]What’s Next… (Outlook and opportunities)[pay]
That potential for a two-day setup could still form a bearish Pivot Reversal by closing back under Wednesday morning’s 1617.00-1618.50 lows. And having trended up into Wednesday’s close, gapping down Thursday under Wednesday afternoon’s 1622.50 low would trigger a session-long decline. Almost any lesser selling pressure would default to being bullish.[/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.