Trading Plan for 4/24
[pay]Pattern notes.
Wednesday’s reaction to AMZN and AAPL earnings was a little positive. And that made it very negative. A short-squeeze had just been retraced before the close, so the muted response soon began repelling buyers and attracting sellers. S&Ps fell 10 points to retest cash session lows under ESm 1372’00, and retested them several hours later after bouncing 5 points in the interim. Yet another, bigger bounce was also retraced back to the lows where (wait for it…) S&Ps have bounced again. Hmmm, there seems to be some sort of pattern here.
Of course, I think the overnight lows will be re-re-retested. More to the point, the lows will be broken sooner or later. It is curious that all three overnight lows came within 1 point of touching Tuesday’s lows, but none could actually complete the task. That’s optimism, and/or impatient buyers, nonetheless ineffectual judging by their repeated failures. So I don’t expect Tuesday’s lows to offer much support if/when they finally are tested. The opinion isn’t new, there’s just more evidence supporting it.
Indicators and Internals.
If there were any reason to doubt the market’s bearishness, it would be Wednesday’s internal spreads. Despite NYSE down volume outpacing up volume, advancing issues outnumbered decliners. Internals diverged negatively from each other, accompanied by rising volume. That would be outright bullish if S&Ps had declined on the day, but the cash index finished with a gain, so any obligation to reward buyers for their relative performance might be satisfied by an early bounce.
Thursday’s opening setup.
Durable Goods and Jobless Claims are due at 8:30 ET, along with quite a few earnings announcements including MMM and F. The 10:00 timing of New Home Sales coming 30 minutes after the open tends to accelerate or reverse any initial trending underway. If afternoon price action becomes range-bound again then this time we can blame it on anxiousness ahead of MSFT earnings due after the close. But I suspect the market may step outside of its comfort zone this time.[/pay]