Lower Daily Low

Here is the daily chart of the ES futures. Overnight with the turmoil surrounding some banks, and the need to bail out depositors at some - at least not the stock and bond holders - the futures initially made a lower low and then turned higher.

However, in the upturn both the 18-day SMA and the high of the outside-day down were respected. Thus, the outside-day down was a continuation pattern and not a trap for the bears as its high was not exceeded within two trading days. The lower low keeps the swing line trend headed lower.

Price hit the lower daily Bollinger Band and bounced, and that is often a location where the Smart Money takes at least some profits off the table.

The fractals of interest are shown on the chart. Prior down (red) fractals were hit, and have thus been removed. The next down (red) fractals are shown at the December and January lows. They might be hit.

The daily bias is still down. The daily slow stochastic is in over-sold territory but the Bollinger Bands continue to be bent down. Clearly, the lower Bollinger Band target was hit before the upper one, and so the market indicates it is weaker to the down side than it is stronger to the upside.

Watch carefully over the next couple of days. If the 18-day SMA crosses below the 100-day SMA (green crosses), then this would be another bearish event. It is possible the Gorilla Glue trade could develop in such circumstances, where price rides the lower band - especially if the slow stochastic embeds. 

In the comments for the prior post, we showed the VIX had spiked past 30. By the end of the cash session, it was around 26.70, but is certainly higher than last week, So, traders should expect significant volatility. This does not 'just' mean lower prices; it means wide-ranging price swings both to the downside and to the upside.

From an Elliott Wave perspective, we showed a tentative channel in the chart above. As long as price stays below the upper channel line, we will continue to try to count a third wave iii. We're looking to see if it becomes a 1.618 extension.

The CPI report is tomorrow, and with price in the over-sold zone, some caution is due until the figures are known.

Have an excellent start to the evening.

TraderJoe