Heading into the FOMC, the market doesn't want to take the next step and turn a recent selloff into a committed risk aversion shift. The S&P 500 has called the end to a 5-day drop - the first since January 15. With this capitulation, we still haven't seen a six-day drop in two years.
I am not sure I would call the recent 5 day consecutive drop a capitulation. Perhaps by some measures it is. The 1987 crash was marked by a consecutive 5 day decline, then one powerful maribuzu bar that broke the selling. The next 4 bars were full selling 20/20 maribuzu bars. I would say tomorrows price action is extremely important. If the rally today and the previous days (7/27) selloff is fully engulfed it does not bode well for the remaining 3 days of this week.