Today was another bad day for the markets. While no new lows were breached, the markets failed on a second day to follow through after a very strong rally day.
Here is a chart with the three day pivot average (dotted brown line). This is one method of gauging trend - today the market fought hard but could not stay above it. 750 - 780 is the current trading range in the short term that is developing, but the indecision should resolve itself in the direction of the primary trend. The chart has two channel lines that may indicate potential targets to the downside. If the market can put together a rally tomorrow, then 800 should be the first line of resistance. The banded region is the smoothed standard error band, and in a trend the outer line can act as resistance to perpetuate the trend (which is possible here, but not indicative yet).
A clue today early at the open was the failure of the market to achieve the high of the prior day. Here is a 5 minute chart of ES - you can see the market failing to capture the prior high, especially in the first half hour of trading. Also note the large failure at the five day MA:
Also compare the TICK charts. Here is the one from the 24th (the nice rally):
The values started neutral and then shifted up to the higher end of the chart. That is a good sign.
Here was today's:
Obviously uglier. The 5-Min 5 MA could not get above zero and hold.
While it is too early to say with certainty what will happen, today was surely not promising for the bullish case. While the low end of the range did hold, this market feels like frustration is building. When that happens, then we should get some selling. A nice capitulatory washout is a dose of what this market currently needs in order to sustain a good move higher.
The one redeeming quality is that there are some potential divergences showing up on indicators like the RSI. A nice move lower with these divergences could finally provide some fuel for a short term bottom.
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