Trading Plan for 4/9

[pay]Pattern notes.
A late recovery barely managed to get S&Ps back up to the ESm 1370’25 target that the afternoon’s first bounce peaked short of fulfilling. That seemed to be Tuesday’s defining characteristic – last-minute buying or selling sprees instead of being evenly spread out. Not that the environment was very opinionated otherwise; S&Ps only twice ventured 1-2 points beyond either end of a 6-point trading range that began at Monday’s close.

That might seem bullish. After all S&Ps firmed through noon after gapping down, and again through the close after the FOMC reaction’s new session low. But that wasn’t a firm rejection of the test of Friday’s ESm 1365’00 low. A gap up Wednesday that leaves Tuesday’s ranging behind it might be able to resume the rally, but it will need to avoid gravity through the afternoon.

Indicators and Internals.
MACD & RSI printed lows along with price on the FOMC reaction, undermining the afternoon recovery’s credibility, even if S&Ps extend higher overnight or Wednesday. And although gapping up Wednesday could form an Island from Tuesday’s price action, volume was too low to suggest that any gain would be durable.

Wednesday’s opening setup.
Another 10:00am ET econ report is due Wednesday. Wholesale Inventories isn’t so high-profile that its surprises lead to major adjustments in outlook. But the reports timing 30 minutes after the cash session open does often accelerate or reverse any initial trending underway. Quarterly earnings surprises have begun influencing price action, too. But this week’s econ calendar is light, so there’s not a lot of catalysts to prevent extending the decline if Friday’s 1365’00 low is broken early enough.[/pay]