New Bull Market

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Guesstimates July 17, 2009

September S&P E-mini Futures: I think this rally has strong legs and will carry the e-minis into the 965-80 zone and eventually over the 1000 level over the next few months. I estimate today's day session range as 923-940.

QQQ: The next upside target is 39.90.

TYX (thirty year bond yield): Support is at 4.20%. I think a swing to above the 5.00% level is underway.

TNX (ten year note yield): Support is at 3.25%. I think a swing up to 4.30% is underway.

Euro-US Dollar: There is no sign of a top. Support is at 137.50 and I think the market will continue upward to 146.00.

Dollar-Yen: The yen has reached the 92.50 downside target and soon will begin a move up to 105.00.

August Crude: The trend in crude oil is now downward and will carry the market as least to the 55.00 level. Resistance above the market is at 65.00.

GLD – August Gold: Support at 920 was broken. I want to give this uptrend the benefit of the doubt so I will wait for weakness below 900 before I conclude that the market is headed much lower.

SLV - September Silver: Silver is headed to 1700. Support is at 1250.

Google: Support is at 395. Next upside target is 500.

 

Near high of day

Here is a five minute chart of e-mini trading over the past two day sessions. In my last post two hours ago I said that I thought the market still had a good shot at the top of my range estimate (blue rectangle) at 935 within the subsequent hour or two. The e-minis are within a point of 935 as I write this and I see a small volume climax bar on this chart (red oval) near the high.

My best guess is that the market will stall near 935 and then break 15-20 points. A 15 point break (purple rectangle) would be as big as the biggest reaction on the way up from the 865 low.

 

Update

Here is a five minute bar chart of day session e-mini trading covering the past couple of weeks.

My range estimate for today is still 915-935 (blue rectangle). I still think this market has a good shot at 935 over the next hour or two, but I also think a break of about 15 points, the same size as the last significant reaction (purple rectangles) is likely to begin from today's high.

There is no midpoint support in the 915-920 zone. But I see a steep trend channel up from the 965 low which crosses the 915-20 zone late today and early tomorrow. My best guess is that the upcoming reaction will find its low near one of the two lower channel line I have drawn.

I think the e-minis are in the very early stages of a strong uptrend which will last into October and carry the market well above the 1000 level during that time.

 

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Guesstimate on July 16, 2009

September S&P E-mini Futures: I think this rally has strong legs and will carry the e-minis into the 965-80 zone and eventually over the 1000 level over the next few months. I estimate today's day session range as 915-935.

QQQ: The next upside target is 39.90.

TYX (thirty year bond yield): Support is at 4.20%. I think a swing to above the 5.00% level is underway.

TNX (ten year note yield): Support is at 3.25%. I think a swing up to 4.30% is underway.

Euro-US Dollar: There is no sign of a top. Support is at 137.50 and I think the market will continue upward to 146.00.

Dollar-Yen: The yen has reached the 92.50 downside target and soon will begin a move up to 105.00.

August Crude: The trend in crude oil is now downward and will carry the market as least to the 55.00 level. Resistance above the market is at 65.00.

GLD – August Gold: Support at 920 was broken. I want to give this uptrend the benefit of the doubt so I will wait for weakness below 900 before I conclude that the market is headed much lower.

SLV - September Silver: Silver is headed to 1700. Support is at 1250.

Google: Support is at 395. Next upside target is 500.

 

The dog that didn't bark

Here is an hourly chart of the e-mini day session for the past six weeks. The rally from Monday morning's early low has been almost uncorrected - a very unusual show of strength. In my judgment the Goldman Sachs and Intel earnings reports were not by themselves enough to push the market up like this in normal circumstances. But circumstances are not normal. There is a very large investment crowd that is betting that this market will go a lot lower because the economy is deteriorating. The earnings news has put a small hole in that particular balloon - the economy may in fact not be deteriorating. And so many are so under invested that it doesn't take much to scare them back into the market. I think there is much more portfolio reinvestment to come as bears gradually give up the ghost. This market is headed much higher.

 

Update

Here is a 60 minute bar chart of e-mini day session trading for the past 6 weeks. The e-minis have aready rallied above the high of my range estimate for today (blue rectangle). The market has reached the average level (923) of several highs and lows that developed during the past six weeks (dashed red line) and is just below the 928 high (red oval) of the big rally on the way down to the 865 low. My guess is that the e-minis are about to begin a reaction which might last as much as a day. The worst I see on the downside is a drop about equal to the 15 point drop on the way up (purple rectangles).

As you know I think this market is headed for 965-80 and eventually above the 1000 level over the next few months.

 

Guesstimates on July 15, 2009

September S&P E-mini Futures: After yesterday's day session close the e-minis rallied to and above resistance which stood in the 905-910 zone. This is one more piece of evidence that the current rally will continue at least into the 965-80 zone. Meantime I expect today's day session range to be 900-920.

QQQ: The next upside target is 39.90.

TYX (thirty year bond yield): Support is at 4.20%. The next big move will be a swing upward in yield to above the 5.00% level.

TNX (ten year note yield): Support is at 3.25%. I think that the next swing up is about to begin and should take the yield on the notes to 4.30%.

Euro-US Dollar: There is no sign of a top. Support is at 137.50 and I think the market will continue upward to 146.00.

Dollar-Yen: The yen has reached the 92.50 downside target and soon will begin a move up to 105.00.

August Crude: The trend in crude oil is now downward and will carry the market as least to the 55.00 level. Resistance above the market is at 65.00.

GLD – August Gold: Support at 920 was broken. I want to give this uptrend the benefit of the doubt so I will wait for weakness below 900 before I conclude that the market is headed much lower.

SLV - September Silver: Silver is headed to 1700. Support is at 1250.

Google: Support is at 395. Next upside target is 500.

 

Sold second long unit at 901.75

 

Revised range estimate

Here is a five minute bar chart of today's e-mini day session. I have slightly revised my range estimate for today to 892-910 (blue rectangle). If this market is going to get close to 910 today I think it will hold midpoint support at the dotted purple line. If this support fails then I would expect a drop to 890-92 followed by a rally to 900. But in this latter case I think we would then have already seen the high for today.

 

Sold one long unit at 900.00

 

Long second unit at 894.00

 

Long one unit at 894.50

 

Guesstimates on July 14, 2009

September S&P E-mini Futures: Today's day session range will be 890-910. The e-minis are in the early stage of a move which will carry into the 965-80 zone.

QQQ: Support is at 34.00. The next upside target is 39.90.

TYX (thirty year bond yield): Support is at 4.20%. The next big move will be a swing upward in yield to above the 5.00% level.

TNX (ten year note yield): Support is at 3.25%. I think that the next swing up is about to begin and should take the yield on the notes to 4.30%.

Euro-US Dollar: There is no sign of a top. Support is at 137.50 and I think the market will continue upward to 146.00.

Dollar-Yen: The yen has reached the 92.50 downside target and soon will begin a move up to 105.00.

August Crude: The trend in crude oil is now downward and will carry the market as least to the 55.00 level. Resistance above the market is at 65.00.

GLD – August Gold: Support at 920 was broken. I want to give this uptrend the benefit of the doubt so I will wait for weakness below 900 before I conclude that the market is headed much lower.

SLV - September Silver: Silver is headed to 1700. Support is at 1250.

Google: Support is at 395. Next upside target is 500.

 

The next few days

Here is a 60 minute bar chart showing the last two months of e-mini day session trading.

The market has bounced off of support at 867. I think it is headed for the 965-80 zone. But I also think that there will be reactions along the way. I am trying to guess where the first reaction of 20 points or so is likely to start.

The drop from the June top was contained by a very clear trend channel (red dotted lines). A rally back to the top of the channel would now be the obvious expectation. What interests me is that right near the top of the channel there are three other resistance levels. The first is midpoint resistance at 906 (purple dotted line) based on the big rally on the way down to the 865 low. That rally was about 44 points in length and a rally of the same size would carry the market to 909 (purple rectangles). Finally, the midpoint of the entire reaction is at about the 910 level (red line). If the current rally keeps up its pace (rising green line) it should reach the 905-10 zone in a couple of days (green oval). From there a reaction of 15-20 points to a higher low would be a normal expectation. Should the market blow right past that concentrated resistance it would be an indication of great underlying strength.

 

At top of range estimate

Here is a five minute bar chart of e-mini day session trading for the past several days. The market has rallied to the top of may range estimate for the day (blue rectangle). In doing so it put in what could well be a wide range, volume climax bar (purple oval and price bar immediately above the high volume bar). The 889 level is midpoint resistance defined by the rally that preceded the low at 865.25 (purple dotted line). Moreover, the market has rallied to the upper parallel of a clearly defined trend channel (green dotted lines).

These are all reasons to expect a reaction to start from approximately the 890 level. If one does develop I doubt that it would carry the e-minis down more than 8-9 points, a little less than the size of the reaction we saw early this morning (purple rectangles).

I think the market has begun a rally that will take it into the 965-80 zone over the next few weeks.

 

A contrarian goes to Barnes and Noble

Here is another post on "The Art of Contrarian Trading".

 

Sold one unit at 883.25.

 

Light the torches, grab your pitchfork !!

Here's my latest post on "The Art of Contrarian Trading".

 

Long one unit at 877.75

 

Guesstimates on July 13, 2009

September S&P E-mini Futures: I think the market is building a base in the 865-885 zone. Today's day session range will be 875-890. The e-minis are in the early stage of a move which will carry into the 965-80 zone.

QQQ: Support is at 34.00. The next upside target is 39.90.

TYX (thirty year bond yield): Support is at 4.20%. The next big move will be a swing upward in yield to above the 5.00% level.

TNX (ten year note yield): Support is at 3.25. I think that the next swing up is about to begin and should take the yield on the notes to 4.30%.

Euro-US Dollar: There is no sign of a top. Support is at 137.50 and I think the market will continue upward to 146.00.

Dollar-Yen: The yen has reached the 92.50 downside target and soon will begin a move up to 105.00.

August Crude: The trend in crude oil is now downward and will carry the market as least to the 55.00 level. Resistance above the market is at 65.00.

GLD – August Gold: Support at 920 was broken. I want to give this uptrend the benefit of the doubt so I will wait for weakness below 900 before I conclude that the market is headed much lower.

SLV - September Silver: Silver is headed to 1700. Support is at 1250.

Google: Support is at 395. Next upside target is 500.