Trading Plan for 4/4

If Wednesday’s break was a trend change… then any bounce Thursday should be absorbed before the close. If there is any bounce, at all.

Pattern points… (Setups and technicals)[pay]
Wednesday’s decline appears during a pattern that already established buyers were the weak hands. This, alone, doesn’t explain not retesting Tuesday’s 1568.00 high, especially after Wednesday’s pre-open rally to 1567.75 stopped pessimistically short of the retest. Not that 1568.00 needed to be revisited ever again, but it was attracting price higher until just before Wednesday’s open.

That’s what’s so interesting about Wednesday’s decline — not that it began so soon after trying to retest Tuesday’s high, but that it got underway so dramatically so quickly.

Either sellers are very intent, or else they’re very done.

The former case is made by Wednesday having closed under Monday’s 1552.50-1555.50 lows. Failing to recover them Thursday would confirm the trend change (a second consecutive lower close is not necessary in a trend change). A bigger bounce intraday could still fail through the close, and no bounce is necessary, at all. The latter case would be made by recovering 1555.50-1558.50.

[/pay]What’s Next… (Outlook and opportunities)[pay]
Regardless, oversold RSIs at Wednesday’s 1544.00 low require its retest, presumably down to 1541.00. That could be done overnight to greet Thursday in rally mode, or it could be left outstanding to cause an intraday bounce to fail. But, again, there is no requirement to bounce, so Thursday morning is vulnerable simply to trending down to fresh lows. [/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.