Hand grenades, horse shoes and bias-down targets.

[pay] S&Ps continued dropping until coming within 1 tick of the ESm 1325’50 bias-down target. Only one moment later Retail Sales data triggered a 6-point spike up to test the 1331’50 bounce limit. The initial shock is still being absorbed as price gravitates back up to the bounce limit.

A cash session retest of the low is still required to launch a durable rally, but I’m not sure we can hold out for that. MACD & RSI on a 3-minute chart diverged positively into the low, which was a retest of a prior low less than 1 point higher made 20 minutes earlier. Not to mention the bounce limit’s retest already. If a rally is attempted without first retesting the low during regular trading hours, then its slope should be steep, although its peak should be shallow – possibly no higher than the 1338’50 bias-up signal. But that test won’t be signaled without first recovering above 1334’75.

A better test of the low – assuming that it holds as support – would provide a better base to launch a rally that could span 30 S&P points from low to high. Unless 1334’75 pushes back hard, it looks like impatient buyers are going to flub that opportunity and risk new session lows that gain traction for extending the downleg.[/pay]