Trading Plan for 4/3
[pay]Pattern notes.
Tuesday’s rally was either the beginning of a new upleg, or else a retest of last week’s highs. Since Tuesday’s close was the first new relative high close in a week, a second consecutive higher close Wednesday would have confirmed Tuesday’s breakout. Wednesday’s close didn’t satisfy this parameter. That doesn’t mean the alternate scenario is in-play.
In fact, sellers missed an opportunity Wednesday to retake control – the last hour’s new session low reversed up to close back up above the morning’s low. Buyers didn’t gain traction, but sellers lost theirs and won’t regain it at Thursday’s open without falling immediately under Wednesday’s lows. Even then, the pullback might only refuel the rally instead of end it. A retest of Wednesday’s highs first would be the more bearish scenario, stretching buyers thinly when Wednesday’s session already indicated that current levels aren’t capable of launching a rally.
Indicators and internals.
MACD & RSI deteriorated into Wednesday’s last-minute bounce, but only among1-minute bars. Longer intervals were mixed – generally printing higher lows, and only some recovering into positive territory. The likely outcome is an immediate drop or else an early rally’s rejection, but another session-long rally isn’t likely. Internal spreads were positive, but evenly weighted, so Thursday’s market isn’t obligated to reward either buyers or sellers.
Wednesday’s opening setup.
Thursday’s pre-open Jobless Claims econ report is capable of influencing price action. The 10:00am ISM Survey is lower profile, but its timing of 30 minutes after the open can accelerate or reverse any initial trending underway. Trending might be difficult to find after that. Volatility tends to become paralyzed prior to such a weighty announcement as Friday morning’s Employment reports. So while a higher open might be a negative for reasons described earlier, it might be difficult to attract sponsorship capable of extending higher. A lower open would be credible for extending down, but I’ll want to see a strong open for signs of topping.[/pay]