Trading Plan for 4/5

Did Wednesday afternoon’s bounce… look familiar? In some very important ways, it was no different from Tuesday’s late bounce. Substantial, but still too shallow to reverse momentum up…

Pattern points… (Setups and technicals)[pay]
Wednesday’s open gapped under Tuesday afternoon’s low, after Tuesday’s close had trended up. These are the three elements to form a “session-long decline.” Typically, the setup prints a new low during the session’s last hour. Wednesday did not.

Since the setup was not invalidated, its new low remains outstanding. And delaying it until the following day tends to be fulfill it with a vengeance — steeper, more substantial, but at least fulfilling its 1384.50 objective and potentially 1379.50. Opening under 1387.75 could see that vengeance delivered on steroids.

The last opportunity to invalidate the setup Wednesday would have been to close above the morning’s 1398.50 high. Now the next opportunity would be to gap up above 1400.00-1401.50, preferably after probing above it overnight. The minimum objective would fill the gap back to Tuesday’s 1408.25 close.

[/pay]What’s Next… (Outlook and opportunities)[pay]
Gapping up above 1400.00-1401.50 would also invalidate Wednesday’s 3-day weekend indicator. Otherwise, the close under two prior sessions’ lows is actively bearish. Thursday afternoon and Monday morning are likely to trend 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.