Trading Plan for 4/28
[pay]Pattern notes.
Monday’s post-open low was 851’00 and the morning’s bounce reached 866’50. The afternoon’s drop completely retraced the bounce back down to 850’50. This represents buyers failing to retake control. Of course, the return to the lows failed to extend down, so sellers also failed to retake control. Control is up for grabs, and it goes to whichever sponsorship can break out of the 848’00-859’00 range.
Either path is likely to begin by gapping open. A gap up would likely be sizable, testing 867’00, where a dip back down to 859’00 could launch a bigger intraday rally. A gap down doesn’t need to be much under 848’00 for sellers to gain traction, but any bounce it produces must reverse down quickly from 853’00. A gap down under 848’00 that doesn’t bounce before extending down would be shorter-lived before bottoming.
Sponsorship for a gap down is likelier, after Monday’s sellers repeatedly chipped away at the support of session lows. This doesn’t mean an immediate drop would stay down, so even if sellers take control at Tuesday’s open, they may lose it by noon if they haven’t extended down by then to 841’00-842’00.
From flu to fly-by’s, Monday’s environment offered several excuses for breaking under Friday’s lows. Overnight activity is likely to try, just as Sunday night’s drop did. But if sellers aren’t obviously in control coming out of the morning, buyers could be obviously in control going into the close.
Indicators and Internals.
Monday’s late bounce peaked while RSIs were either underperforming or diverging negatively. If combined with a retest of the morning’s low lacking any buy signal, the result could be dramatic – not necessarily permanent, but steep nonetheless.
Tuesday’s opportunities.
The econ calendar is busy, with unusual timing. None of the three reports due pre-open is very high-profile, but their staggered announcements could provide a swarm of punches that keeps the market off-balance. Consumer Confidence is high-profile, and comes 30 minutes after the open, which tends to accelerate or to reverse any trending already underway. Any and all of these reports can be dwarfed by bigger news. Maybe not so much anymore by an errant plane. [/pay]