Trading plan for Oct. 12, 2016

161011-es-daily

ESZ6 Oct. 11, 2016. Daily chart.

The effects of the first reports for the Q3 earning season started to be felt in the early morning. The first company reporting – Alcoa Inc. – announced earnings that were dismal, far below expectations.

It prompted the ES to retrace all of Monday’s gain. Later ES broke down through the bottom boundary of the triangle pattern support and changed the short-term outlook to bearish.

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Today we could see a continuation low move first to test yesterday’s low at 2122-21 zone if overnight trading holds ES under 2140.50-38.50. September’s low 2100 could be the downside target if ES stays under 2146-51 and breaks below 2118.50 in an attempt to fill the unfilled gap at 2113.

The Daily PMO indicator turned its nasty whipsaw short-term buying signal into a selling signal yesterday. But it doesn’t rule out the possibility of a snap back.

However the breakdown to the triangle pattern is not good sign for the Bulls. It gives a bearish outlook for at least several days. If there is a bounce, focus on the short side.

Outlook

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

Support and resistance

Major support levels: 2123-21.50, 2112-13.50, 2103.50-01.75
Major resistance levels: 2164-62.50, 2171-72.50, 2181.50-78.50, 2188-90.50