In a surprise move this evening/early morning, futures are declining significantly to new lows. It looks like we are going to see the gap fill down to 1050 on the ES sooner rather than later. The question is, will the markets bounce up off those levels or will we make new lows? It will be interesting to see where the equities markets open this morning, but I will be looking to get long somewhere around gap fill. Official gap fill is at 1050.25 on the ES (106.02 on the SPY), but the gap fill range is between 1047 and 1055.50 (105.66 and 106.50 on the SPY). I will be looking for an official fill before getting too enthusiastic about a long position. Keep in mind that prior lows dating back to the 25th of May are at 1032.50 on the ES. I will be watching volume to look for shifts in supply and demand to influence where I get long. There will be bounces in this market, which is why I am looking to get long, but glancing at the bigger picture, fundamentals are not good and technicals are bearish. So be cautious. I do expect the market to see new lows. The difficult part is getting the timing right. Will it happen this week, or will we see a fake-out rally first. That is always the tough question...
One thing to note is the bear flag that formed from the highs on the 21st downward to the last two days of sideways consolidation. The bear flag looks to be playing out and if it does, we could see new lows down to 1012 to 1018. If it fails, meaning we don't see further lows past 1060, we could see a pretty nice move upward in the opposite direction...
I will post more this morning as the markets open...
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