The path of least resistance at the moment remains down but there remains plenty of support underneath. What does this mean? It means that I expect choppy action to continue though my overall bias is to the downside.
Key up trend support channels dating back to the October 2011 lows broke down to begin last week on both the S&P 500 cash index as well as the SPY. A subsequent lower low followed and the first attempt at a bounce was quickly rejected. This action officially moves my bias to the short side overall. E-mini S&P 500 futures remain in their up-trend channel dating back to October of last year, but the price action is still weak.
Although my overall bias is bearish, I will be looking for support to come into the market this week at 1352-1353 or 1344-1346 ES.
When I see price action that confirms support, regardless of the level, I will be looking to position myself long in anticipation of a move back up toward 1400 ES. I like short entries from there.
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