Trading Plan for 4/17

[pay]Pattern notes.
Wednesday’s session-long rally started by gapping up above sharply. Thanks to strength after the cash session close, Thursday’s open is more likely than not to gap, too. S&Ps added more than 6 points before the Globex open, surging from the ESm 1365’00 area to above 1371’00 in reaction to IBM’s earnings. Because of the surge’s timing its “new Globex trend extreme” is less likely to be retested during the next cash session. And the overnight high’s eventual retest would more likely hold.

Indicators and Internals.
Internal spreads were evenly weighted at better than 5 times more NYSE up volume and advancing issues than their counterparts, down volume and decliners. Wide spreads, to be sure, but that’s the only assurance of there being follow-through buying. There was no outperformance by buyers or sellers that otherwise would require being rewarded. Usually the next day’s price action tends to reflect a genuine opinion, and not a reaction, so therefore more predictive.

Thursday’s opening setup.
Thursday’s open is likely to be at Wednesday’s cash session close where an immediate bounce would recover back to overnight highs – currently 1372’25 – or else any delay would more likely sink back to the 1356’00 area. There is room down to 1363’00 without sellers gaining too much traction, but under 1361’50 through a relevant timing window would turn the market too defensive to much remember the prior day’s excitement. The more volatile the pullback, the more its leadership is changing hands, and the more likely for it to resume into the weekend. A steadier controlled retracement would only ensure retesting Wednesday night’s highs, while making a break higher more difficult.[/pay]