The US stock market posted solid losses yesterday as investors got mixed signals from the Fed over the possibility of an interest rate hike in September.

The ES attempted to fill its gap at 2094 after the Fed minutes were leaked ahead of the scheduled time. If that was intended to goose the market, it failed. The ES sold off into the close 2072.75, losing 21.25 points for the day. The only outcome that can be construed as good news is that the 200-day moving average line held the price from declining further. The ES closed almost exactly at the 200-day ema..

The price action on closing was bearish. The total volume increased by 50% over Tuesday’s volume.

Today

Today we expect the ES to have a brief consolidation to hold price up to help the SP500 index close above the 2065 level at option expiration day.

ES could remain inside the triangle pattern range from 2090.50 to 2055 but price could be very volatile, as it was yesterday. Every time ES moved up to the top or bottom line of the triangle formation, the momentum disappeared the following day. So far we don’t know which direction ES will break out, but that breakout is not far away. Once ES gives us a clear breakout direction, we will trade in that direction.

The major support levels: 2054-55, 2035-32, 2025-23.50, 2018.50-16.50;
major resistance levels: 2128.50-29.50, 2134.50-36.50.

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Chart: S&P500 mini futures (ESU5) daily chart to Aug. 19, 2015

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