Trading Plan for 4/2

REMINDER: Please join us for the Saturday Strategy Session… It begins at 9:30am, and its link can be found in the blog’s sidebar.

Pattern points… (Setups and technicals)[pay]
Friday morning’s drop back to 1395.75 undid the entire overnight rally up to 1406.00. A 10-point drop into negative territory could have set a negative tone for the day, especially on a Friday. But the overnight rally had created a lot of room to absorb the selling pressure.

Also, starting the sell-off from well into positive territory only allowed the no-bias signal to trigger. Triggering the signal late, invoking the grace period, undermined its 1394.50 objective.

But the 1395.75 low was accompanied by oversold RSIs. Higher oversold lows, but oversold nonetheless for the purpose of requiring a retest. Breaking back under 1401.50 at Monday’s open would target 1389.25, and potentially launch a new downleg. Otherwise, retesting 1395.75 (along with the prior Friday’s oversold RSIs at 1380.50) will probably be left outstanding while retesting recent highs.

[/pay]What’s Next… (Outlook and opportunities)[pay]
There was repeated intraday pessimism in avoiding a retest of the 1406.25 pre-open high. This level was significant for also being the morning’s bias-up target. Sellers gained no traction for their avoidance. Gapping up above Friday afternoon’s 1406.00 high could trigger a “session-long rally.” That should be fairly simple for having closed at 1403.00 — so simple, that not gapping up would be that much more bearish.[/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.