Trading Plan for 4/19

Would a default be that much worse? Certainly worth considering, for sending a message to any remaining politicians that didn’t hear S&P’s warning. If there is still more selling to come, then room to absorb it if it were to come soon. Before too big of a bounce refuels sellers. [pay]

Pattern points… (Setups and technicals)
Monday’s 1301.00 close was still testing the open’s 1301.25 print. Essentially all interim price action developed below, so it might seem to be trapped sellers. That might be true of this setup in an uptrend, which this is not. Monday’s session developed entirely in negative territory, and it was not ineffectual. It is ballast. Keep that in mind, as the market surely will.

Meanwhile, closing above  1295.50 did satisfy a lot of selling pressure without triggering a lower target. Recovering back above 1295.50 after probing Monday’s 1290.25 low would form a durable bottom. A durable bottom could also form from holding a retest of 1295.50 as support after first bouncing to 1305.00 – this latter path would still be vulnerable to extending down, but a second rally attempt would be credible.

Regardless, closing under 1295.50 would signal that new sponsorship had been found to extend the downleg, next targeting 1281.00. Just extending higher without taking more time down here would be likely to fail, and likely to launch a substantial downleg.

What’s Next… (Outlook and opportunities)
Monday’s last productive pullback limit at 1300.00 was probed deeply enough to signal momentum reversing down to at least test 1298.00. A new high before touching 1298.00 was doomed to failure. And 1298.00‘s support has been chipped away, so its test is likely also to test 1295.50. That’s the next lower level with potential to launch a rally overnight or at Tuesday’s open. But beware of 1295.50‘s test turning into a break. That is an inflection point where the alternative to recovering is spiking 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.