Sellers in control

Here is a 60 minute bar chart of day session trading in the September e-minis over the past month. The market has dropped to the low of its June trading range at 918 (blue dotted line). I think this drop will continue down to support which stands at 903 (red dashed line) and 898 (purple dotted line). The 903 level is the midpoint between the 1067 October 2008 rally top and the November 2008 low. The 898 level is the midpoint of the May 2009 trading range. A drop as low as 903 would also equal the length of the biggest reaction of the past three months.

I think the drop from last week's highs will take several trading days to play itself out. Any break below the low of the May trading range (roughly 875) would mean that the market is probably headed down to 800 or so. At this juncture I do not think this is likely to happen.