Trading Plan for 4/8
[pay]Pattern notes.
Tuesday’s open gapped down under yesterday’s lows to signal a session-long decline. The setup was continuously confirmed throughout the day, as every checkpoint’s timing window pushed lower through a relevant price. But since the interim price action kept bouncing optimistically, the relevant prices were in some cases higher than the preceding checkpoint. Even the last checkpoint at 3:20-3:30 – appropriately spent trending down under 815’50 – did not prevent a bounce up to 819’50 before sliding back to 811’25 into the cash session close.
So, the session-long decline was productive in keeping price negative throughout the day. But it wasn’t much more productive than the 813’50 pre-open low. It’s almost, but not quite, “ineffectual pessimism” that would suggest the market was trying to trap shorts. That won’t matter without an attraction to higher prices that might squeeze those trapped shorts.
NOTE: Don’t forget to add your stock request to the blog’s
comments section of my earlier post on this matter.
Indicators and Internals.
Tuesday morning’s 822’25 high was accompanied by the highest overbought 3-minute RSI, which tends to require a retest. This is because the overbought reading reflected substantial buying pressure. One exception is when subsequent price action absorbs the residual buying pressure. Tuesday’s did, by ranging sideways for an hour. A retest of 822’25 would be more likely to extend higher.
Wednesday’s opportunities.
A bounce back to 822’25 will be assessed for whether it is neutralizing Tuesday’s “ineffectual pessimism” so the decline can resume. Extending the bounce back above 823’25 would be more bullish – not necessarily to retest Sunday night’s highs, but potentially. An immediate break under 804’00-806’50 would simply point down, and probably sharply.
The SEC has long-planned an April 8 meeting to revise and reinstate the so-called “uptick rule,” which might have a bullish influence if anything is simply agreed to. Normally I would look for thinner afternoon trading ahead of the evening’s Passover holiday, which also tends to be bullish. But the 2:00 FOMC Minutes might delay some participants’ departure plans. And the FOMC news is likely to be influential anyway. As for the night’s full moon… [/pay]