The debt ceiling plan will probably lead to a credit downgrade, and most in the market expect the same. Thus, any selloff on a downgrade should not last long, like any rally on a debt deal didn't last long. Problem is, you have more data coming in supporting a slowing economy and Europe weakness pushing the PIIGS closer to the brink of panic. It is a slow motion panic in Europe, but those stocks are so beat up that there just isn't that much downside and I don't know anybody that is bullish on Europe. Nobody.
With the nonfarm payrolls coming up on Friday, I expect fund managers to pare back on risk today and tomorrow. We will likely be testing the lows in June. The lows in March are probably safe unless there is a speculative attack on Italy or Spain, which I don't see happening yet.
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Levels to watch on ES: 1262 = closing low in June, 1254.5 = intraday low in June, and flat on the year. I expect there to be strong support at 1254.5.
I missed this move lower. I was positioned for a bounce, then a move lower.
I've taken a nice hit. Still looking for a move back to 1300. Not sure after that? The move lower seemed to happen already. Maybe sideways?
You and everyone else stuck with longs are hoping for 1300 to bail them out. We probably end up breaking 1250 tomorrow, panic out the weak hands, and then churn for a few days. I don't expect an immediate move up because so many were looking to sell this debt deal rally which prevented us from getting the bearish sentiment necessary for a bottom.
It feels close to capitulation to me.
It will be a violent bounce.
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