You really have to separate the overnight market and the intraday market in the ES. They have different characters but the problem now for the ES is that the overnight market is no longer the free money zone that it has been for such a long time. It is behaving more like a natural market with sellers included among the buyers. Maybe it has to do with the end of QE2, but more likely, we've reached a point where gap ups just aren't supported as well as before. A more two way market. Still, I shudder to go short overnight on ES on most days because it is tough for the short seller to fight the long term history of strength overnight. But it's no longer a free fire zone on the shorts in overnight trade.
Market looks like it wants to grind lower, no panic, just a steady drip lower to more reflect emerging markets and European pain. Still bearish on this market until Friday.
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Better to try trade the post Europe close rally... Europe is the drag... when it shuts US doesn't care and tends to push on... small gains but if you look over past month you will generally see it including today
expect a very light trading day Friday, ahead of the long weekend.
It wasn't that light of a trading day last year ahead of the Memorial Day weekend. Anything is possible on a trading day, even ahead of a Memorial Day weekend. Europe and Asia will not be off on Monday.
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