Trading Plan for 4/1
[pay]Pattern notes.
Monday afternoon’s price action took full advantage of room for a pullback down to ESm 1321’00 – even retesting it twice while MACD & RSI improved each time. That eventually produced a bounce up to 1326’00 and then another up to 1329’00. S&Ps dipped into the cash session close at 1324’00, and then afterwards back to 1320’00. The cash session usually prevails in contradicting closes, so I expect Tuesday’s open to gap back up. And not just back to the cash session close, but higher in order to balance out the extra – perhaps even above Monday’s 1330’50 high.
Indicators and internals.
Internal spreads were distributed evenly into late-afternoon. But the last-minute dive saw NYSE down volume expand sharply compared to decliners. The ending ratio requires Tuesday’s session to reward Monday’s buyers for their relative productivity. A gap open under Monday’s 1313’50 lows would be needed to invalidate the requirement, but I wouldn’t hold my breath if 1316’00 were broken.
Tuesday’s opening setup.
The cash session usually prevails in contradicting closes, so Tuesday’s open is likely to gap back up. And not just back to the cash session close, but higher in order to balance out the extra – perhaps even above Monday’s 1330’50 high. This wasn’t signaled at Monday’s close, but it does lend credibility to an overnight rally’s ability to extend higher. Sellers will need to produce a gap under the 1316’00area to compensate for holding two tests of 1321’00 Monday, which would have triggered a new downleg.