The early game-plan was to short early strength, then beware of a reversal from the 1084.50-1084.00 PowerZone. The ES popped up to the 1088.50-1089.00 zone and reversed, dropping from 1089.00 to1084.75 (1084.00-1084.50 PowerZone) in 5 minutes and then turned back up. The bounce stalled and reversed from 1088.50 and then dropped to the 1084.75 support again. The ES rallied 13 points to the 1097.00-1098.00 PowerZone shortly after noon. Two small pullbacks from 1097.00 followed, but the 1094.50 updated support held, setting up a bounce to 1099.50 just before 2 pm. A pullback to 1095.50 was reversed and a sprint to a 1101.50 high occurred, and then selling took the market lower into the close.
The 2 day rally has turned the short term internal gauges from very oversold to modestly overbought. If there is one more day of decent action, that would stretch the indicators into overbought territory nearly across the board. The sentiment sure turned bullish fast, and if the Vix drops a bit more and then reverses, that will give some sell signals.
The ES didn't like it over 1100 on Tuesday afternoon, and reversed from just above that level. The ES settled about 3 points under fair value, so if there is a pop up to the 1099.50-1100.50 area that reverses early on Wednesday, that should set up a good shorting opportunity. If that plays out, or if the ES reverses from a bit higher up early in the day near the 1103.50-1104.00 PowerZone, then the initial support at the 1094.75-1095.50 PowerZone on the ES will need to be defended, or quickly reversed if broken. The pullbacks have been setting up good buying opportunities, reversing as soon as the downside momentum fizzles and prices turn back up. So that area should hold if the market is still in good shape. If there is a decent sized pullback/selloff, then a test of the 1079.75-1080.50 PowerZone area would need to reverse quickly, otherwise we are having another technical breakdown and the downside could gather some steam.
Today's levels for the ES, NQ, YM http://www.pivotfarm.com/futures.html
EURUSD, GBPUSD & USDJPY http://www.pivotfarm.com/forex.html
Disclosure: no positions