Trading Plan for 4/3

If Tuesday’s new high close were all that was relevant… then this rally would have just found new life. But the new high close was under Thursday and Friday’s prior highs. That was despite gapping up and spending the entire session in positive territory. This is “ineffectual optimism,” and while that is not a sell signal, it is at least a warning.

Pattern points… (Setups and technicals)[pay]
This week’s first two sessions have shared at least one common trait: their mixed signals. Sell-offs that persist through relevant timing windows to reflect strong-handed sponsorship, followed by productive bounces that fail to gain traction. It’s distribution, but it’s not yet a reversal down.

Tuesday’s cash session close was attacking 1565.00 which also held as resistance Monday — albeit at Monday’s open. So, 1566.25 also was not recovered. Probing both without closing above them suggests that buyers are running out of energy. It doesn’t mean they can’t be probed intraday again.

In fact, recovering Tuesday afternoon’s dip to 1560.00, by closing back above 1563.75, all but requires retesting Tuesday’s 1568.00 high. Whether that is to 1571.00, or through it, even the most bearish scenario need not immediately reverse down. The most bullish scenario might dip quickly from a fresh high, leaving time to launch another rally leg before the close.

[/pay]What’s Next… (Outlook and opportunities)[pay]
So long as Wednesday’s open isn’t gapping down back into Monday afternoon’s range around 1555.50, at least a temporary probe of fresh highs remains likely.[/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.