Tuesday

ESU5

Open

High

Low

Close

1952.00

1968.75

1944.25

1967.50

Monday night there were rumors the Chinese government would announce an even more massive influx of money into their stock markets, intended to halt what is starting to look like an all out economic disaster. It worked, at least temporarily – how little it takes to move the markets now! — But the biggest beneficiaries were in the US.

The SP500 large cap mini-futures, which trade overnight while US markets are closed, halted a nasty-looking decline, surged 31 points overnight, and then managed to hold the gain and a bit more during the regular trading session Tuesday.

The futures ended the day 46 points above the previous close, and all the major US indices had nice big green candles Tuesday, a welcome relief from the sea of red in the past two weeks.

So the US crash is over now, right? It was just a correction, not a new Bear… wasn’t it?

Not quite. This is more likely to be a sucker rally than the end of the decline.

We want to see the price action today before we decide if this breakout has any substance.  The ES could rally up further if there is a strong follow-through today. Without it, it could be the same fake breakout as we saw Aug. 30, followed on Thursday by a further decline.

Wednesday

Today 1950 will be the first support line, but it will also be a battle zone if the price pulls back to that level. As long as the ES doesn’t close below 1950, the odds will favor the upside for a while longer. Buyers will continue fighting for the overhead resistance levels 1983-88 and 2000 as we approach rollover day for the contract.

Major support levels for Wednesday: 1900-03.50, 1850-45, 1828.50-25;
Major resistance levels: 1992.75-95.50, 2012.50-2013.50 2032-2035

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Chart:  S&P500 mini futures (ESU5) daily chart Sept. 8, 2015

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