After very weak trading overnight that broke the multiday trading range and the lows from 8/11-8/12, we've seen a bounce in the S&P 500 (ES) futures and are now trading back above those lows (i.e., back into the multi-day range). A similar pattern is evident in the NASDAQ 100 (NQ) futures. If we can hold the overnight lows, a snap back rally trapping shorts is a distinct possibility, particularly given the historical patterns around weak opens noted in the prior post.
Oil is also trading off its lows this morning, and the U.S. dollar is off its highs vs. euro. I'll be watching those correlated markets to see if risk assets can catch a bid today from bargain hunters.
That having been said, we've seen an extended period of topping from late July and those do not typically terminate in one-day declines. A break of the overnight lows would represent fresh selling pressure and a confirmation of a transition from a topping market to a short-term downtrend. I'll be tracking markets via Twitter this morning (follow here) to gauge acceptance or rejection of value at these lower price levels.
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