Tomorrow's open will define the day

One of most reliable market traits is that the market will do what is necessary to cause pain to most people. Looking at the charts and putting things in the context of EW, I arrive at a few conclusions with respect to tomorrow's movement.

- Significant support exists at the 875-880 zone, where certainly there are a lot of buyers salivating over that area for an 'easy' win.

- A break of that level will create significant selling.

To me, this means that we are most likely to either: (a) never make it all the way to the zone (leaving those buyers with a missed opportunity) or (b) we will sell right through the zone (leaving those buyers with massive losses).

So how do we get there and how am I going to trade this market.

First off, there is a daily range level low at 884 tomorrow. This level would meet all the requirement for a wave 5. The market can either open near that level and rally off it or it can open near today's close and fall to it. Under this scenario we will have likely completed an A-B-C off of the high to complete our first minor wave A of our intermediate wave B. In this scenario, I would be looking for a minor wave B to reach to the 930 zone and no higher.

Should the market open near 884 and sell right through it within the first 30 min of the open, then that opens the possibility that our latest wave is actually a 3rd wave and we will sell right through the 875 zone reaching an extended low daily range target of 860. This fits nicely with the weekly low target of 855.

My plan is to take some profits at the open, sell some additional July covered calls on my QID position (July 40 calls). I will also use the opportunity to initiate ES long positions with an immediate stop below 870 but will sell out of the position and go short on any sign of a momentum drop.