Trading Plan for 4/3

Monday’s open was eager… to exploit the weakness it had absorbed. Monday’s noon hour was eager to be entered above the morning’s high. But Monday’s last hour was not eager enough to extend its slightly higher high, so a late drop retraced 38.2% of the day’s rally.

Pattern points… (Setups and technicals)[pay]
Monday’s recovery from its overnight dip rallied 14 points to fresh highs attacking 1418.00, closing the cash session at 1413.25. Despite the late slide, this is above the last two prior high closes: Last Monday’s 1411.25, and the prior Monday’s 1407.00.

The late slide was just that. Monday afternoon’s bias environment was exited at 2:30 in recovery mode from testing the noon hour’s 1415.50 lows, and the session’s last hour was entered 1 point above the afternoon bias environment’s 1416.50 high. Strong-handed sellers would have prevented both.

None of which is a buy signal, are immunization from a later drop. But a later drop could be sponsored only by weak hands. That would apply to Monday’s later drop to 1412.25, despite seeming strong-handed for trending straight down throughout the last hour.

The drop could still be productive, as was a similar setup off of the 1408.00 high two Mondays ago. Its 28-point drop to 1380.50 was recovered entirely before fulfilling the week-old outstanding bias-up target at 1410.25. No further drop is required before fulfilling this Monday’s 1420.25 outstanding bias-up target. But the unfinished business above won’t necessarily prevent a bigger drop.

[/pay]What’s Next… (Outlook and opportunities)[pay]
Monday morning’s break above 1408.00‘s bias-up signal was premature, so retesting it overnight as support could launch another upleg targeting 1422.00 or even 1427.50. But opening under 1410.00, regardless of whether 1408.00 were tested already, would be difficult to recover at all.[/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.