Trading Plan for 4/7

If he fired only five shots instead of six… then being this is a .44 Magnum, the most powerful handgun in the world and will blow your head clean off, you’ve gotta ask yourself a question “Do I feel lucky?”

Pattern points… (Setups and technicals)[pay]
Well, do ya, punk? Sorry, not you, personally. That was quite a sell-off Friday. And it ended at 1858.00-1859.00, what would have been the afternoon’s renewed bias-down target — support, which would have been officially in play had the 1867.00 bias-down target been broken more decisively at 1:20.

But, size doesn’t matter. Context is much more important.

And this context stinks. The recent period of rejected gaps up from 1867.00-1874.00 were clearly distribution. Having disgorged itself of that overhead supply, last week’s low was the launching pad for one more higher high. And the template containing those elements warned us that the new high would be brief and rejected firmly.

Many big sell-offs are buying opportunities. Those come at the end of prolonged declines, or after big uplegs that have created a lot of room to absorb selling pressure without damaging the chart. This one follows the distribution described above, closing back under 1867.00-1874.00.

It’s not yet a trend change. But extending Friday’s drop almost any further would likely lead to one. Meanwhile, Friday’s last hour of choppy sideways ranging ended where it was entered. And barely fulfilling a hold-short setup. Gapping up to 1870.00-1871.50 would be likely to fail. But gapping down is likelier.

[/pay]What’s Next… (Outlook and opportunities)[pay]
Join us for this weekend’s Saturday Strategy Session at 9:30am ET. There will be no session for two weeks, so be sure to bring stock requests and general questions.[/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.