Well, that about sums it up, right?
As I said in yesterday morning's Report: "On the whole, I'd rather if we consolidate here before even popping above 2,700 again as 2,850 was too high. Hopefuly we can hang around 2,650 for a week or two and form a proper base before trying to move higher again – but traders are so impatient.…"
Well, it's been a day and people are already freaking out because we haven't flown back to 2,850 and it's going to be a while before they realize 2,850 shouldn't have happened in the first place and it's more likely that this (2,700) is the top of the range, not the bottom – at least through Q2. On our Big Chart, 2,640 is the 20% line on the S&P and, even being generous, THAT should be the middle of a range we move 5% up (2,772) and 5% down (2,508) in, so call it 2,500 to 2,800 with 2,650 the middle line. That's where I think we'll settle once all the dust clears.
This morning, however, in our Live Member Chat Room, we are playing for a bounce using the following levels:
I also like /TF over 1,500 and /NQ over 6,600 and /NQ is lagging and likely to pop big if we get moving. /YM 24,800 and /ES 2,675 will confirm and tight stops if 2 of the 3 fail to hold those lines!
Remember, 25 points (back to 2,700) on the S&P (/ES) is good for $1,250 per contract – nothing to sneeze at. The Russell (/TF) hit 1,520 yesterday and that's up $1,000 per contract and the Nasdaq hit 6,700 and getting back there pays $2,000 per contract, so it's well worth playing for the bounce and the BOE gave a more hawkish statement this morning and that should keep the Dollar in check and allow our indexes a bit of breathing room today.
In the Futures, we tested 2,550 on Tuesday and our 30% line is 2,860 and 2,640 is 20% so, ignoring the spike below, we have a 220-point drop and our 5% Rule™ tells us to expect a 20% weak bounce off that fall (44 points) back to 2,684 and then the strong bounce line…