Trading Plan for 4/29

If Monday morning’s rally proved Friday’s sellers were weak hands… then what did Monday afternoon’s rally prove? It did, and it didn’t. Reversing down sharply intraday didn’t prevent retracing almost all the way back up to the morning’s highs. And almost all the way back up to Friday’s highs. The operative word is “almost.” That suggests pessimism, which doesn’t prove anything… yet.

Pattern points… (Setups and technicals)[pay]
Monday’s wide-ranging choppiness reflects very divergent opinion. That’s quite a way to start a very newsy week. And it’s not just noise within a range. Monday’s session probed prior highs and prior lows.

If only it had settled beyond either.

My concern going forward near-term is that Monday’s volatility was a “shock to the system.” Doctor’s orders would require ranging narrowly through Tuesday and into Wednesday morning. Usually that’s in reaction to a major event, I suspect that’s not the case here.

Also, several instances of ineffectual pessimism suggest another rally effort, anyway. The open’s attack on Friday’s high, the morning’s peak stopping pessimistically short of filling the gap back to Thursday’s close, and the afternoon’s recovery stopping short again of fresh highs. Each a different form of pessimism, each ineffectual.

[/pay]What’s Next… (Outlook and opportunities)[pay]
Resuming the decline is also possible. But Monday’s buyers gained traction for their efforts, so an opening dip has room to 1860.00-1861.00 before another downleg is underway. Anything shallower, or just trading higher, could rally sharply intraday.[/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.