Pre-close View

Sellers gaining traction on an inside day.

Thursday”s range has yet to be probed in either direction, and might not be. That would make today an “inside day.” An inside day”s bias tends to be counter-trend. More so,an artificially influenced bias (e.g. expiration).

We”ll continue that discussion later.

Meanwhile, the afternoon”s bias environment was exited at 2:30 under the noon hour”s range, and the final hour was entered lower. Sellers gained traction for their efforts. The 3:10-3:20 timing window probed fresh lows, too — down to 2101.00 — but not durably.

Oversold RSIs make the drop vulnerable to reacting up, which can be exacerbated by the fast-approaching two-weekend”s illiquidity. Back above 2104.00 would start to signal a short-squeeze underway, albeit doomed to failure. Otherwise, the next lower attractions are 2099.25 and 2097.25.

Pre-news drop produces recovery to fresh highs.

One thing prevented getting too bullish ahead of Wednesday afternoon”s FOMC statement: oversold RSIs at the 2080.00 low. That one thing, and the lack of anything outright bullish. But at least two relevant conditions were potentially bullish.

First, the intraday pullback had developed exclusively since the morning”s bias environment began lapsing, and extended substantially during the noon hour”s noise. That”s not necessarily strong-handed sponsorship, leaving potential for the dip to be defensive posturing.

Second, the 2080.00 low was the afternoon”s bias-down signal. That”s literally as much selling pressure as could be expended without gaining traction.

The FOMC statement”s knee-jerk reaction spiked down to neutralize the low”s oversold RSIs down to 2078.75. Then it recovered to 2094.00. Its reaction to 2085.50 was recovered to 2098.75.

Until dropping back down to 2084.50, having absorbed so much selling pressure last week and since Wednesday”s open, there remains potential for a relief rally. Fresh highs in the 2100.00 area offer resistance, but probing any higher would likely find an air pocket above it.

Rallying throughout the day should bode well overnight.

Sellers weren”t actually marginalized through the open, but the session has behaved that way. The overnight low”s recovery from 2062.00 that opened at 2074.50, has extended higher to 2088.75.

The afternoon”s bias-up signal triggered late. That”s more predictive than this morning”s no-bias signal that was invalidated.

Meanwhile, the afternoon”s bias environment was exited above the noon hour”s high. Entering the final hour above the final hour”s high would have signaled buyers gained traction for their efforts. That didn”t happen. Trending up to fresh highs through the 3:10-3:20 timing window would still suffice.

Otherwise, back under 2086.25 would start to signal at least a corrective dip underway. Probably nothing more substantial, as the 2088.75 high”s retest wasn”t distributive and is likely to be retested.

Morning drop”s retracement doesn”t translate to afternoon recovery.

We discussed a setup during this weekend”s Saturday Review, which anticipated recovering into positive territory from an overnight or opening probe into negative territory. The probe occurred, and it was retraced back through the open. But its retracement never extended into positive territory.

Not, yet.

Tomorrow”s session isn”t being greeted from a position of weakness. After extending down 8 points, the 2071.25 opening print was recovered by 8 points, as well. And once it was recovered, it stayed recovered. Also, despite the final hour”s entry overlapping the noon hour”s low, the 3:10-3:20 timing windows did not exploit the weakness. So, sellers didn”t gain traction for their earlier effort.

But buyers didn”t gain traction, either. Extending down Monday night and trending down Tuesday is possible, which is how the decline has developed Friday and Monday. But not gaining traction Monday does require gapping down Tuesday to undermine a recovery. Not gapping down would not likely resume the decline — even if fresh lows were probed intraday.

So, as for that setup we discussed on Saturday, it remains intact since today”s sellers gained no traction. Its delay suggests that Tuesday will gap up to fulfill it. But the vulnerability to a recovery would evaporate by gapping down.

Remaining under pressure, but not extending.

This afternoon”s no-bias environment began lapsing at the noon hour”s 2084.25 low. Then fresh afternoon lows were probed down to 2082.25 just several minutes past 2:30. Any earlier would have been relevant.

The final hour was entered under the bias environment low, but the 3:10-3:20 timing window didn”t confirm. Sellers gained no traction for their effort.

RSIs did diverge positively at the 2082.25 low, producing a bounce to 2087.00. But the bounce isn”t credible for extending higher, since the 2082.25 lows stopped optimistically short of touching this morning”s low, and that”s potentially bearish from a contrarian perspective.

Extending down to 2080.50 before the close, or not, this afternoon”s selling pressure could have been a lot worse into the weekend. Instead, the morning”s drop wasn”t exceeded before entering the position-squaring window at 3:37. So, sellers are still considered weak-handed.