11:08 am EDT:  The ES clearly failed at key resistance this morning, which was the daily pivot and highest volume market profile point of control at 1063.00 (actual ES high of 1064.00).   It has found support at the upper boundary of the next lower market profile value area, which extends from 1033.00 to 1044.00 and has 1037.75 as its point of control (actual ES low of 1043.25).  There is also powerful pivot support at the current low in the form of monthly R1 and daily S2 at 1042.50 to 1042.75.  A rebound from this area (with no material new lows) is a very bullish rejection of this value area that will likely see a quick return to the higher value area.  However, new material lows today signal acceptance of this area and a longer pause before resumption of the longer term uptrend (and makes us medium term neutral as opposed to bullish into next week).  See the chart on page 1 of this morning’s report to see the two value areas we’re discussing (shaded in blue and gray).

Daytrading other than scalping will be difficult until the markets signal acceptance or rejection of the lower value area.  Aggressive longs can wait for another test of the ~1042-1043 area or a precise 50% retracement from the low (we want to see it respected within one tick), but we would use very tight stops.  Similarly, aggressive shorts can enter between 1046.50 to 1048.00, but we would similarly not allow price to move much above.  The next downside target is the point of control at 1037.75. 

7 Year auction is at 1:00 pm today and not likely to move equities unless it goes very poorly.