We have bounced nicely off the overnight lows in the S&P 500 e-mini (ES) contract (above) and now are trading well within yesterday's trading range. Holding above the Wednesday lows would set up a potential patterns of higher lows after the recent correction and would have me looking for an eventual retest of the bull highs. For that scenario to unfold, I'd want to see us stay above yesterday's pivot level on selling pressure (see Twitter post for pivot and profit targets). Failure to stay above that pivot level would keep us in rangebound mode and would keep me far more defensive. As I'm writing, the U.S. dollar is off its highs for overnight trade; I'll be watching to see if that continues, as it should keep pressure on stocks. I'll also be watching financial stocks and the Russell small caps, which helped lead the downside late yesterday. Their lead should help us establish direction during the day.
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