It's hard to make too much of today, other than what it was. When you look at the daily chart of the ES E-Mini S&P500 Futures, all they did was snap-back towards the line that was previously violated.
|ES - Daily - Snap Back Towards the Line|
The problem is there is no clear information that the rally is over. Numerically, the futures settled back inside the lower daily Bollinger Band, which 'resets to zero' the consecutive number of days under the lower band.
And, when one looks at cash, one does not see the 50 point decline in last night's overnight session, or the overnight reversal, so it is again hard to believe it for the best guidance. Cash 'can' be counted as three waves up from the low to this point, but, again, there is no clear information that the rally is over. Sometimes really sharp and violent waves like this one are the start of a triangle, particularly after a long steep drop.
We'll have to wait to see some retrace waves, and how prices react to the lower trend line before making more firm conclusions. But, as said before, there is no upward counting until a higher high day is made. That has not happened yet. Today was actually a "lower low" day! The swing line is still down and daily prices are still under the 18-day SMA, and so have a negative bias. Further, there is no critical upward overlap, yet.
However, to those who say "what a surprise" today was, we clearly outlined the probability of closing outside the band in Friday's post. No surprise here.
Have a good start to the evening.