My expectations of a move back up above the previous highs were looking bleak following a rare earnings miss from Apple last week, but market sentiment quickly changed following comments by Mario Draghi that the European Central Bank, "is ready to do whatever it takes to preserve the Euro." European markets took off and US Markets followed. The ES rallied 27 points off the Thursday morning lows and continued higher on Friday following better than expected US GDP numbers. The ES closed up another 27+ points marking the 3d consecutive day of positive gains.
I said I would sell anything above 1380 on the ES and I do remain bearish up at these levels. That being said, I don't expect an immediate reversal to the downside amidst the current market enthusiasm. Today, following three consecutive daily gains totaling more than 60 points, I expect consolidation. I'll consider buying a move down to around 1372 this morning and selling any moves back up at, or slightly above Friday's highs.
I expect the enthusiasm to fade fairly quickly. After a couple of day's of consolidation to begin the week (to pick off the overly excited bulls and the overly eager bears), I will then look to hold a short position a little longer. For the moment, its consolidation, after that, there will be a solid opportunity to the downside. I'll comment again as the action unfolds this week.
Levels to watch today on the ES:
Resistance Above at 1384-1386, 1390-1391
Support Below at 1372-1373, 1369-1370
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