ES review & plan

Yesterday's overnight extension move higher was rejected quickly after the open and the gap was closed, leaving a long selling tail. Volume was low again at just over 1m contracts and 3.2bn shares on NYSE. Rallies were sold every time and the overnight low was eventually taken out with a brief break into the single prints from Tuesday stopping a tick above Friday's high. Mechanical short term traders dominating once more.

Overnight we have seen a break lower through the weak RTH structure of single prints, triggered by weakness in the UK and European indices.  There is still a gap from the globex opening this week between 2076.50-78.50, so we may see an attempt to close this. Beyond that, the naked POC/VPOC from last Friday is the initial downside profile target, with the 2072.50-74.50 being an important support zone to hold above for longs. Below this, the bottom of the current range at 2064.50 is next in the sights.

If buyers step up above the bottom of the single prints from last Friday we are likely to build value within this weak structure area today. As stated in yesterday's review: "Short covering can weaken the market as prices move rapidly away from where longs want to enter. The profile between 2089.75-80.00 is vulnerable and would benefit from filling in for a stronger rally to hold."

Existing Home Sales is the only major US data due at 9am ct and large cap earnings from FB, KO, T, QCOM, BA, EBAY & MCD.

I'm expecting a test of the now resistance zone at 2087.25-89.25 and potentially looking to fade that for a move down into the 74.50-76.50 support, or at least to close the globex gap. Acceptance back above 2089.25 invalidates that and puts the upper resistance zones as long targets.