Before today's pit open the employment numbers came out and were worse than expected. In the face of bearish news the market has held up remarkable well.
Still, the ES has traded in an extraordinarily narrow range (so far) for an employment number day. This continues the pattern of extreme dullness that began three weeks ago. As a general rule dullness and low volume after an extended rally or decline indicates an imminent (but sometimes temporary) reversal. In the current situation I see the ES trading a shade above the 1127 level which marks the midpoint of the 2007-09 bear market. The 1137 level was the low reached in September 2008 just after the collapse of Lehman Brothers. Coupled with dull trading at new rally highs these resistance levels are likely to produce a break to support in the 1100-10 range.
Has this break begun? Probably not quite yet. The indifferent response to this morning's bearish news suggests a little more to come on the upside first. I think we shall see a temporary top early next week somewhere in the 1140-50 range. Then a break of 40 points.
I still think this is a bull market. Over the next couple of months the ES should move up to 1200 or so.