The ES gapped down at the open yesterday and dropped sharply until the European market closed. It mainly reflected concern the problems with European banks may spread to US banks.

The market recovered by bouncing from the last August low, aided by hope that tomorrow’s Congressional testimony by Mrs. Yellen may calm the nerves of frightened investors.

So far last year’s support zone still helps to hold up ES. But after Mrs. Yellen’s appearances before the US Congress Wednesday and Thursday it could turn out differently.

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Today we could see ES repeat yesterday’s range to wait for tomorrow’s testimony, or attempt to fill yesterday’s gaps at 1865.75 and 1875.75 if the price can move 1856.50.

The PMO indicator hasn’t crossed down yet, and still give some hope to buyers. But the fast line points down, we still expect that PMO will give a selling signal soon.

1905 is the current short-term resistance line. As long as it holds down, the short-term outlook still is bearish and the direction remains down.

Outlook

Short-term === Bearish
MEDIUM TERM === Neutral
LONG-TERM === Neutral

Support and Resistance

Major support levels: 1816-1818, 1800-1790, 1785-75.50
Major resistance levels: 1893.50-89, 1906.50-08, 1921.75-23.50, 1956.50-55.50

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