Pre-close View

Relatively shallow, for a correction.

During this weekend’s Saturday Review we discussed why the pattern had become vulnerable to a correction. It could last only several hours or several days. But higher objectives had been created, allowing a detour to refuel buyers. Meanwhile, upside momentum had weakened, and objectives below had been left outstanding.

Probing higher overnight didn’t prevent the morning from trending down. Holding the morning’s bias-down signal didn’t prevent probing lower during the afternoon — despite not triggering its bias-down, either.

Not very uncomfortable for a correction.

Probes under each bias-down signal were recovered coming out of the bias environment. But RSIs are oversold at the low, and the bias environment exit was under the noon hour’s low. Entering the final hour under 2054.75 would give sellers traction, targeting 2048.75 and potentially 2041.00.

Now THAT would be a correction.

Entering final hour above all prior highs.

The afternoon bias environment begins lapsing at 2:30, and finishes upon entering the final hour. A trending session that probes fresh extremes during the afternoon bias environment can marginalize counter-trend sponsorship by maintaining its position.

Today, that means exiting the bias environment above the noon hour’s 2057.25 high has marginalized sellers. The rally need not extend but it probably won’t reverse down. It had extended already to 2062.75, so there is room for noise below.

Exiting the bias environment back within a prior timing window’s range would open the door to a reversal. Reversing wouldn’t be required, but it would be unlikely otherwise.

None of which prevents an interim dip, anyway. Ranging narrowly at 2062.75 for 45 minutes doesn’t make a dip any likelier, except that it suggests upside momentum may be in trouble.

Back under 2059.75 would be credible for a dip targeting 2056.00 with potential to 2051.00. It would likely be both temporary and brief, and recovered completely before the close. Meanwhile, the greater vulnerability remains to the upside.

Noon hour slide attracts sellers.

Flt-to-higher choppy ranging eked gradually higher this morning. Recovering from its pre-open dip to 2053.00 had extended to 2059.50 at noon.

Sliding since then has been relentless, trending down to fresh session lows at 2049.00.

The slide’s purpose could have been similar to yesterday’s, expending a lot of selling pressure without it gaining traction for the effort. But today’s slide is threatening to enter the final hour under the 2050.50 bias environment low, after exiting the bias environment under the noon hour lows.

Sellers may be gaining traction into Friday’s Employment Situation report.

Extending back down to the 2047.25 overnight low would likely give way to 2044.50, and potentially also to 2039.25. If sellers do gain traction, then overdoing it already could risk inverting the traction back up, and might be the only way to end the week rallying.

Noon hour high’s retest hardly hesitates.

Actually, the noon hour high’s retest did react down briefly at its 2041.50 target. But that took only enough time to touch the 2040.25 pullback limit. Soon, the rally was extending up to 2046.25.

Meanwhile, last Monday’s 2044.50 high was touched. That’s called the “pivotal high,” being the high prior to last Tuesday’s 2047.50 actual high. Having probed under their interim low, recovering to touch the pivotal high all but requires revisiting the actual high.

The actual high isn’t always revisited immediately. Reacting down first is likely to recover. Today’s test doesn’t seem interested in more than a brief pause, as fresh highs are now within 3 ticks of 2047.50.

More important for tomorrow is whether the 3:10-3:20 timing window maintains its probe of fresh session highs. That would complement the bias environment exit having been above the noon hour’s high, gaining traction for extending higher tomorrow morning. Fresh highs could be probed anyway, but probably not maintained.

Bearish setup gets distracted by shiny metal object (a gun).

Nothing about this morning’s price action was bullish. A lot of selling pressure had been expended just to probe back into Thursday’s range without actually reversing it. But the bias environment wasn’t exited above any relevant level. The opportunity to trap the morning’s sellers was not exploited.

The noon hour’s bounce tested the afternoon’s bias-up signal. It didn’t trigger. Probing above it anyway was “no-bias trending” that was doomed to failure. It did fail, and price was falling further. Retracing the rest of Thursday’s rally was about to begin.

That’s when a headline crossed about the capitol visitor’s center shooting. Like last week’s Brussels event, it created a distraction from the distributive price action — not additional selling pressure, but selling pressure that the original selling pressure allowed to run its course.

So, the headline reaction has been retraced. Not to a fresh high like Brussels last Tuesday, but that wasn’t required being so much later in the session. The distribution described all day is now free to resume pressuring price back down. A fresh afternoon low today or tomorrow morning would be expected to resume the ongoing pullback.