Pre-close View

The setup is there, but not yet triggered.

1912.00 support had room below it down to 1907.00. The afternoon’s bias environment tested that room and retested it, while RSIs diverged positively. The bias environment’s exit recovered 1912.00.

Extending up to 1924.00 entered the final hour above the afternoon’s prior highs. That’s the stuff of a short-squeeze.

Not that a squeeze is required. But the market doesn’t become more vulnerable than this. Rejecting fresh lows back above prior highs is not noise — specifically during these two timing windows, and especially after having expended so much selling pressure.

Not exploiting the setup could become as bearish as it would have been bullish. And a squeeze could be very bullish.

Overnight low’s retest is trying to hold.

The 1893.50 overnight low was retested all the way down to… 1982.50. Not quite the potential to 1881.00 of the pattern I’ve been tracking.

Nevertheless, its reaction just touched 1910.00. That tests the resistance of higher prior lows around 1906.00, and their prior high. Any higher upon entering the final hour could trigger a short-squeeze.

If the resolution is to be bearish, and if the anti-optimism conditioning classes have finally matriculated their last student, then 1910.00 will hold. More so, back under 1903.50 and 1899.00 will gather pace at a steeper slope as the decline announces it remains alive and very well.

An hour of hovering just above this morning’s lows.

This morning’s test of its 1927.25 bias-down signal was retested as the afternoon’s bias environment was lapsing. It was being tested as the final hour was being entered. Only now is it being probed as the last half-hour begins.

Fresh lows now underway are targeting at least 1921.00. That’s the “unfinished business” left outstanding this morning at its bias-down target. And it’s being fulfilled now.

Every bit as likely — if not more so, as compensation for the delay — is to test 1912.00 or 1907.00. And by the way, Monday’s not looking very good. [We’ll talk more about that at tomorrow’s Saturday Review, 9:30am ET]

Rally’s complete failure still finding buyers.

This morning’s rally from gapping down was more productive than yesterday’s. It peaked earlier, and its reaction down probed negative territory sooner. Lest we think buyers have been conditioned yet to expect an extended decline, there’s another bounce underway.

But the bounce is the product of conditioning, too. A much more developed conditioning effort, which is the 3:30 rally. Of course, it’s not reliable or consistent, but patient sellers are smart to step back while the dip is retraced.

The retest of the overnight 1931.00 low by 3 ticks has reacted up to 1942.25. Although the bias environment exit was under the noon hour’s low, confirmation during the 3:10-3:20 window was slow.

Perhaps the hesitation in extending down is only due to tomorrow morning’s Employment Situation report. Regardless, there is still no template with a reliable path back up at this stage of the pattern.

Probing fresh post-open lows, and now the pre-open lows, too.

A couple of minor knee-jerk reactions to the FOMC Minutes ultimately stuck to this afternoon’s 1984.25 bias-down signal. It had been tested during the bias timing window long enough to avoid triggering, and the news didn’t break that mold.

But the clock did.

Already drifting 4 points back down to 1984.25 when the bias environment began lapsing at 2:30, suddenly selling appeared. The 1971.25 pre-open low is being touched just a half-hour later.

And now probed.

So, the bias environment’s 1984.25 exit was under the noon hour’s 1985.25 low. The final hour’s 1971.25 entry is under the bias environment’s 1980.25 low. The decline has gained traction, making tomorrow morning likely to probe lower, too.