Ugly duckling watch… where’s the swan?

Did this morning”s swoon dodge a later downdraft?

Two premises greeted today”s ECB news. First, that its favorable reaction would be very productive. And second, that the reaction would ultimately be reversed back under last week”s lows. Whether peaking this morning or next week, the next leg would return it all and more.

ECB news, check. Favorable reaction, check. Very productive, check… Reversal down, check already?

True, the reversal down was substantial, but it was also recovered entirely, and quickly. That suggested the rally had smartly shoved its correction into a timing window that could be absorbed easily. The bearish resolution was at least delayed until testing higher highs at 2059.00.

That was this morning. Now 3-4 hours later, the market has only ranged sideways through the noon hour and a no-bias environment. 

The bias environment is now lapsing. Its 2043.50 bias-up signal had held as resistance, and is now being probed. There is no bullish reason to further delay extending higher. Back under 2041.50 would start to signal the bearish potential remains intact. 

Regardless of which direction is underway into the final hour, it should be aggressive — steep, and substantial.