Good Tuesday Morning, MPTraders! August 8, 2023-- Pre-Market Update: Weak Economic Data from China is the elephant in the room this AM (see CNBC headline below my attached Hourly ES Chart), and is the excuse for the resumption of downward price pressure in the equity futures indices in pre-market trading.
Mostly in reaction to weaker-than-expected China economic data, but also in response to Moody's Investor Service credit ratings CUT on multiple small and mid-sized banks because of higher funding costs and slimmer profit margins, ES is down about 35 points and 0.8% two hours prior to the opening bell.
Let's notice that the price structure is rapidly bearing down on last Friday's low-zone at 4493.75 to 4500, which if violated and sustained, will point ES toward a next downside target zone of 4440/50, with downside overshoot to 4400 thereafter.
Despite yesterday's rebound from 4493.75 to 4541.00, which ultimately failed to take out the dominant near-term down trendline (see turquoise blue annotated trendline on my attached chart), ES has pivoted sharply lower, reinforcing the power and incompleteness of a larger-developing correction from the 7/27/23 recovery rally peak at 4634.50.
A break of 4493.75 that sends ES to 4440 will represent a 4.2% correction off of the 7/27/23 high. A 5% correction points to 4400-4405.
Only a sharp upside reversal and close above resistance at 4530/40 will neutralize the ominous weakness this AM... Last is 4504.50...