There are some tepid signs that this retest of the S&P lows will succeed. Once the S&P accepted prices below 804.30, I expected prices at least to dip below 741. The price action since the breach of 804.30 suggests that it will be only a dip rather than acceptance below 741. The difference is not inconsequential.
Acceptance below 741 suggests the start of directional move south, a move that will probably be accompanied by strong downside momentum. On the other hand a dip and regain above the Primary Buy Zone (882 to 741) will project a target to at least 1034 to 1158.
The price action to date tonight is not very helpful. Last night we had a Neutral Day (Figure 1). This suggested a possible reversal day. There were a couple of factors against that interpretation.
- Market Delta showed that the bears dominated Friday’s volume (Figure 2). This suggested that any open-gap tonight would be closed. And so it has proven.
- So far tonight, we have seen the continuation of the light volume (Figure 3). This lack of trade facilitation as the market heads lower sets the scene for a tradeable bounce.
Within the next ten days or so, the situation should resolve itself.
Finally two points:
- All figures are basis cash S&P and
- The charts were the ones used in my live webinar-commentary tonight and do contain some spelling errors. My apologies.
Figure 1 Neutral Day
Figure 2 Market Delta Volume
Figure 3 Normalized Volume 30-mins ES
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