Continuing Weakness
In what has become a broken record over the past three weeks, the equity index complex continues to give back its recent trading bounce gains. Trading in this environment can be dangerous. But, it is important to identify what the expectations are for the market. Right now, it’s simple, all bets are off — at least in terms of new money.
To me the crucial factor in the SPZ is the upside gap left from Friday’s trade — 1323-1337. This zone needs to be traded before we can hope to sustain any type of serious retracement of the recent downmove. In the most bullish of circumstances, this zone would be traded and we would close the session around 1330 and move higher over the next few weeks. In the bearish scenario, we would settle under 1320. What this should show the reader is that until we trade in this zone, it will be difficult to gauge market direction — especially in terms of aggressiveness.
As for the session remaining, I am looking for 1340 to trade, followed by a move towards 1333. Any trade above 1354 negates this short-term downtrend.
More importantly is the NDZ — I am looking for new contract lows today at 2650.
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