Here's what I described to several traders yesterday as the $64,000 question: Have we started a new bull leg higher, so that we stay above the early May highs (blue line above), or do we stall out here and return to the May range as part of a larger consolidation/topping pattern?
Yesterday's market dipped below the line before rallying furiously into the close and finishing the session above those early May highs. This morning we are adding to that strength. The rejection of price in the 922/923 area for ES was notable. We should stay above that level if we're to see a fresh bull leg higher. For now, the operative intermediate-term trading range is between yesterday's lows and Tuesday's highs. I start the day with that range mindset, particularly if we get mixed sector performance during the regular trading session.
Meanwhile, keep an eye on the three sectors identified in this post; they still have yet to confirm the new highs in the stock market averages.
7:17 AM comment - With the ECB decision to hold rates steady, the U.S. dollar has traded higher against the euro and stock index futures have sold off along with gold and Treasuries. The dollar trade continues to hold important implications for stocks. Meanwhile, this sets the 938 area in ES as important resistance, as the currency picture has created a meaningful rejection of value at the overnight highs.
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