Trading Plan for 4/22
[pay]Pattern notes.
Monday’s open was vulnerable to gapping down and forming an Island of Friday’s price action. The gap down didn’t clear Friday morning’s low and an Island pattern was averted. At least, a one-day Island. An Island is still possible if Tuesday’s open gaps down about 14 points to test Thursday’s highs. That’s smaller than Friday’s gap up, but still a tall order. Gapping down under ESm 1386’00 would likely slide another 4 points to attack Monday’s lows. Gapping down to attack Monday’s lows under 1382’25 could attract sellers capable of producing a slide back to Thursday’s highs.
Indicators and Internals.
Confuscious say… no decision is decision. In that vain, low volume sessions can also be revealing. For instance, Monday’s volume shrank considerably compared to Friday’s pace. While that would be appropriate during any consolidation, the sudden disinterest doesn’t help to confirm Friday’s strength, and it doesn’t make Monday’s recovery from lower lows very impressive. It also undermines the relevance of Monday’s internal spreads, which were more negative than the price loss, so the price outperformance is also less impressive.
Tuesday’s opening setup.
Overnight lows have already probed 1382’25 which I had originally thought might be so deep that it would attract more buyers than sellers. Perhaps initially, but a limp bounce would call sellers from far and wide. Currently, overnight weakness indicates a gap under 1386’00, with five hours before the open. Unless 1389’00 maintains a recovery by then to put buyers in control for the morning, some sort of decline will likely be attempted. There is little news today except for the ongoing quarterly earnings onslaught. Home Sales is due 30 minutes after the open at 10:00am ET, timing that tends to reverse or accelerate any initial trending attempt underway.