And an End to a Choppy Day

So it turned out to be a choppy consolidation day in the markets without giving too much indication as to what will happen next. One thing of note is that we closed the day above last week's down-trend channel. Lets see if this new minor support can hold heading into next week. There is really no telling quite yet. Enjoy the weekend...

Retest of the Overnight Highs?

I expect a retest of the overnight highs at which point I will look to enter short somewhere between 1074 and 1076 on the ES. I will not defend this position...

There is also potential to enter short where we are currently trading at 1072, which is the upper region of current downtrend channel. I will not take this short however, I will wait.

Where Are We Going From Here?

The 1065 level I mentioned yesterday was hit on the ES early this morning. I am currently flat and neutral in my bias. My neutrality however is only in this moment. I am still bearish in the bigger picture. I will be cautious moving forward, but there is a strong chance the ES trades below 1050 and possibly tests the prior lows. I say this for a couple of reasons. One, we have crossed below gap window from back on June 10th. So if we do confirm below 1065 the next level of support will be 1055. Official gap fill will be 1050.50. Two, if you use a Keltner channel indicator on a daily chart for the ES, you can see we are poised to move towards the bottom of the channel. That suggests a potential target range between 1037 and 1050. Prior low on the ES is 1034.40.

If we do move down below 1040 to retest prior lows, it will be the third time doing so. In that case we cannot rule out the possibility of making new lows on the third attempt. It will be tricky trading as we move back down and attempt to find the low, so you must be very careful. We'll see how today's trading goes and see if we get a consolidation day or if we see the decline continue further into the weekend. I'll try and comment again as this day's trading reveals a little more...