Trading Plan for 4/6

Q: What do you call a doctor that graduated last in his class? A: Doctor.
Q: What do you call a bias-up signal that triggers by only 1 tic? A: Bias-up.
The afternoon’s 1332.75 bias-up signal barely triggered. But it triggered. And it held through 1:30. Barely… The subsequent dive down to 1327.00 suggests otherwise.  [pay]

Pattern points… (Setups and technicals)
Tuesday’s open avoided triggering a session-long decline. Having absorbed the overnight pessimism, the open rallied sharply. Despite being a no-bias environment, the morning’s 1332.25 bias-up target was quickly met within 1 tick.

In the chartroom we noted how that upleg was comprised of 5-7 uncontested points. Optimism was extreme, and it was retraced by only 38.2% before extending higher into the noon hour.

The bias-up environment didn’t extend higher while awaiting the FOMC Minutes to be released at 2:00. It didn’t extend much higher in the first 3 minutes. Then it spiked down. And the balance of the session trended down, retracing all of the morning’s uncontested rally back down to 1326.75.

Was the afternoon’s bias-up blind-sided by the President’s surprise appearance, exacerbated by being so overbought? If so, then its reaction down should be absorbed, and potential up to 1338.00 remains alive. But if the 1332.75 bias-up signal wasn’t actually triggered, then the press conference reaction down has left no unfinished business above.

What’s Next… (Outlook and opportunities)
New highs, or new downleg? Tuesday afternoon’s next pullback target outstanding was 1326.00, which was met already after the close. A bounce has room up to 1330.00 without buyers beginning to gain traction.

Above 1331.00 would signal that Tuesday morning’s rally was resuming, targeting new highs. Otherwise, breaking under 1324.25 would trigger a downleg targeting at least 1303.00-1304.00. [/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.