One of the many wild cards in trading is the tension between the cash markets and the futures. SPX, for instance, already came within 4 points of our downside target at 3854.90 – which was 20% off the Jan 4 highs. But 20% off for ES means 3846.60 – 8 1/2 points below the lows it registered last week.
The upshot is that while SPX came reasonably close to a bounce spot, ES was a little further away. This raises the prospect of an after-hours “do over” where ES gets the chance to tag some solid support.
If the tag comes during trading hours with SPX dropping through its support, things could get even uglier than we saw yesterday.
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