After the big drop on Monday, at current price of ES 1745, we've retraced about 1/4 of the 45 point drop from 1778 to 1733. That is a very weak bounce. I am still getting the sense that there are weak hands on the long side hoping for a quick rebound like 2013 to bail them out. Not so sure the market will be so compliant with that hope.
I want to emphasize that we haven't seen such a speedy drop since November of 2012. Back then, there were fears of the fiscal cliff, and traders definitely were more bearish back then. I looked at the equity put/call ratio for Wednesday found in the OCC website, and was surprised to see just a 0.77 p/c ratio, indicating a lot of equity call volume. This for a such a weak bounce day.
It looks like more pain ahead for bulls. I am in cash, and will probably not get a chance to short a bounce today, which was the original plan. I expect a flush out either today or Friday, easily breaking yesterday's lows.
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