Trading Plan for 4/2

If a new high close was needed to complete the top… then Tuesday’s new high close fulfills it. Barely. There was an overnight high that is yet untested. Its outstanding attraction could be rejected before the close. Until then, it’s an attraction leaves potential for confirming high close.

Pattern points… (Setups and technicals)[pay]
The prior intraday high 2-1/2 weeks ago was at 1877.25. It was touched Tuesday morning, and probed that afternoon. The 1870.00-1870.25 prior high closes had surrounded the high’s session, and they were clearly exceeded. An interim bounce’s peak was exceeded, too.

Now comes the question of confirming, or not. A second consecutive higher close Wednesday would require at least a third. Whether or not produced consecutively on Thursday, confirming Tuesday’s breakout would make this unlikely to be a top.

After confirming, reversing back down Thursday and extending down further on Friday’s Employment Situation report would only refuel buyers — which the outstanding requirement for a higher close would unleash. Extending higher Thursday and then reacting down Friday might be productive, but the timing would be unlikely to reverse the trend down.

Rather, the optimal topping pattern would probe new highs Wednesday and close back under a relevant low — like Tuesday’s 1869.25 bottom. Actually, gapping down first before temporarily recovering would be optimal. Regardless, volatility remains very much alive.

[/pay]What’s Next… (Outlook and opportunities)[pay]
This week ends with the Employment Situation report. So Wednesday brings the highest profile advance look, in the pre-open ADP report. Its data lets economists fine-tune their expectations, and its reaction let us fine-tune the market’s disposition before the report.[/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.