1370.75 it was ! Remember my call from yesterday was for a move to ES 1367-1370 - we acheived that technical objective today. Technically it was a nasty move - a 3 sigma move. On the 120-min chart i have shown 3 instances from 9/11/06 when we hit the 3 standard deviation band (on 20 EMA). Two of the prior instances on 10/3 and 10/11 resulted in barn burner rallies. Will it be a replay of the same this time ? I don't think so. Notice the bands were compressed in the prior two moves, while it's expanding and turning down now i.e a potential change in trend. The daily context was on a solid buy then, and back then i was a frothing bull. Right now the daily is on a momentum sell. Well, anything can happen in markets, but we have to play the odds. Given the 3 sigma touch today at 1370.75, a reflex bounce is a given, which is why i covered all my shorts at 1372, which i posted in real-time on traders-talk. Now how big is the bounce gonna be is anyone's guess. Given the technical condition, any bounce tommorow morning will be likely sold. So will reshort on any bounce and see how it goes. If the selloff results in a positive divergences on the hourly charts, i will consider going long for a counter-trend trade. If we break 1367 and accelerate to the downside, it can get nasty in a hurry. It's all speculation at this point. Gotta watch the tape tommorow to see what happens. For now, i am neutral, but looking to short tommorow morning.
I don't have the time today. But i will definetely post the updated daily charts tommorow, which warned us last Friday.
Bottomline - Bearish ST, Bullish IT/LT
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