Round Two coming?… Sunday night’s rally did extend through Monday’s open, but that leg never improved. Did sellers absorb the excessive optimism, or can the optimism become even more excessive?

Pattern points… (Setups and technicals)

Despite holding 1190.00 support through 1:30 to trigger “late no-bias,” the afternoon never exceeded 1194.00. And 1190.00 support was being tested once again as the bias environment lapsed at 2:30.

This time, it failed to hold. The afternoon’s 1184.00 bias-down target was probed down to 1182.50.

But that wasn’t necessarily bearish — failing to hold support, and extending down. Expending selling pressure can be bullish if it does not gain traction. Monday afternoon’s dip did not. Its dip to 1184.00 satisfied selling pressure, and it was retracing back above 1186.00 by 3-5 minutes before the cash session close. The actual close was above 1190.00.

The last-minute recovery did also test 1192.00 without closing above it. That may be its Achilles heal, if pullbacks fail to hold 1189.00 and 1184.00 support. Recovering 1193.00 overnight could gap up Tuesday above 1196.00 — should — and resume the rally to 1205.00 that Monday morning’s open had tried.

What’s Next… (Outlook and opportunities)

Attention New York area subscribers: My apologies for the short-notice, but please email me your availability to meet informally in the city for drinks and appetizers Tuesday evening. I will provide details in the morning.

Look for at least one update overnight or ahead of the Morning Market Tour… My thoughts on the day’s econ calendar are linked here.

Rod David develops analytical techniques that are designed to efficiently identify targets and turning points for any liquid stock or market in any time frame. He primarily analyzes S&Ps, generating several round-turn candidates daily. Rod publishes "Trading Plan" and more each session at the blog http://IfThenSignals.com.