The market has seen a volatile mix of selling and buying over the past month and a half. I have been a confident buyer during each major decline throughout the month of August right up through the first week of September. After beginning on a down note last week, the ES rallied up to 1200 as expected. This week however, I am not a confident buyer. The up-trending support (between 1140-1150 ES) has already broken down.
Much of the negativity this morning comes on the heels of selling pressure in Europe. European debt remains a major concern. The latest rumors suggest that Moody's may downgrade French Banks at any time.
This morning we are seeing support come in off 1124 ES. The current bounce may have a little more juice, but I like shorts between 1140 and 1150 ES.
The next attractive long entry will be somewhere between 1097-1106 (ES). From there we could see a nice rally back to the mid 1100s or even as high as 1170-1180. Whether the ES rallies back up to 1150 or 1180, I expect selling pressure will again push markets lower. There will likely be enough momentum to move price below the August 8th low. The next downward target from there is 1000 ES.
While I believe there is a high potential for lower lows, there will be plenty of opportunities to get long in the process. My overall bias, however, is to the short-side.
I will try and post some trades this week...
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