The S&P 500 E-mini Futures (ES) dropped just shy of 150 points, or 2.11 percent.

We saw sideways action, or consolidation, for nine days holding the support of the 21-day moving average until Monday when we gapped lower, opening below that support.

The futures couldn’t even close above the 50-day moving average, $88 below.

Overnight, the futures are trying to retest that 50-day moving average level at $6,860.95.

It’s the classic case of one of three things a stock will do once it hits a support or resistance level:

1. Honor it, meaning it will bounce off support or roll lower at resistance.
2. Consolidate around it.
3. Accelerate through it but almost always come back and test it.

What we currently have is number three, which can create an opportunity to sell if you think the stock is going to continue in the same direction, lower.

Below here, my pitchfork support is at $6,817.50, and below there, $6,775.

I wouldn’t go long until the futures clear the 50-day moving average.

President Trump is scheduled to speak at Davos today, so … stay nimble.

See You Next Tuesday,

Licia Leslie

P.S. Mark and Voz are hosting a live event tonight to showcase a new strategy they’ve been working on. They’re one dynamic duo. You don’t want to miss this!