Trading Plan for 4/13
Quick! Duck! Several consecutive declining sessions have followed several consecutive sideways sessions. It is classic behavior for defensive posturing ahead of coming news. In this case that news is probably the earnings deluge now beginning. Look out below if a 30-point slide didn’t discount enough. [pay]
Pattern points… (Setups and technicals)
Tuesday’s lows probed the next lower target at 1307.50 and closed above it. So, what? Monday’s targets also held as support through the close. A relevant difference is that Monday’s targets weren’t even tested until the last timing window. Not only was Tuesday’s test early, but it also held an afternoon retest.
That only suggests that sellers gained no traction for their efforts. New lows intraday remain possible. Especially since the template being tracked should at least visit 1304.50, which would maintain a symmetry for the current multi-session pullback to react up sharply. How sharply? To probe February’s highs.
Timing is also relevant. A new low Wednesday must recover to close positive to avoid sellers gaining traction. Such a volatile intraday whipsaw is made all the more possible – no more likely, just more possible – by the earning deluge now arriving. Beige Book’s release Wednesday afternoon will help to keep the market jumpy.
What’s Next… (Outlook and opportunities)
Ending optimistically Wednesday – above Tuesday’s 1310.50 cash session close, preferably above Tuesday’s 1315.50 high – would be to end the day bullishly. Having spent several consecutive sessions hunkering down ahead of news, even the release of negative news could be viewed optimistically for getting out of the market’s way. Imagine the effect of optimistic news.
But ending Wednesday at new lows – under 1307.50, 1303.00 or lower – would renew this current downleg’s momentum. That would bust the template whose pattern would require new highs. In its place would be a dramatically steep and deep extension down.[/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.