There Be Dragons

I don’t know how much time I’ll have for a complete post today so I’m knocking this one out early. This is where we are: For the sixth time in a row the bulls now failed to breach the ES 2100 mark over the past year, and most deservedly so there will be a price to pay. The most positive scenario I’m seeing here will be a descent into the range between 2040 and 2020. There’s a ton of daily and weekly support that should hold. However…

Should that fail then we are talking about a completely different beast. For one a drop below the 2k mark most likely leads us to around 1900. And things could turn pretty ugly from there as all that bullish context would now loom above as resistance. Not a rosy scenario given the political landscape over in the U.S. and the pending Brexit referendum over here in Europe on June 23rd.

If you are not positioned then I recommend a wait and see approach until we either touch ES 2040 or see a miraculous turn on a dime which propels us back above 2080 (i.e. the 25-day SMA). If you’re positioned short then do nothing. If you’re positioned long then stop trading and take a vacation – you should have pulled the plug a long time ago!!

Bottom Line

For now the bulls are in for some pain and most likely it’ll get worse before it gets better.