Hello Everyone,

As you were aware from Matt's comments last night, we were quite cautious coming into today's session. First of all the volatility systems for the major indices signaled a short (will review below).  Further supporting a move down, please look at market structure for the SPX/QQQ intraday charts where you will clearly see a corrective (abc) bounce that unfolded from Tuesday's low to Wednesday high which argues for a move back down to test the previous low. Both NQ/QQQ left equal lows below yesterday's closing price which tend to act as magnets - traders look to grab liquidity by taking out equal lows (or highs) which is exactly what transpired today.  Finally, this morning in chat, I posted a triangle pattern regarding ES (which shows contraction and is typically  followed by expansion).  I was looking for a downside break for confirmation to trade short which led to a nice move lower followed by a backtest of the breakdown area which failed and kicked off a trend day lower.  This along with very bullish sentiment sowed the seeds for a nice pullback today and until evidence changes we must remain guarded. 

ES levels posted on trading community. 

Here's a link to Tonight's Newsletter.

Please take a moment to look at the trade ideas.