The ES reached a key resistance level yesterday morning between 1423 and 1425 and was rejected swiftly. The remainder of the day was dominated by selling as the ES dropped more than 20 points. The ISM Manufacturing Index suggested business is contracting following a disappointing reading of 49.5, the lowest level since July of 2009. Employment is especially weak in this report, showing the first monthly contraction in more than three years. At the same time, Fiscal Cliff talks are not making any progress leaving room for sellers to enter the market.
I expect choppy action in the markets over the next two weeks leading up to the December 12th FOMC meeting and what should be resolution on the Fiscal Cliff scenario two days later. If we see any significant sell-off during this period, it will be a buying opportunity and I like buying dips into the end of the year. A sell-off into the 1370s ES is not out of the question. Uncertainty is high so I am not looking to hold any positions for long. Most of my trades will be day trades for now.
Levels to Watch on the ES (Z December contract):
Resistance: 1410.50-1411.50, 1416-1418, 1423-1425
Support: 1403-1404, 1399-1401, 1393-1394
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