Ultimately I don't trust moves that occur during the last 1/2 hour of the day. That window is used for position squaring and tends to be very unreliable for price action dictating anything predictable. So yesterday I said 995/994 was a major price point for signaling the end of this rally that originated at 865ish. Yesterdays close did close under the 995/994 level, however the price action that occurred from 3-3:30 was more telling than the price action from 3:30-4:15. We ranged in the 995/994 area for almost 2 hours in the afternoon before the position squaring window took prices lower. This signals to me a lack of conviction on sellers to push prices lower.
What they need to do today is prove they have conviction and the only way of doing that is to sell with conviction. Any hesitation will be exploited by buyers because 995/994 is the maximum stretching point for buyers before breaking. If sellers are willing to stretch them to their breaking point and not break, there will be a snap back and we'll see the upper end of this trading range tested (1016) and most likely broken.
Overnight sellers tried to gap down lower and show some selling conviction, but were stopped at the 986 area which shows that buyers are still willing to fight back and do so optimistically. By doing so this confirms a previous pattern and I can say that I need to see 983 tested and broken soon (including a close under that level) for me to finally call this rally finished. The first thing I am looking for is a close under 990 to signal a test of 983.
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