Though the ES was not able to break morning highs of 949.00 and run stops, the close was not too weak.  Shorts want to see 944.25 hold overnight.  As day-session-only points of control (red line extending right off chart) often serve as overnight highs and lows, 943. 50 could be it.   If the ES breaks above, there is a R1 confluence area right around today’s highs, which should hold.  We expect 934.50 to hold overnight for the longs.

…market front ran by half point and got 3 point reaction.

Update: in our haste to write the post, we erred and should have said the market front ran by 3 ticks, not half point

Should this level hold though the close, we would not be surprised to see 949.00 as an interim high here with a retest into Friday of key support from 907.75 to 911.25.

Unfortunately, the Gold volatility data only go back to Aug 08, but we can see what has happened to the S&P 500 the four times gold has crossed above the VIX previously.

Update:  This is not a confirmed signal yet, but we are monitoring it and will update you.  Based on the limited history of this signal, the short will occur either within one day of the cross of gold over VIX or within one day of the subsequent cross of gold under VIX.

12:40 pm EDT:  We’ve seen an orderly decline to the 1st standard deviation of VWAP and the trendline that has contained the move could break as we write.  Our lowest long entry at 939.25 is so far holding.  Shorts will defend at 944.00, not wanting to see 945.25 taken out.

10:26 am EDT:  The ES shot up on a stronger than expected Pending Home Sales report at 10:00 am, but has sold off sharply from the 949.00 high, the only significance of which we attach to it is that is by the round number 950.  There is a new countertrend short at 948.25, which, as always should not be taken on very high volume or around news (as the 945.75 CT short should not have been taken at 10:00 am).  Longs can enter at 941.75, which is the 50% retracement of the Globex range, VWAP, and just over today’s primary point of control.  Under that, longs may also try 939.25, but should hold off on longs below 937.00 until the upper range (931.75) of the major support area identified in this morning’s report is tested.

Update:  The morning’s CT short was 945.75, not 945.25, and has been corrected above.

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