Trading Plan for 4/15

Thursday’s pre-open weakness was in-line… with Wednesday’s expiration signal. Thursday’s rally would be in-line, too, if it resolves down to new lows. If not trending down, then the expiration signal only needs to prevent a rally from beginning through Monday morning, and continue retesting recent lows. [pay]

Pattern points… (Setups and technicals)
Thursday’s last timing window tested 1312.00 as resistance. Its break Wednesday as support had triggered the overnight decline. Closing under it kept buyers from regaining traction. The 1315.50 area’s recovery would have signaled momentum reversing up, but it was barely attacked to within 2 points.

At least three attractions below are inhibiting a recovery attempt. Wednesday’s expiration signal reflects a degree of pessimism just close enough to expiration, that sellers are likely to remain influential. Meanwhile, Thursday’s failure to touch 1298.00 before recovering reflects optimism not normal for a bottom. And the open’s 1302.50 gap down will want to be retested.

Resolving Thursday’s bounce down is likely, and resuming the drop overnight is possible. But I can’t yet discount the potential for trying to extend the rally first. Although GOOG’s post-close earnings disappointed the stock, S&Ps barely downticked. And there was plenty of froth from the intraday rally. Instead the market has been ranging flat-to-higher, which suggests there is some  unfinished business above.

What’s Next… (Outlook and opportunities)
Being expiration, Friday’s open can slide, or it can gap down, in either case breaking under 1307.50 and 1306.00 to signal momentum reversing down. Friday’s open could bounce briefly up to fresh highs at the 1315.50 area and still resume the drop coming out of the open. Not reversing initial strength can marginalize sellers through the day. [/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.