A Failing Rally?

As the accompanying chart shows, a crossover in the near term indicators tracked (momentum and MACD) occurred last week. That crossover suggests several weeks (or more) of work to undo the damage. However, today's bounce (while certainly justifiable on economic terms for a number of reasons) is taking place very early in the undo-the-damage process.

Given the short term oversold (third indicator - slow stochastics), the bounce is not entirely unexpected. However, in light of the aforementioned crossover, the bounce today has all the characteristics of a failing rally.

Therefore, out of the four probable market sequence outcomes noted last Thursday, the first two referencing a failing rally now appear to be the most likely.

Whichever market sequence ultimately plays out, however, it is toward a resolution of the multi month trading range that the market sequencing outcomes have the greatest value.