Midterm Boost? We'll See About That

S&P teeters in a notable area.

Technical Edge — 

• NYSE Breadth: 59% Upside Volume

• Advance/Decline: 64% Advance 

• VIX: ~$24.50

We’re not in no man’s land, but the direction from here is not clear given the slate of events over the next 48 hours. That’s the midterm elections and the CPI reading on Thursday.

The bulls have truly constructive action here to work with and have shaken off the Fed’s hawkish stance rather impressively. In fact, the S&P retraced half of its prior rally, found its footing and is now pushing higher.

That said, we’re sitting in the 50% to 61.8% retrace zone. So it wouldn’t be weird if the index stalled between here and the next 30 points.

FWIW, I look at this as more of a zone rather than favoring any one particular retracement over the other. A very great friend of mine, an old pit-trader, heavily favors the 50% retrace. Another good 25-year-screen-trading friend of mine heavily favors the 61.8%.

To me, there’s never been much preference between either one, although I like them both — hence the “zone.” In any regard, the setup is a little…foggy…until the S&P gives us another clue.

Here’s what I mean:

S&P 500 — ES 

There’s a little bit for both bulls and bears here. 

Bears: Keep an eye on yesterday’s high of ~3822. If the ES loses this level and can’t regain it, we could see some pressure back toward 3800. A break of 3800 opens the door down to 3770 to 3775. 

Bulls: If the ES can sustain over 3822, it opens the door to the 61.8% retracement at 3842.50, then 3860. Above that could put 3900 to 3920 in play. 

ES — Buy the Dip?