$ES Morning Brief

Well, the hope had been that CPI would come in low, prompting a reevaluation of the seemingly one-sided “inflation trade.” But, the print did not impress and the technical risks discussed here seem to be coming in to play. As it stands this second, $ES is right at it’s bull flag’s (discussed here) lower rail now, but with the intensity of the dump, that may not hold.

The S&P still has a decent volume node below, and we may find support in this range:


That said, if this bull flag does fail, it’s not a good look. A small failure and prompt and powerful rally will become a terrific bear trap, but if we don’t get that, and if we don’t find support in this volume shelf, things are probably grim.

On $AAPL, despite its apparently losing its channel, I see one possible support (if this drop is a final fakeout). The channel as I’ve been drawing it has confined itself to price action alone, giving the lower rail some contraction. But if we make a lower rail that is parallel to the upper rail instead, we get this:


It’s possible that we find support there, too. Barring that, it will be hard to be bullish here.

If all of that fails, we can also look to this fib relationship, as well. ~3500 will give “C” a 1.618 extension to “A,” and the entire rally from the COVID low has a 50% fib there, too. That will also place us in the volume node from the January 2020 high and the major correction from September and October 2020:


These are some precautionary levels in case these present levels fail. As it stands right this second, the S&P and Naz are still in their bull flags and they may still rally powerfully if this morning drop is just a fakeout.

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