Here you see how we're setting up for today's open in the S&P 500 e-mini (ES) futures. The multiday range that has been the subject of several recent posts stands out here. We tested the lower end of that range (the 7/24 lows) on the heels of a large drop in share prices in China. We're currently on target for an opening drop of over half a percent in the emerging markets ETF (EEM). Many of the bullish intermarket themes are retreating in overnight trade, with gold and oil down, a stronger U.S. dollar, and lower 10-year Treasury rates.
All of this is a corrective movement from the significant momentum highs of 7/23 and Monday price highs. Recall that we made a breakout from the long term range that went back to May-June; it would not be surprising to see that former resistance now serve as support. Failure to take out the 7/24 lows would be quite bullish for stocks, as it would signal significant buying interest on modest dips and a resilient ability to weather the China weakness. A break below those lows should find support in the 950 region. I'll be updating market action via Twitter; my live online chat will begin at 10 AM CT.
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