Tuesday the markets chopped around a bit and closed higher slightly overall. However, we failed to break the morning high of 942 on the futures and seemed to really run into resistance above the 930 area on the SPX. Looks to me like the market is a little tired and in need of a pullback after a large rally the past week or so.
For Wednesday the pivot point on the ES is 932. I think if we gap down then a retest of the pivot in the low 930s could be a god chance to go short. If we break Tuesday's lows then I think we can easily see 918, which is a good support area to expect a bounce because it is the previous area of resistance we broke out of last Friday.
If we do break that 918 area then I will be watching for a move down to the low 900s minimum with a possibility of seeing the mid 890s. Remember that we are up about 90 SPX points in one week roughly so giving back 45 of them would be nothing more than a healthy 50% retracement.
It will be interesting to see how oil reacts Wed to the inventory report. Oil had a ugly reversal day on Tuesday closing at 48.5 after getting up to 50.5. I would be a seller of energy here and perhaps expect a move back down into the low 40s.
Overall look for a pullback going into midweek but if we somehow breakout over the 940 area I would like to see a close on the 30min chart to confirm. Trade safe.