Tuesday’s trade was a continuation of the downside that began yesterday. Trading though, was sketchy at times, but manageable in terms of having a profitable day. As I left off last night, should the 4188 high be the completion point for the Minor wave 2 (view #1) or Intermediate wave A, (view #2) the ES would pick up stronger support for the high being place once we can count 5 waves down on the hourly chart. It is possible to do that, but I’m leaving open the potential for a quick drop down to towards the 200 EMA at 4108 to put in a cleaner 5 waves down.
For tomorrow the CPI number comes out before the opening – expect several violent bigger swings in both directions. Positive response from the markets would leave the potential for new highs above 4188 to occur before the next decline picks up. A quick drop to 4100 or below could put in the first 5 down and set the stage for a bounce higher. And all of that could come before the bell rings tomorrow morning.
Support and resistance levels are updated in the update.