Pre-close View

FOMC statement is out. Fed chair is on.

The FOMC news was greeted at 2268.50. A knee-jerk reaction down to 2262.50 reacted up to a fresh session high at 2272.50. Attacking yesterday morning’s high to within 3 ticks then reversed down sharply to 2258.00 and 2252.00 taking both RSIs oversold both times.

3-minute RSI was not oversold on the low’s retest down to 2251.50. Its reaction stopped 1 tick short of the 2257.25 buy signal that would have targeted fresh session highs. Now fresh lows are testing 2243.00, and RSIs are again oversold.

Yellen seems to be passing that point in her Q&A where nothing shocking is left to ask or to say. Back above 2253.50 would start to signal the drop was done, and momentum is reversing up. The objective would be to probe fresh highs above 2273.00 — not necessarily today, and probably not by just a little, thanks to a much deeper interim dip. Otherwise, fresh lows would be vulnerable to extending down into the close.

Sideways into the close?

The afternoon’s 2266.50 bias-down signal was being tested when the bias environment began lapsing an hour ago. It no longer needed to define the window’s lower-end. Yet, despite not bouncing out of its test, 2266.50 has continued holding as support.

And now the 3:10-3:20 proxy window has lapsed without breaking lower, or bouncing. The market seems comfortable where it is, hovering under the 2270.00 upside potential, probed only once as the bias environment began.

A deeper pullback remains possible, with plenty of room below before failing to produce a new high close. That would neutralize the only remaining “unfinished business above,” except for overbought RSIs at the high. The 3-minute RSI wasn’t actually overbought when its high bar finished forming, so even that doesn’t require a retest.

Negative territory, but not declining.

This afternoon’s no-bias environment ranged between two inflection points at 2248.00-2251.50. Both were touched, neither was broken. The bias environment began lapsing an hour ago, and still that range persists.

All in negative territory.

Ranging sideways in negative territory does not reflect stability. It does not suggest that all of the downside momentum — from retracing the overnight and the post-open surges — has been absorbed. The burden of proof is on buyers and yet positive territory isn’t yet recovered, with almost all relevant timing windows elapsed.

Maintaining this template through the close would be vulnerable to trending down overnight. Just closing today under Friday’s late consolidation low of 2151.75 would start to signal the rally’s momentum had given way to a corrective pullback. Closing above Friday’s 2254.25 would target a retest of Sunday night’s high.

PROGRAMMING NOTE: The post-market Wrap will be held a half-hour early today at 3:33. I’ll be available through the close.

This afternoon’s 2246.50 bias-up target was met to within 2 ticks. Just attacking it to within 3 ticks prevents it from becoming “unfinished business above” if left outstanding.

And it sure looks like it will be left outstanding. Reacting down into and out of the bias environment lapsing has extended to test 2237.00.

It’s possible that all trending today is done, leaving the balance of the session to range sideways. Back under 2237.50 would suggest fresh session lows are in-play. But there is otherwise no bullish setup.

What could go wrong:

I joked in my last blog post that this may be the “Anti-antiTrump” rally. But that leg actually peaked before last Wednesday’s high retested it at 2212.00, launching a temporary correction down. The pullback’s lowest objective at 2181.00 was met Sunday night in reaction to Italy’s “no” vote. Opening Monday back above Friday’s lows isolated that probe of fresh lows to the overnight. Today’s test of 2235.00 is the result.

Trump’s rally seems to tower of the No-vote rally. Even if we include the No-vote’s 2179.00 low — without including election night’s 2029.00 low — that’s 56 points since Sunday night’s low, compared to 87 for Trump. The better pace is this week, just 3 days in and already two-thirds as productive as Trump’s 13-day run.

Of course, there’s nothing scientific about the comparison, and not much that is mathematical. Plus, we don’t need a rate-of-change indicator to tell us this week’s rally has been significantly steeper than the prior upleg.

Steeper, into new highs. New highs, into Thursday’s ECB policy meeting, and Mario Draghi’s press conference. His comments have a perfect track record for quite some time of launching steep price swings, often in multiple directions, during the same presser. Be careful.

As for the balance of this afternoon, the final hour just missed an opportunity to gain traction. It was entered within the bias environment’s range, instead of high to confirm the bias environment that had lapsed above the noon hour’s high. Confirmation is still possible by extending higher through the 3:10-3:20 proxy window, which just opened by probing highe.

Back under 2232.75 would target 2222.00. There would be no “unfinished business above” since RSIs have left overbought territory. And closing at or under 2220.00 would prevent putting into play any higher objective. Just as Mario Draghi takes the microphone.