ES reached the very top end of our initial downside target yesterday, about 6 points above the 50-day moving average and 361.8 Fib extension. It tagged both overnight, leaving traders to wonder whether or not the 200-day is still in the picture.

There’s a very good chance that the release of FOMC minutes at 2pm ET will be the deciding factor.

continued for members…

The bigger picture shows that ES’ SMA10 is currently dropping through the SMA20 (the white arrow), another reason we’re at an inflection point for the algo crowd.

The picture is fairly similar with the other indices we watch.

I’d be surprised if the SMA200s don’t at least produce a bounce. There are also some SMA50s to consider. These readings were taken around 1pm ET.  Note there is a big spread amongst the indices. In general, the SMA50s are the closer targets.

I would assume that this will be one of those quick plunges followed by a sharp reversal and rebound. A drop that satisfied all of them, including DJIA, would mean 3,900 for SPX.