Pre-close View

Relentless slide is teasing at a bounce.

The afternoon’s 2060.00 bias-down target was being overlapped at 1:20 to avoid renewing the bias-down signal. That didn’t change whether it was still a bias-down environment. Despite not being required, the decline extended down to 2040.00.

Now a bounce is testing resistance at 2048.25. That’s also a buy signal. Triggering it would marginalize sellers for the day, and target a bounce to 2056.00.

But oversold RSIs at the 2040.00 low want to be retested, and today is fine with them if the bounce isn’t extending higher. Their retest’s next lower objective is 2035.25.

No-bias trending is exacerbated by California headlines.

We discussed before Tuesday’s close that today would likely correct its late surge by dipping back down into yesterday’s range. That’s because the surge was sponsored by weak hands.

Today was never required to recover, at least not before the final hour. The afternoon’s no-bias environment took advantage of that extra window. It probed under its 2091.00 bias-down signal, fulfilling potential down to 2088.00.

Headlines along the way revealed what appears to be a terrorist incident in San Bernardino. That only exacerbated the decline’s trending, which has extended down to 2075.50. That’s where 3-minute RSI finally left oversold territory, while 1-minute RSI diverged positively. And that has bounced up to 2081.00.

Probing under 2091.00 was already sponsored by weak hands. The excess is in knee-jerk reaction to news headlines, which is the definition of weak hands. A recovery must at least retest 2091.00, if not also 2094.50 where the 1:20 no-bias signal triggered.

Meanwhile, having filled the gap back down to Monday’s 2082.00 close, closing today above 2088.00 would maintain the likelihood for extending higher tomorrow. Otherwise, tomorrow’s open must recovery 2095.00 to resume the rally without first dipping any deeper for any longer.

TODAY’S WRAP WILL BEGIN AT 3:30, AND I’LL BE UNAVAILABLE FOR THE SESSION’S LAST 15 MINUTES.

I’m giving the rally every benefit of the doubt for being able to resume during the final hour. This is despite the final hour’s 2094.00 entry overlapping the bias environment’s 2094.25 high, and each being contained by the noon hour’s 2094.50 high.

An interim surge before the final hour did probe fresh afternoon highs up to 2095.25. That’s not necessarily bullish, especially not if the 3:10-3:20 timing window doesn’t trend up to fresh session highs.

Overbought RSIs at this morning’s 2097.25 high still require an eventual retest. And that’s likely so long as the afternoon 2093.50 bias-up signal holds tests as support.

The likeliest alternative to rallying is still just to range sideways, essentially hovering into the close.

Bounce bumped its head before falling over.

Avoiding the attraction below to 2079.00 was possible if the bias environment exit and final hour’s entry were above  2086.00 and 2088.00.

2086.00 was probed up to 2088.00, but no higher. Back under 2084.50 has put 2079.00 back into play. This morning’s 2080.25 low is being attacked now to within 1 tick.

Testing 2079.00 earlier from lower would have had plenty of time to hold and to recover. There was plenty of time to attract counter-trend sponsorship, and the last downleg had just expended a lot of energy.

The effect may not be different now testing 2079.00 later from higher. It’s a little late to attract new sponsorship, and another downleg has recently played out.

Testing 2079.00 still isn’t a requirement. But having failed this afternoon’s bounce, a fresh low is very likely.

Big rally, deep correction, complete recovery… time to rest?

Low-volume environments are difficult to generate sponsorship for trending. They’re also difficult to generate counter-trend sponsorship. Both rules will apply more so tomorrow than today. But anticipating them may be what prevented extending down this morning.

It’s just a little optimistic — buying from so low so quickly and so much for so long. Not that the news should have been taken any more seriously than it was. It wasn’t earnings or liquidity related, so its effect was exacerbated. But the timing and corrective bias allowed more selling.

Probing fresh highs through the 3;10-3:20 timing window today (about to begin) could push the rally into Wednesday and Friday. Otherwise, just ranging flat, let alone lower, could prevent a Friday rally.