Trading Plan for 4/2
[pay]Pattern notes.
Tuesday’s opening gap up was too shallow to invalidate Monday’s decline, but it did promise to delay the decline’s resumption for 1-2 days. Tuesday’s last-hour drop hastened the decline’s resumption. A weak open Wednesday would have been able to continue sliding into oblivion (i.e. 767’00). But the open gapped down.
The open’s gap down expended a lot of selling pressure without sellers gaining traction, making the reaction up likely. The open’s gap down fulfilled the 781’00 target and quickly recovered from probing the 779’50 overnight low. And perhaps most important, the open’s gap down was retraced back above a key level that signaled the drop’s momentum was being reversed up.
The reaction up was sizable, exploiting the thin resistance above. There was no accumulation pattern, and the bounce’s first target at 795’50 was being tested before one ever began forming intraday. No pullback probed a prior low before recovering to a a new session high. And Wednesday’s last two hours only ranged around Tuesday’s 807’00 prior high – in fact, it held as resistance after a last-minute blip-up touched the afternoon’s bias-up target.
Wednesday’s last-minute high finally touched Friday morning’s “higher prior lows” as resistance. It wasn’t required, but it does neutralize a potential attraction. Having held a test of Friday’s 810’25 lower-end, buyers would gain control by gapping above Friday’s 821’25 upper-end. Otherwise, the balance of the session would likely gravitate back down, initially targeting 790’00.
Indicators and Internals.
Technicals did not confirm any of the afternoon’s higher highs. This reflects inherent weakness, but it does not signal immediate price weakness – obviously not, since no downturn materialized by the close.
Thursday’s opportunities.
No doubt Wednesday’s recovery was motivated in part by anticipation ahead of Thursday morning’s FASB mark-to-market hearing. It begins before the cash session open, and its outcome could become known soon after. Whatever the morning’s reaction to the news, the afternoon could become paralyzed by anxiousness ahead of Friday’s Employment Situation report. [/pay]