Trading Plan for 4/30
[pay]About that close (How the prior session ended)
Careful what you ask for. The open had gapped up, the morning had extended higher, and the noon hour climbed more. When Thursday afternoon’s no-bias environment finally ended, trending was free to resume. But probing fresh highs by only 2 ticks found buyers already stretched too thinly.
At least the drop from 1206.25 to 1201.50 didn’t gain any traction. Lackluster RSIs had already shown that noncommittal buyers and sellers were the biggest impediment to trending. The last half-hour’s bounce closed back at the 1204.00 morning highs.
Pattern points (And technical influences)
1204.00 was also a major corrective bounce target. Closing there means the market is in a state of “equilibrium.” Buying pressure has been satisfied, but no new pattern has been triggered.
Equilibrium mornings can seem to be rudderless, but not like the usual no-bias environment. Trending is almost certain to be attempted – two or three times, often in alternating directions, and at least one time to a significant degree. But the market is anchored, and at least twice the trending is retraced back to its origin.
Gapping Friday beyond either prior high or low (1206.00 and 1200.00, respectively) can break negate the equilibrium setup. This would be confirmed by extending through the open, which isn’t assured as the equilibrium influence would fight for a retracement.
Bottom line (My underlying premise)
Thursday’s close had an opportunity to signal trending overnight, by closing outside of the 1202.00-1205.00 range. It didn’t, despite repeated attacks on either end. Gapping up Friday above 1206.00 to negate equilibrium only requires 2 points. If that were so simple, then Thursday’s close probably would have accomplished it.
Each of the two factors suggests that the rally from Wednesday’s low has been a corrective bounce. This being a Friday, early trending would likely gain traction – which suggests that trending won’t be signaled early unless it is a bias-down.[/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.