My market outlook to begin last week turned out to be spot-on as dips were bought and the ES crossed into key resistance in the 1370s. It has since sold off almost 45 points. European concerns are evident as current market sentiment is weak.
US treasury yields reached historic lows yesterday as the 10 year note hit 1.395%. At the same time, the Spanish 10 Year yield ballooned to almost 7.5%. Moody's cut its outlook on Germany yesterday as the health of Greece and Spain are a concern.
Today's trading will be important to get a gauge on what to expect next. I'll be watching to see if the 1335-1338 level holds this morning. There is support underneath that at yesterday's low's as well and as long as we see the 1330's hold this morning, I will look for continued buying to follow, though trading action may be slow and boring.
In the short-term, the ES remains in a bullish up-channel dating back to early June and I will not be surprised to see last week's highs tested again and even broken. Again, this will be a key resistance level and will likely be sold. I will look to sell anything above 1380 ES. As always, i will wait for confirmation that there are sellers at that price level before jumping in short.
A close below 1339 today will be negative and will suggest further downside is ahead. So we'll wait and see how price action unfolds.
Levels to watch today on the ES:
Resistance Above at: 1348-1350, 1356-1357
Support Below at: 1337-1338, 1331-1332, 1327-1328, 1321-1322
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