Trading Plan for 4/18

A funny thing happened… on the way back the lows. Monday night’s drop fulfilled unfinished business under Monday’s low. And Tuesday’s open recovered above Monday afternoon’s high. Did that change the eventual resolution, or only delay it?

Pattern points… (Setups and technicals)[pay]
1386.00 was first tested during the noon hour, and the balance of the session ranged above it. There was plenty of opportunity to extend higher, but it was still being tested at the cash session close.

1386.00 is important because last week’s trend change signal — which is premised on the two consecutive closes under 1386.00 — would be invalidated by two consecutive higher closes above it. So it is interesting to note that the opportunity was ignored.

A plunge iimmediately following the close fell to 1383.25 in reaction to IBM and INTC earnings. It was too late to be bearish. Unfortunately, it was also too late to trigger a sell signal under 1386.00 that would have targeted 1383.00. So the rally gets the benefit of a corrective dip, without that dip damaging the chart.

[/pay]What’s Next… (Outlook and opportunities)[pay]
Tuesday afternoon’s 1389.25 bias-up target is unfinished business above. It could be probed by 1-2 points. But it remains in-play so long as 1381.50 holds as support. And 1389.25‘s test is likely to reverse down unless exceeded through a relevant timing window.[/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.