The SPX gapped open down today,
then made a failed attempt to rally back up and fill that gap. Considering yesterday's post-close Goldman Sachs profit news, this is disappointing "sell the news" type action. The downside in the last hour has broken pretty well-defined horizontal support ST-S1, which implies a drop down of the height of the pattern above ST-S1. This implication takes the SPX down to 830.
There is minor support below off ST-S2 and the 4/9 opening gap,
ST-S2 is around 833 at today's close. (Because of the holiday, we have to back up a day when analyzing the SPX action around this line). The top of the 4/9 gap is at 830.
Now that R1 has obviously pushed the SPX down, I expect the SPX to drop to around 830-835. Then considering that level will have fulfilled the implications of the ST-S1 break, and considering the bullish 4/15 bias (below), I expect another run up to R1 tomorrow. I'm going to take that bet in hopes that I'll get lucky and end up on the right side of a news-based R1 break.
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If the SPX is in the 830-835 area at my fund trading cutoff, I'll go 100% long with tax-deferred/free accounts not managed by mechanical systems. If these positions are taken, at this point I only plan to hold them one day.
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I'll also be buying calls today in speculative taxable accounts if we reach that level intraday which I'll plan to sell at R1 intraday tomorrow. (Again, option trading is beyond the scope of what I can do in this report so don't count on any complete or detailed account of when/if these positions are taken or closed.)
April 15th has a huge upward bias.
Just like one would have expected the post-close Goldman Sachs profit report to be bullish for the market, one would expect tax day would be historically bearish. Not true...
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Historically, 1942-1989 the SPX:
63% winners
44% annualized return
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Historically, 1990-present:
63% winners
336% annualized return
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Historically, 2000-present:
89% winners
1514% annualized return
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Interestingly, 4/16 has been very bullish from 1990-present (similar numbers to above) but was historically flat from 1942-1989.
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(Tested via ULTRA's Period System.)
