The move from that area is likely to stall out tomorrow with the gap up. For those who took short profits in the 1260 area, tomorrow is a good day to start scaling back into shorts (if you believe we need a divergent bottom). We are likely to close down (from the open) from any gap above 1280ES.
We are about to smack a giant pocket of resistance. It would appear to me this overnight gap is a bull trap, so I started scaling into shorts at 1279ES with a stop above 1290ES. This stop is a little higher than I normally take, but the odds of being lower than 1280ES within 3 days is very good. It is unlikely an short squeeze will materialize with the gap up so I'm not too concerned here (yet).
We are likely to be stuck in a trading range below 1280 and above 1255 until Tuesday of next week. Any move above or below this range within the next 3 days will be a good fade.
Edited by orange, 18 March 2011 - 12:47 AM.
