Trading Plan for 4/22

[pay]About that close (How the prior session ended)
Like the noon hour’s 1205.00 high, Wednesday afternoon’s bounce peaked upon testing 1202.00 as resistance. Its recovery would have robbed sellers of their traction. That would have been surprising since oversold RSIs at the afternoon’s 1195.00 low require its retest. The cash session’s close equated to 1201.75 but the futures close dived to 1199.50. S&Ps re-opened to a gap down that slid to 1196.25.

Pattern points (And technical influences)
A lot of news accompanied the post-close slide. That news was earnings announcements. But overwhelmingly, estimate had been beat. In other words, Wednesday afternoon’s bounce discounted the news more favorably than it delivered. Two of the higher profile announcements came from EBAY and QCOM, each of which reacted down sharply to its own positive earnings “surprise.”

NDX futures gapped down below Tuesday’s cash session low, triggering sympathy from the broader-based S&Ps. Duplicating this action at Thursday’s open would trigger the session-long decline that Wednesday’s open avoided. Near-term targets would be 1176.00, 1170.00 and 1156.50 – essentially every relevant price point from the last month’s Complex Triangle.

If Friday’s drop was only exacerbated after all by the GS news timing, then its low shouldn’t be retested. Recovering above 1205.25 would suggest as much, putting into play new highs. But the burden of proof is on buyers.

Bottom line (My underlying premise)
Isolating the damage to NDX might help to launch another rally leg fueled by rotation out of the Tech sector. That may be the only way to avoid extending Wednesday’s decline. Justification for the bearish posture was only enhanced by Wednesday’s drop.[/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.