Trading Plan for 4/1

If the market wanted gaps up to be sold… then it didn’t do enough conditioning last week. Friday and Monday’s gaps up held intraday as support. Perhaps distribution has finally turned the corner — not to start becoming accumulation, but to waiting for one more fresh high before really dropping the hammer.

Pattern points… (Setups and technicals)[pay]
Monday’s opening gap up wasn’t rejected. Like Friday’s before it, that’s two consecutive gaps up not to be reversed into negative territory. Friday’s was retraced back to the morning’s low, still holding well into positive territory. Monday’s didn’t extend, also still holding well into positive territory. But neither gap up was rejected.

That’s more important for Monday since it tested the 1866.75-1874.00 range that previously killed gaps up. Gapping up Tuesday to 1874.00 would still be vulnerable to rejection, although Monday’s ~1866.75 highs would be strong support against turning negative.

Unfinished business above was left outstanding at Monday afternoon’s 1869.75 bias-up target. There were enough opportunities to reject it back under 1864.25 that remaining intact anyway makes its test even likelier.

[/pay]What’s Next… (Outlook and opportunities)[pay]
Dipping first had better hold Friday morning’s “lower prior highs” as support 1858.00-1859.00. Recovering back above 1861.00 would signal the dip had reversed back up. Recovering overnight back above 1861.00 would signal the market was reversing back up aggressively. Just extending above 1867.25 would be likely to resume the rally.[/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.