We have pierced important support around 990 in the ES contract, but found good buying there and are currently trading back into the multi-day trading range. I will be watching closely to see if that 990 area can hold support. A sideways correction would be positive for market bulls, similar to the corrective action we saw during much of May and June. A drop below support at 980 and especially below the 965 support would suggest a topping process of more significant potential magnitude, especially if it is accompanied by very weak market breadth. Holding the 990 support, conversely, would suggest more of a rotational correction, with fresh high prices likely to lie ahead. Upon my return, I will track sectors and secondary indexes to determine whether the corrective behavior is more rotational or the start of a shift in trend. For a further look at the market's recent action, check out my previous post.
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