Coming up Close on Support

We thought just for an instant we could see the future
We thought for once we knew what really was important
--Til Tuesday

Domestic equity markets gave up nearly 1.5% today. The action is noteworthy on a couple of fronts. Buyers are becoming more reluctant to buy the dip. Today, for example, a few afternoon attempts to lift 'em off the lows failed, and the indexes closed near the day lows. As such, the tone of the tape may be changing.

Today's action also saw prices fall out of a near term, head-and-shoulders-ish topping pattern.

We are now coming up close to the 50 day moving average and uptrend line that have technically been supporting this rally since last November. In the past, this is where buyers have dutifully stepped in to bounce the tape.

A pure technical read, therefore, suggests that chance favors a rally attempt soon. Lots of traders seem to be reading the technical tea leaves, as my sources of chatter suggested that many shorts covering late today.

In a vacuum, of course, that's bearish on the margin.

position in SPX