Trading Plan for 4/9

If there’s a bigger rally leg coming… then can it begin without dipping, first? Is dipping first assured of recovering to launch a bigger rally? Would rallying first be bearish? Yes, no, and no. But not in that order.*

Pattern points… (Setups and technicals)[pay]
Tuesday morning’s second recovery — not the first one that was invalidated, but the second one that fulfilled the first recovery’s invalidated target after the invalidation leg fulfilled its objective, that one —  Tuesday morning’s second recovery peaked upon testing Monday afternoon’s 1846.00 high.

And, apparently, that was the end of that. Sideways ranging back down to 1842.00 defined the balance of the session. Its upper-end was probed just barely in time to invoke the afternoon bias signal’s grace period. It held. Its lower-end was probed until recovering into the final hour, instead of breaking lower.

The market didn’t just test resistance and then sit still. It tested resistance, and then kept its contents under pressure by continuing to shake. Those contents have yet to be released.

So, breaking higher first could cause quite a mess, presumably from testing 1851.00 or 1853.50. Breaking lower first could also be temporary, assuming 1837.00 holds as support. But having expended so much buying pressure Tuesday only to hover at resistance, a reaction down would be vulnerable to resuming the decline (the big one that began Friday morning).

*So, the correct order of the answers is no, no, and yes.

[/pay]What’s Next… (Outlook and opportunities)[pay]
Quarterly earnings are here, with Alcoa (AA) having announced after Tuesday’s close. That may become more influential in inhibiting afternoon volatility. But AA is not an appropriate scapegoat for that. And Wednesday doesn’t have any high-profile names scheduled.[/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.