We got a rally yesterday that was either a great harbinger of a political breakthrough — or an amazing head fake. In either case, it shows the strength of the pent-up bullish fervor. If D.C. gets it together, we should see some nice follow through. If not, all that fervor will be instantly transformed to disappointment — and, you don’t want to stand in front of that train wreck.
ES and SPX have obviously bulled their way back into the broken purple channel. SPX closed there; ES is currently about 4 points above the channel bottom.
I would short here at ES 1672.50, with the understanding that it could just as easily be a small pullback on the way to 1683.30 (.500 retrace) or even 1693.50 (.618.)
1693.50 is only a few points away and would make for a nifty IH&S, so we’ll go with that assumption for now.
UPDATE: 10:30 AM
Almost to our .618 ES 1693.50 target. Anyone still long might want to think about stops in the 1683 range.
There’s the tags on the .618 for both ES and SPX (which also just tagged the important 1700 level.) Good place to try a short position — though with tight stops in case the pols actually do make a deal.
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