The VIX has broken support, but ES has not yet cleared resistance.
(Admittedly, ES is not the same thing as SPX, and while both SPX and the Dow have moved above resistance in the first hour of trading...I'm still skeptical.)
Regardless of my sense for the potential for a reversal day today, I will be taking partial profits on ES to reduce risk and offset the possible loss if I'm wrong and get stopped out.
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The VIX Daily:
The dramatic drop in the VIX is as expected. But it is now a perfect setup for 2nd attempt up. (the first attempt being 3/28/11). It is also a minor trend channel line overshoot. Both indicate high probability up move for the VIX and down move for the S&P in the next few days.
The Dow Daily:
The Dow is in a perfect setup for an Upthrust. A move down from this level will trap breakout traders who will have to cover as the market moves down. It will also trap out any shorts who had to cover at the prior high. It all depends on whether we get a good looking reversal bar in the next few days.
Longer term ES:
The ES is in too strong a trend to reverse just yet. The prior high (1338.25 on 2/18/11) is too close to not get retested. I expect one move push up to that level.
Looking at the ES on a 12Range bar with globex data, today's high was a perfect trend channel test. I expect retest of today's high and then a possible move down after the retest.
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