First Target Reached, Anticipating the Next Move...

First target of 1198-1200 ES reached. You can see how that area has acted as pretty good resistance. The ES has traded down almost 10 points off that price area 4 times now.

I expect that my second price target of 1218-1220 will be reached next. The key is choosing the best price point to look for long entries to try and catch this move. Ideally, an opportunity will present itself to enter long down around 1178-1179 assuming the ES trades that low. I will of course be careful defending long entries. Keep in mind, a daily close below 1171 will likely send the ES down to revisit the lower 1150s.

I will consider short entries at or above 1218-1220. The key is to wait for a good short entry signal. Maximum upside potential (in the next 5 trading days) according to my analysis is at 1245. I don't think we will trade that high, but it is possible. As long as we don't see a daily close on the ES above 1231-1232, I will like shorts at those price levels.

IN THE NEWS
Even though the market is up, there continues to be a lot of negative news.

• As final details of the EFSF come out, it is clear that it is not the solution to avert a crisis in the European debt situation.
  
• There are talks of a contingency plan to dissolve the Euro.
  
• Global GDP is declining while debt burdens become untenable.
  
• Standard & Poor's cuts ratings of Bank of America, Goldman Sachs, Citigroup and many other banks.
  
• Today, for the 4th time, the ECB failed to sterilize its ECB bond purchases. The ECB said that 85 banks bid a total of EUR 194.2 bln for seven-day term deposits. It had aimed to drain EUR 203.5 bln.
  

The reason I expect further upside amidst the negativity is because the market is expecting a plan to recapitalize the banks and to make sure bond interest rates don't spiral out of control in Europe. Whether money comes from the IMF, the ECB, the Fed, China or somewhere else is not important. Whether or not it actually happens is not important. What matters in the short-term is what the market expects. For this reason as well as for technical reasons, I expect we will see further upside in the market. As always, only time will tell...