Trading Plan for April 1

[pay]Pattern notes.
Tuesday’s sloppy open gapped up and chopped sideways until finally probing higher highs. Extending the rally through the afternoon threatened to be a session-long rally, which the open had not signaled. The lack of signal doesn’t preclude a session-long rally, it’s just odd. Anyway, the afternoon’s no-bias rally from 798’00 up to 807’00 needed to be retraced, so it was, by a 17-point drop back down to 790’00.

The close was at or under the cash session open. The “equilibrium” label doesn’t fit this instance – as it did last Wednesday – because Tuesday’s price action developed exclusively in positive territory. That’s more like  “ineffectual optimism,” also not an entirely appropriate label since the last hour’s dive penalized the optimistis. More important than a label is that the choppy open proved to be unsustainable buying that was retraced entirely. More important is that Monday’s decline wasn’t recovered or rejected. And most important is that the rally from Monday’s low could still be labeled counter-trend, as was suggested by the origin’s odd timing.

A less aggressive bounce Tuesday could have delayed the decline’s resumption through Wednesday’s open or until late Thursday. That’s still possible if Wednesday’s open bounces high enough and long enough. But almost nothing short of gapping up above Tuesday’s 807’00 high can put buyers back in control without first probing lower lows.

Indicators and Internals.
RSIs barely managed to diverge positively at Tuesday’s very last-minute lows. The differences were almost imperceptible, and hardly confirmed by MACD.  Tere was otherwise no unfinished business left outstanding at Tuesday’s highs.

Wednesday’s opportunities.
Gapping under 788’00 would be very credible for simply resuming Tuesday’s last-hour slide to lower lows. Support at 783’00-784’00 would still need special attention, but its break would essentially target 767’00 and 762’00. Closing under Tuesday’s noon hour lows might have made a corrective bounce necessary first, either at or before Wednesday’s open. Its target would be 795’00 or 798’00. Any higher could add another day before resuming the decline. Otherwise, no pattern actually predicts a bounce here, only a vunerability to it.[/pay]