11:24 am EDT:  We incorrectly identified Wed and Thurs of this week as the two days on which the Federal Reserve Bank of NY would conduct permanent open market operations (POMO).  In fact, it is today (Tues) and tomorrow (Wed).  This increases the likelihood of a correction to be underway by tomorrow (Wed), instead of Thursday.  Regret the error.  Today’s POMO results were for a meager $2 B, so quantitative easing could conceivably continue beyond this week with smaller auction amounts.

After an initial failed test of the 8:30 am spike high to 1048.75, longs have supported the ES in the expected area of 1037.25 to 1039.50 per our morning report.  If the ES accepts value in the upper half of the combined session range (1043.50 and higher), there could be a successful afternoon push to new highs, as we have seen in previous days.  Otherwise, the conditions for this morning’s high being the September high are partially in place.  We would like to have seen a directional push down by now, but a close under 1030 still signifies the top is in for us.  For this reason, we will not be buyers on any further weakness (including test of 1038.25 low), and will instead begin intraday shorting on a break of 1037.00, should it occur.