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Rally Reverses
By Mike Paulenoff, MPTrader.com

Today has turned out to be very interesting largely because at the outset the indices were pushing the highs established late yesterday after a very potent afternoon rally took the E-mini June S&P from 1123 up to 1129. This morning when we came in the index was pushing 1129-30, and above 1132 would be considered a technical breakout on a micro basis. Sure enough, in the first hour of trading the E-mini June S&P successfully broke above 1132, but managed only to be able to reach 1133 1/2 before it reversed and started a move all the way down to Wednesday's lows near 1120.75.

The low so far today in the E-mini June S&P is at 1122 and as we speak it's at 1123. Our work argues that you're going to break 1120.75 and go into the 1119-1117 next target area.

As far as the Qs go, they had a similar situation where this morning they were pushing against the 36.85-.90 resistance area. That's where they pretty much went out late yesterday after the final hour rally from 36.45 to 36.90.

The Qs failed to break out. They had to break above 36.95, which was Wednesday's high, could not do that, turned around and traversed the entire range to the downside, testing and then breaking 36.30.

As we speak now they're at 36.15 on the way to 36. That 36 level would be the next optimal target. A break of 36 will take us to 36.85-.75, our next target zone. At this point, only a rally in the Qs that takes out 36.40 would argue the current downleg is complete.

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