By now, it’s pretty clear that the markets are in a bear market and all the rallies are getting sold into. The bounce of late last month did not even reach 50 days SMA on the key indexes, except on the YM (Dow Jones Industrial) and it was tweeted earlier (see the tweet here) the rally started fizzling out immediately. Although yes, I did get a feeling the day after that we probably are headed for 50DMA on the ES as well, but that didn’t materialise and the market bombed.
Let’s now dive in and see where we are:
ES: The ES broke down of 4H rising wedge last week and didn’t look back. What’s more concerning is that the bulls did not even have enough strength to take it closer to 50 DMA and even lost the 20 SMA the very next of the rising wedge breakdown.
When we zoom out further, the weekly chart shows even truer picture. The real struggle last 2 weeks was the supply zone of 4130-4270. It just coudln’t be sustained. Even more worrisome is the fact that the demand zone has not been held in this leg of sell-off. What lies ahead? I would expect 2 crictical areas to be tested. One: Recent lows of 3807 on the ES would be tested in the coming week (with FOMC and triple witching on the table). Once broken, the next level of daily support comes around 3730 while weekly critical demand zone would be far deeper around 3500-3530.
NQ: The tech index too has broken past critical support zone and should see another demand zone to be tested around 11,000. Its a weekly demand zone and should hold on for a bit before bears get into further hammering. I would not be heavily bearish in the tech stocks unless that 11,000 level is broken and sustained on the weekly basis.
YM: As mentioned earlier, YM was the only index that saw 50SMA on the daily and couldn’t even cross past it. Co-incidentally, it was also around the weekly supply zone that the bulls couldn’t digest. What we saw next is a sheer carnage of what bear markets truly are.
What comes next for on the YM is daily channel support around 30650 (also recent low) and then weekly demand far deeper around 29,400.
Conclusion: Bulls have nothing to hope for, other than pricing out downright recession, which is still far away and one can only hope Fed has enough ammo to recue the economy. On the charts, its not pretty at all, stay PUT (pun intended).
Macro micro trader 
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