Here is a chart of today's e-mini day session. I think tomorrow will have a range very similar to today's - 865-890 is my estimate. I think the market will start off near today's close and then rally most of the day.
Thursday, April 30, 2009
Tomorrow
Here is a chart of today's e-mini day session. I think tomorrow will have a range very similar to today's - 865-890 is my estimate. I think the market will start off near today's close and then rally most of the day.
Revised range estimate
I thought today would be a generally bullish day. But the break below midpoint support near 872 (purple dotted line) means that the market is probably going to retrace about half of its 48 point gain from the electronic low at 839 early on April 28. I have revised my range estimate accordingly (blue rectangle). I think the day's low will be near 865. I see no sign of a supply shock because volume on this drop from 887 has remained moderate (red lines). So it is likely that today's low is established the close will be somewhere near the middle of today's range.
Why I sold
I think the odds have shifted to favor what I called plan B in my last post. Why? the market held the higher of the two support lines, then made a slight new high for the day, then fell all the way back down to that higher support. It is now past 11:30 am, and on most bullish days the buyers would have pushed the market substantially higher than the open by now. Since this hasn't happened I have to conclude that the sellers are about to have their innings. If so I think we shall see a break down into the 872-75 range before a rally to 890-900 can develop.
Plans A and B
Here is a five minute bar chart of the e-mini day sessions. I am long two units at an average of 879.00. If plan A for this trade works, I expect to sell these longs near the top of my range estimate for today (blue rectangle). Plan A will remain in place as long as midpoint support at the higher of the two purple dotted lines holds.If that support is broken I would expect the market to drop to the lower purple dotted line. This is midpoint support based on yesterday's late reaction. I would again be a buyer near that level, this time with the expectation of a move to 890 or so.
Guesstimates on April 30, 2009
June S&P E-mini Futures: In electronic trading this morning the e-minis have traded as high as 887. I am estimating that today’s daytime range will be 875-895. There is pretty strong resistance in the 890-900 range and I think the market will drop from there to support in the 840-60 range before it begins a move to 940.
QQQ: The 32.40 level is support and I think the Q’s are headed for 35.00.
June Bonds: I don’t think the longer term bearish picture has changed. Resistance above the market is 132-16. Next downside target is 115.
June 10 Year Notes: I think a bear market in the notes is underway. Resistance above the market is at 125-20. Next downside target is 118.
Euro-US Dollar: Resistance stands at 133.35. I now think the euro is headed for 115.00.
Dollar-Yen: Then yen is headed for the 104.00 level. Support stands at 95.55.
June Crude: I think crude is on its way to the 58.00 level. Support is at 46.00.
GLD – June Gold: I think the market is headed below 700. Resistance above the market is at 915.
SLV - July Silver: Silver is headed for 750.
Google: I think that its drop from 747 is over. Support is at 360. Next upside target is 450.
Wednesday, April 29, 2009
Tomorrow
The reaction from today's high proved to be bigger than the 8-12 point break I had expected. Nonetheless, I think tomorrow will be another bullish day. I estimate the range will be 860-885. The midpoint of the range developed over the last two day sessions is 860 and I shall lean on that level in making my long side trades early tomorrow.
The last trade
I went long one unit at 869.00 after a 10 point break from today's high which was at 879.25. I thought that the reaction wouldn't even go 12 points. But when it got nearly as deep as 14 the trade fell out of my normal expectations range so I got out at 865.50. I am still bullish and think that the 890 level will be reached this week.
Top of the range
Here is a five minute chart of today's e-mini day session. After the Fed news came out I bought two units at an average of 872.75 and then sold them at 877.25 after the move to new highs for the day and for the rally seemed to stall.The market got within a point of the top of my range estimate for today (blue rectangle). I sensed that there wasn't going to be much of a net reaction to the Fed news - volume and volatility after the news were subdued compared to previous Fed announcements. Finally I thought I saw a volume climax (red arrows) near the top of my range estimate. So I sold my longs.
I am still bullish but think that it would be normal now to see a reaction of 8-12 points (purple rectangle) down to midpoint support (dotted purple line). I expect to be a buyer near there. In any case I think that tomorrow will be another bullish day.
Why I got out
I sold my two long units at 871.25. I am still bullish, so why did I get out?The main reason is that I think that between now and the Fed announcement at 2:15 pm New York time not much is going to happen in this market. It's not just the announcement itself. I also know that most days the first two hours of trading see most of the day's gains or losses and that another good trading opportunity generally does not develop until 1:30 New York time.
But there are other considerations at work here as well. One is risk control. The market has bumped up against its previous high at 872 (dashed red line). I would be surprised if that level did not attract sellers - perhaps in sufficient numbers to drive the e-minis into a reaction of 8-10 points. A reaction that big would put the market down to my entry levels, never a comfortable position for a trader. I find that I get the best results by hitting singles instead of going for the fences (in American baseball parlance). So the move to new highs for the day gave me an opportunity to do just that.
Looking more closely at the price action, I saw a minor potential volume climax (first pair of red arrows). After a rest period the market made new highs for the day on lower volume (second pair of red arrows). Since it was also bumping against the 872 level I took this for a warning that a reaction was likely to develop soon.
I am sticking with my 858-880 range estimate and expect to get long again shortly after the Fed news comes out. Meantime support is at yesterday's high (purple dotted line).
Breakout Imminent
Here is a five minute chart of the e-mini day sessions. I am long two units at an average of 863.00.I think this market is about to stage a high volume upside breakout from its 830-870 trading range. The initial surge should carry to 900 or so. I am revising my range estimate for today to 859-880 (blue rectangle) and think we have already seen the day's low. The low point of this range occurred just above midpoint support based on yesterday's late reaction (dotted purple line). Today's open above that line and subsequent strength above 860 convinced me that I had to get long.
For the rest of today I am leaning on yesterday's high (dashed red line) as support. I don't expect to see any reaction of more than 9-12 points before the market reaches 900 or so.
Guesstimates on April 29, 2009
June S&P E-mini Futures: Today’s day session will probably extend from a low at 854 to a high near 875. I still think the 825-870 trading range will be resolved by an upside breakout which will carry the market to 900. In any event this market is likely to reach the 940 level over the next few weeks.
QQQ: The 32.40 level is support and I think the Q’s are headed for 35.00.
June Bonds: I don’t think the longer term bearish picture has changed. Resistance above the market is 132-16. Next downside target is 115.
June 10 Year Notes: I think a bear market in the notes is underway. Resistance above the market is at 125-20. Next downside target is 118.
Euro-US Dollar: Resistance stands at 133.35. I now think the euro is headed for 115.00.
Dollar-Yen: Then yen is headed for the 104.00 level. Support stands at 95.55.
June Crude: I think crude is on its way to the 58.00 level. Support is at 46.00.
GLD – June Gold: I think the market is headed below 700. Resistance above the market is at 915.
SLV - May Silver: Silver is headed for 750.
Google: I think that its drop from 747 is over. Support is at 360. Next upside target is 420.
Tuesday, April 28, 2009
Why I got out
Here is a two minute bar chart of the recent part of today's e-mini day session. I bought two units at the green arrows because I expected the market to probe for sellers above 860. Not much progress was made above 860, more for lack of buying pressure than from aggressive selling. I was willing to be patient waiting for more buyers to show up since I thought a move into the 865-70 range was a good possibility by the close.Instead the market sagged to and a little below the breakout level (which for me was the red dashed line). This was one warning that trouble might be on its way. The sellers finally showed up at the red arrows on increasing volume, after a failed rally to a lower top. I just stopped myself out at that point.
I still think that today's session shows more bullish than bearish characteristics, primarily because the early morning rejection of support at 845-46 is still holding up. The purple dotted line is the midpoint of today's day session. If the market can open above there tomorrow, or rally above there early in the session, I think we will be in for a bullish day and the start of a move to 900.
A move below 845-46 support would negate my bullish expectations temporarily and mean that a move down at least to 830 is underway.
Going up
Here is a five minute bar chart of the e-mini day session. The market bounced (green arrow) off of midpoint support (purple dotted lines) at 845-46 right at the open and returned to the trading range it established yesterday afternoon (green rectangle). This is a clear rejection of prices below 850. The logical consequence of this rejection should be a move up above the green rectangle to see if sellers can be attracted. Since I have a bullish bias (up to 900 and then to 940 over the next month or two) I just put down a bet that the market is going to rally from here.If I am right we won't see the e-minis trade below 849 for the rest of the session. I am now estimating that today's day session range will be 843-866 (blue rectangle).
Boxed In
Here is a 30 minute bar chart of the past 10 days of e-mini day sessions. The market has broken past the high of this morning's range estimate of 830-850. The question now is whether or not this changes my outlook for a basically downward trend during today's day session.The market has been trading sideways for most of the month and its fluctuations appear to be narrowing. This is normal behavior and shows that the e-minis are preparing for a breakout, one which I think will be to the upside.
There are two midpoint support levels at roughly the 846 level (dotted green lines). There are two midpoint resistance levels at roughly the 856 level (dotted red lines). For the moment today's activity has been contained between them (purple rectangle). I think the next move will be downward out of this purple rectangle to the 830 level. But if I see increasing volume on an upside breakout from this rectangle I shall try to get on board for a move to 900.
Guesstimates on April 28, 2009
June S&P E-mini Futures: Today’s day session will probably extend from a low at 830 to a high near 850. I still think the 825-870 trading range will be resolved by an upside breakout which will carry the market to 900. In any event this market is likely to reach the 940 level over the next few weeks.
QQQ: The 32.40 level is support and I think the Q’s are headed for 35.00.
June Bonds: I don’t think the longer term bearish picture has changed. Resistance above the market is 132-16. Next downside target is 115.
June 10 Year Notes: I think a bear market in the notes is underway. Resistance above the market is at 125-20. Next downside target is 118.
Euro-US Dollar: Resistance stands at 133.35. I now think the euro is headed for 115.00.
Dollar-Yen: Then yen is headed for the 104.00 level. Support stands at 95.55.
June Crude: I think crude is on its way to the 58.00 level. Support is at 46.00.
GLD – June Gold: I think the market is headed below 700. Resistance above the market is at 915.
SLV - May Silver: Silver is headed for 750.
Google: I think that its drop from 747 is over. Support is at 360. Next upside target is 420.
Monday, April 27, 2009
Another range revision
Here is a five minute chart of today's e-mini day session. After the morning rally the market showed two signs of weakness. The first was the break below midpoint support defined by today's early reaction (dotted purple line). The second was the break below the high volume up bar that kicked off the rally (green arrows and red dashed line). This combination convinced me we had seen the day's high so I sold my long position. I now think today's low will be near 845 (bottom of the blue rectangle).The last two weeks has seen the market confined between 825-870, a relatively narrow range given recent volatility. I think a breakout from this range is imminent, and I think it will be to the upside.
Revised range estimate
Here is a five minute bar chart of the e-mini day sessions. I am revising my range estimate. I think the low of the day is in place and that we shall see a high near 875. Meantime support should be the midpoint of the early reaction (purple dotted line). I am long two units at an average of 856.50.
Guesstimates on April 27, 2009
June S&P E-mini Futures: Today’s day session will probably extend from a low at 842 to a high near 865. I think this market will reach the 900 level before seeing a reaction of as much as 30 points. In any event this market is likely to reach the 940 level over the next few weeks.
QQQ: The 32.40 level is support and I think the Q’s are headed for 35.00.
June Bonds: I don’t think the longer term bearish picture has changed. Resistance above the market is 132-16. Next downside target is 115.
June 10 Year Notes: I think a bear market in the notes is underway. Resistance above the market is at 125-20. Next downside target is 118.
Euro-US Dollar: Resistance stands at 133.35. I now think the euro is headed for 115.00.
Dollar-Yen: Then yen is headed for the 104.00 level. Support stands at 95.55.
June Crude: I think crude is on its way to the 58.00 level. Support is at 46.00.
GLD – June Gold: I think the market is headed below 700. Resistance above the market is at 915.
SLV - May Silver: Silver has broken 1240 support and is now headed for 750.
Google: I think that its drop from 747 is over. Support is at 360. Next upside target is 420.
Friday, April 24, 2009
Revised range estimate
Here is a five minute bar chart of the e-mini day session. I am long two units at an average of 856.75. I got long because I am bullish for the day and because my original estimate for the low - 842 - was hit overnight and the subsequent rally brought the market to new highs for the day before the floor open. When the market didn't react much from the open I had to get long.I think we have seen the day session low. My new range estimate is 853-875 (blue rectangle). If this is the correct read then midpoint support based on the first 25 minutes of the day session should hold (purple dotted line).
Guesstimates on April 24, 2009
June S&P E-mini Futures: I think today’s day session range will be 842-865. This swing upward will encounter resistance at 900. In any event this market is likely to reach the 940 level over the next few weeks.
QQQ: The 30.80 level is support and I think the Q’s are headed for 35.00.
June Bonds: I don’t think the longer term bearish picture has changed. Resistance above the market is 132-16. Next downside target is 115.
June 10 Year Notes: I think a bear market in the notes is underway. Resistance above the market is at 125-20. Next downside target is 118.
Euro-US Dollar: Support at 131.00 has been broken decisively. I now think the euro is headed for 115.00.
Dollar-Yen: Then yen is headed for the 104.00 level.
June Crude: I think crude is on its way to the 58.00 level. Support is at 46.00.
GLD – June Gold: I think the market is headed below 700. Resistance above the market is at 915.
SLV - May Silver: Silver has broken 1240 support and is now headed for 750.
Google: I think that its drop from 747 is over. Support is at 340. Next upside target is 410.
Thursday, April 23, 2009
Tomorrow's range
Here is a five minute chart of today's e-mini day session. I am interpreting the market's failure to break after yesterday's supply shock as a bullish omen. I estimate that tomorrow's range will extend from 842 up to 865 or so. If so this should be only the first of a series of bullish days.
The dog that isn't barking
Here is a five minute chart of the e-mini day session. I have tried the short side twice today with no results. Whenever this happens I begin to suspect that I may be on the wrong side of the market.Late yesterday we saw a clearly defined supply shock (red arrow). Volume associated with the shock was the highest in two weeks. After a supply shock like that one the market generally continues downward with only normal reactions. But today we instead see a relatively narrow trading range concentrated at the high end of my range estimate for the day (blue rectangle). The supply shock dog isn't barking like it normally would. I make it a rule to watch carefully for departures the market makes from normal behavior. Such departures often are important clues to subsequent trends.
In this case I think that my "down to 805" scenario hangs by a thread. Increasing volume which carries the e-minis above today's trading range and visibly away from its midpoint (purple dotted line) will cut this thread and mean that the e-minis are heading much higher.
Update at 10:45 am
Here is a five minute chart of the e-mini day sessions. I was short early today at an average of 839.75. But then a potential volume climax bar developed (red arrows) so I waited to see if the market could rally afterwards. The subsequent rally was the biggest and longest of the day so far so I covered at 841.00. My concern was that the market was apparently in an 833-848 trading range (using the overnight extremes) and since it was bouncing from the low of the range it more likely than not was headed back close to the high of the range. Since my bias is a bullish one I didn't want to let a short side trade show any signficant loss.So far the market appears to be in a trading range near the top of my range estimate. I am sticking with this estimate. Unless we see increasing volume on the upside first I plan to take another shot at the short side.
Guesstimates on April 23
June S&P E-mini Futures: I think today’s day session range will be 820-845 and that the market will reach the 805 level is a couple of days. Strength on increasing volume above the 850 level would force me to abandon this prognosis and move over to the bullish column. In any event this market is likely to reach the 940 level over the next few weeks.
QQQ: The 30.80 level is support and I think the Q’s are headed for 35.00.
June Bonds: I don’t think the longer term bearish picture has changed. Resistance above the market is 132-16. Next downside target is 115.
June 10 Year Notes: I think a bear market in the notes is underway. Resistance above the market is at 125-20. Next downside target is 118.
Euro-US Dollar: Support at 131.00 has been broken decisively. I now think the euro is headed for 115.
Dollar-Yen: Then yen is headed for the 104.00 level.
June Crude: I think crude is on its way to the 58.00 level. Support is at 46.00.
GLD – June Gold: I think the market is headed below 700. Resistance above the market is at 915.
SLV - May Silver: Silver has broken 1240 support and is now headed for 750.
Google: I think that its drop from 747 is over. Support is at 340. Next upside target is 410.
Wednesday, April 22, 2009
Supply shock !
Here is a 30 minute bar chart of the e-mini day session for the past 10 days. The market dropped the second shoe, but it made a much louder noise than I expected. The drop from today's high at 858.75 carried below midpoint support (purple dotted line). Even more bearish is the fact that volume during the final 30 minutes was higher than on any bar on the chart, including this morning's demand shock.This sell off is a clear supply shock and I think it means that the market is headed down to 805 or so. I estimate tomorrow's daytime range will be 820-845.
Why I got out
I just sold my two long units at 850.75 after buying them at an average of 842.25 earlier today. Why did I get out?My range estimate for today was 835-860. The market so far has traded as high at 856.75 - not far from my estimate for the top of today's range. When I saw that high print I believed that today's demand shock would prevent any reaction of more than 6 points and I figured that the high of the day would more likely be 865 or so instead of 860. So the depth of the subsequent reaction which carried the e-minis down to 845.50 surprised me. When the market surprises me I start to wonder whether my current assessment needs modification.
In this case I was also bothered by the fact that the drop from 856.75 (and not far from the top of the range estimate) was an uncorrected one. Such uncorrected counter trend moves are often only the first shoe to drop, the second shoe being a second decline to a slightly lower low. In this case I also saw support at the midpoint of the correction from yesterday's high at 848.75 to this morning's low at 836 (purple dotted line) as well as at the point that would make the drop from 856.75 as big as the drop that ended at 836 (purple rectangle). Both support levels were below the 845.50 low of the reaction. It thus seemed reasonable to expect a second down leg to develop before the market took out the 856.75 high.
Give these considerations I decided that it was appropriate to accept a "half a loaf" of profit and sell my position at a lower high after a six point rally. I plan to put my long position back on near 844 or when the market gives me a good reason to think the rally is about to resume.
Another Demand Shock
Here is a 30 minute bar chart of the e-mini day session for the past two weeks. The market has just rallied sharply on the highest volume bar visible on this chart. This is a clearly defined demand shock, even stronger and more obvious than the one I pointed out yesterday.This is very, very bullish action and means that this market is headed much higher.
Where does the 940 target come from?
Here is a daily chart of the cash S&P 500 going back to the October 2007 bull market top. As you know I am looking at the move up from the March 6, 2009 low at 666 as the first leg of a new bull market. I think this first leg will carry at least to 940. Where does the 940 projection come from?I think there are two basic principles which are consistently effective for computing support and resistance levels. The first is that the market tends to repeat the lengths of swings. This habit of repetition is often very exact over very short time frames (a few days) but is more of an approximation looking out over longer time frames. The second principle is that the market usually halts its swings very near the midpoints of previous swings. Let's apply these principles to the chart you see above.
The very brief rally from the October 10 low in 2008 and the rally from the November 21 low each carried the market up about 200 points. A 200 point rally from the March 6 low at 666 would carry to the 866 level. In this post I used this fact together with the midpoint principle to highlight the fact that my initial target for this rally was 842 (lower boundary of the blue rectangle). I said that I thought that the market would hesitate for a couple of weeks at that resistance level.
I expected the S&P to eventually push past 842. My next important upside target was 940. Why? The blue rectangle represents the span of the two day October rally which in cash carried from 840 to 1044 (blue rectangle). The midpoint of this swing is 942 (dashed blue line). Note that the November-January rally established its high right on this midpoint (and at a level which made the rally match the length of the October rally). The 942 level is still the midpoint of that range and now, in addition, is the level of a previous top - the January 6 high. So it should prove to be strong resistance again.
Next note the red rectangle. It encompasses the swing down from the 1265 high of the big two day rally in mid-September of 2008 to the 666 low. The midpoint is 965 (dashed red line). So this puts two midpoints (942 and 965) and a previous top (942) in close proximity to one another. This is therefore the first strong resistance that the market will encounter above the 842 level. So that makes it my current target for this first up leg.
Guesstimates on April 22, 2009
June S&P E-mini Futures: I think today’s day session range will be 835-860. Even so, the market could drop as low as 830 without disturbing my conclusion that a demand shock hit the market yesterday. In any event this market is likely to reach the 940 level over the next few weeks.
QQQ: The 30.80 level is support and I think the Q’s are headed for 35.00.
June Bonds: I don’t think the longer term bearish picture has changed. Resistance above the market is 132-16. Next downside target is 115.
June 10 Year Notes: I think a bear market in the notes is underway. Resistance above the market is at 125-20. Next downside target is 118.
Euro-US Dollar: Support at 131.00 has been broken decisively. I now think the euro is headed for 115.
Dollar-Yen: Then yen is headed for the 104.00 level.
June Crude: I think crude is on its way to the 58.00 level. Support is at 46.00.
GLD – June Gold: I think the market is headed below 700. Resistance above the market is at 915.
SLV - May Silver: Silver has broken 1240 support and is now headed for 750.
Google: I think that its drop from 747 is over. Support is at 340. Next upside target is 410.
Tuesday, April 21, 2009
Tomorrow's range
Here is a five minute bar chart of the last two e-mini day sessions. The market went a little above the high of my estimated range for today. For tomorrow I think we shall see a day session range of 837 - 860. I expect the low of the day to form near midpoint support at the dotted purple line.As I pointed out in my last post, I think we have seen a demand shock today. If I am correct about this I don't expect to see the market trade below the 830 level for the rest of the week.
Demand Shock ? !!
Here is a 30 minute bar chart of the e-mini day sessions for the past two weeks. I think something important is happening today. It looks like a demand shock has hit the market. If I am right about this then this morning's low is the low of the reaction and the e-minis are now on the way to 872 and higher.The first thing to notice is that the volume during today's first half hour was the highest of the past two weeks and occurred while the market was rallying. I didn't put a lot of weight on this at the time because the e-minis retraced most of this early rally. But then between 11 am and noon there was a second high volume rally. This time the volume during that hour was bigger than at the same time of day on any of the past 10 trading days (horizontal green lines). This qualifies as a demand shock, especially since the market is bouncing off the 825 midpoint support level in the process.
If this is indeed a demand shock reactions should be limited to 8-10 points.
Wave chart
Instead of dropping to 818 as I thought it would the e-minis have put in a longer up wave than the up wave early this morning (green lines) and broken well above the descending trend established yesterday (see my last post). This means that the day's low is in place so I am going back to my original range estimate of 822-845.This could easily be the start of a substantial rally so I shall try to be a buyer near support. Right now that is at the midpoint of the day's first reaction (purple dotted line).
Range Revision
Here is a five minute bar chart of the e-minis covering the last part of yesterday's day session and the early part of today's. I see no sign that the trend down from Friday's high at 872 has ended. This morning's early rally only brought the market up to the generally declining trend established yesterday (declining red line).I am adjusting my range estimate for today to 818-840. I am guessing that today's day session low will be as far below today's early low at 823.25 and this early low was below yesterday's low (red rectangles).
Guesstimates on April 21, 2009
June S&P E-mini Futures: Today’s daytime range should extend from 822 to 845. This market is likely to reach the 940 level over the next few weeks.
QQQ: The 30.80 level is support and I think the Q’s are headed for 35.00.
June Bonds: I don’t think the longer term bearish picture has changed. Resistance above the market is 132-16. Next downside target is 115.
June 10 Year Notes: I think a bear market in the notes is underway. Resistance above the market is at 125-20. Next downside target is 118.
Euro-US Dollar: Support remains at 131.00. I still think that the euro is headed for the 141.00 level.
Dollar-Yen: Then yen is headed for the 104.00 level.
June Crude: I think crude is on its way to the 58.00 level. Support is at 46.00.
GLD – June Gold: I think the market is headed below 700. Resistance above the market is at 915.
SLV - May Silver: Silver has broken 1240 support and is now headed for 750.
Google: I think that its drop from 747 is over. Support is at 340. Next upside target is 410.
Monday, April 20, 2009
Tomorrow
My current estimate for tomorrow's range is 822-845 (blue rectangle). My guess is that the low will occur early in the day and the high late.
Looking for Support
Here is an hourly chart of the cash S&P going back through the start of this rally from the March 6 low. As I told you in my last post I think that this reaction has a good chance of stopping at the highest purple dotted line you see on this chart. This is midpoint support based on the reaction we saw in early April and also the level at which this break would equal the size of that early April break in the e-minis (which was bigger than in cash because both extremes were made outside the day session in electronic trading).While I think a good rally will start from 825 I have to entertain the possibility that it will end at a lower top. This is worth thinking about especially because the market has had no rallies on the way down from 872 thus far. If the rally from 825 does end at a lower top (probably one in the 845-50 range) then the next step down would carry the e-minis to 805 or so (lower of the two purple dotted lines). This is midpoint support defined by the late March reaction. A drop that low would make this reaction the biggest one since the March 6 low.
I have marked with the red dashed line the midpoint of the entire rally thus far- it stands at roughly the 771 level in cash. While I don't expect this drop to get anywhere near that line I also think that any penetration of that level would mean that the market would be on its way to 700 or even lower.
Having spoken only of reactions in this post, I want to reiterate my view that this market is going to hit 940 before it drops near to or below 771.
How Big Will the Reaction Be?
Here is a 30 minute bar chart of the e-mini day sessions for the past two weeks. The question I am thinking about now is just how big will the drop from Friday's 872 high turn out to be?The first thing to consider is whether or not a supply shock has hit the market. Looking at today's first hour volume and comparing it to the first hour volume of previous days (red lines) shows that today's first hour did not see unusually high trading volume to the downside. So this tells me to expect a reaction which is comparable in size to the ones we have seen on the way up from the 666 low on March 6.
The most recent one was 30 points, but the market has already gone past that mark. The other two reactions on the way up measured 46 and 55 points. I note that a 46 point drop from 872 would take the market down to 826 (purple rectangle). This is just above midpoint support based on the reaction which started on April 6 at 848 and carried the e-minis down to 803 (purple dotted line).
So the coincidence of these two levels makes me think that the 825 level is a pretty good guess for the low of the current reaction. The only thing that would force me to reevaluate the situation would be an obvious, high volume supply shock - something that is not yet visible in the market's activity.
New Range Estimate
Here is a five minute chart of today's e-mini day session. I bought two units at an average of 843 figuring that midpoint support at 845 would hold. Instead the market has dropped as low as 839.50, almost 12 points below its open and more than 5 points below support. This tells me that we have probably seen the day session high and that the day's low should be expected around the 830 level (blue rectangle). In light of this new information I did the only logical thing which was to get out of my long position.So far the market has dropped about 12 points from its day session high without any rally. I think we shall now see a rally of about 8-10 points (purple rectangle). After this rally the move t0 the day's low should resume.
It now looks like the market has started a reaction that will last a couple of days and carry it down to support in the 820-25 range.
Guesstimates on April 20, 2009
June S&P E-mini Futures: The 845 level should be strong support. I think today’s range will be 845-865. This market is likely to reach the 940 level over the next few weeks.
QQQ: The 30.80 level is support and I think the Q’s are headed for 35.00.
June Bonds: I don’t think the longer term bearish picture has changed. Resistance above the market is 132-16. Next downside target is 115.
June 10 Year Notes: I think a bear market in the notes is underway. Resistance above the market is at 125-20. Next downside target is 118.
Euro-US Dollar: Support remains at 131.00. I still think that the euro is headed for the 141.00 level.
Dollar-Yen: Then yen is headed for the 104.00 level.
May Crude: I think May crude is on its way to the 58.00 level. Support is at 46.00.
GLD – June Gold: I think the market is headed below 700. Resistance above the market is at 915.
SLV - May Silver: Silver has broken 1240 support and is now headed for 750.
Google: I think that its drop from 747 is over. Support is at 340. Next upside target is 410.
Friday, April 17, 2009
Range Estimate
Here is a five minute bar chart of the e-mini day session. I am sticking with my range estimate of 855-878 for today (blue rectangle). A drop from yesterday's high as big as the break from yesterday's early morning high (not shown on this chart) would carry the market to 855 (purple rectangle).Over the next few weeks the market should move up to the 940 - the level of the early January high.
Guesstimates on April 17, 2009
June S&P E-mini Futures: The range estimate for today is 855-878. I expect this market to reach the 940 level over the next few weeks.
QQQ: The 30.80 level is support and I think the Q’s are headed for 35.00.
June Bonds: I don’t think the longer term bearish picture has changed. Resistance above the market is 132-16. Next downside target is 115.
June 10 Year Notes: I think a bear market in the notes is underway. Resistance above the market is at 125-20. Next downside target is 118.
Euro-US Dollar: Support remains at 131.00. I still think that the euro is headed for the 141.00 level.
Dollar-Yen: Then yen is headed for the 104.00 level.
May Crude: I think May crude is on its way to the 58.00 level. Support is at 46.00.
GLD – June Gold: I think the market is headed below 700. Resistance above the market is at 915.
SLV - May Silver: Silver has broken 1240 support and is now headed for 750.
Google: I think that its drop from 747 is over. Support is at 340. Next upside target is 410.
Thursday, April 16, 2009
Tomorrow's range
Here is a five minute chart of today's e-mini day session. After a weak start the market rallied persistently and has nearly reached the top of my 843-868 range estimate (blue rectangle). Volume has picked up noticeably today and the market has developed the widest day session range in two weeks. This supports an interpretation of today's action as a breakout from a two week trading range. If this is the correct reading then the market will head up to 910 or so before another break of 30-40 points develops.This morning's early break carried the market down about 12 points. A similar drop from 867-68, the high of my range estimate for today, would carry down to 855 or so (purple rectangles). This is the low of my estimated range for tomorrow. I am guessing the high will be near 878.
Range Estimate
Here is a five minute bar chart of e-mini day session trading. I am sticking with my range estimate of 843-868 (blue rectangle).
I went long at 852.75 because I was bullish on the day and I know that up days usually make their low points not far from the open - generally less than 6 points lower. I also had yesterday's close at 849 as support. So after seeing the open it was no longer logical to expect a move as low as 843, at least not early in the day.
In the event the market was much weaker than I expected. So far the drop from its high today near the open has nearly matched the last reaction on the way up from yesterday's low (purple rectangles). The market dropped almost 9 points from its opening price and three points below yesterday's close. This is unusual behavior for an up day, but I am still willing to lean on my 843 estimate for today's low point. I expect to put my second unit back on near that level if the opportunity presents itself.
Guesstimates on April 16, 2009
June S&P E-mini Futures: I think today’s day session will see its low near 843 and its high near 868.
QQQ: The 30.80 level is support and I think the Q’s are headed for 35.00.
June Bonds: I don’t think the longer term bearish picture has changed. Resistance above the market is 132-16. Next downside target is 115.
June 10 Year Notes: I think a bear market in the notes is underway. Resistance above the market is at 125-20. Next downside target is 118.
Euro-US Dollar: Support remains at 131.00. I still think that the euro is headed for the 141.00 level.
Dollar-Yen: Then yen is headed for the 104.00 level.
May Crude: I think May crude is on its way to the 58.00 level. Support is at 46.00.
GLD – June Gold: I think the market is headed below 700. Resistance above the market is at 915.
SLV - May Silver: Silver has broken 1240 support and is now headed for 750.
Google: I think that its drop from 747 is over. Support is at 340. Next upside target is 410.
Wednesday, April 15, 2009
Looking Up
I think the e-minis have just staged an upside breakout from the trading range they established yesterday afternoon (red dashed line). It is hard to read volume indications near the close, but I am impressed by the two consecutive higher lows we saw today, each coming after a bounce off of resistance.If I am reading things correctly midpoint support near the 840 level (purple dotted line) will hold for the next few days. I estimate that tomorrow range will be 843-868.
Top of the range
Here is a five minute bar chart of the e-mini day sessions. The market has rallied to the top of my estimated range for today (blue rectangle). The rally carried it visibly above midpoint resistance (purple dotted line). However volume was low on the rally, even for the time of day, and the market just put in a relatively high volume, outside bar to the downside. I think this means that the market is on its way to the low end of my range estimate.
It would take a rally above the top of the box on increasing volume to swing me around to the bull side.
At Resistance
Here is a five minute bar chart of e-mini day sessions. You can see that the market has rallied to midpoint resistance (purple dotted line) on generally lackluster volume. It would take a move above the top of my range estimate (blue rectangle) to indicate that an up trend has begun. In the meantime I still think the market will make it down to the low of my range estimate before it begins the next up leg.
Guesstimates on April 15, 2009
June S&P E-mini Futures: I think today’s day session will see its low near 827 and its high near 845. Strength above 845 would mean that a move to 875 or so has begun. QQQ: The 30.80 level is support and I think the Q’s are headed for 35.00.
June Bonds: I don’t think the longer term bearish picture has changed. Resistance above the market is 132-16. Next downside target is 115.
June 10 Year Notes: I think a bear market in the notes is underway. Resistance above the market is at 125-20. Next downside target is 118.
Euro-US Dollar: Support remains at 131.00. I still think that the euro is headed for the 141.00 level.
Dollar-Yen: Then yen is headed for the 104.00 level.
May Crude: I think May crude is on its way to the 58.00 level. Support is at 46.00.
GLD – June Gold: I think the market is headed below 700. Resistance above the market is at 915.
SLV - May Silver: Silver has broken 1240 support and is now headed for 750.
Google: I think that its drop from 747 is over. Support is at 340. Next upside target is 410.
Tuesday, April 14, 2009
Tomorrow
The blue rectangle is my range estimate for tomorrow - 827-847. The top of the box is midpoint resistance defined by today's early rally. The bottom is a shade above midpoint support defined by the drop from 848 to 803.Any strength above 847 on reasonable volume would force me to conclude that the market will head up to 870 without first dropping to 827.
New range estimate
Here is an updated 5 minute bar chart of today's e-mini action. I sold my longs because the market broke below midpoint support (purple dotted line) on increasing volume (red arrows).This break of support means that I must revise my range estimate. I think the day's high is in place at 853. I believe that we shall see the day's low near the 827 level. This is near the midpoint of the reaction which carried the market down last week from 848 to 803 (both extremes were made electronically, not in the day session).
Range Estimate
Here is a five minute bar chart of today's e-mini day session. I am long two units at an average of 845.50.I think we have seen the day's low and I am sticking with my estimated high of 868 (blue rectangle). From this point forward the market should hold midpoint support near 844 (purple dotted line).
Guesstimates on April 14, 2009
June S&P E-mini Futures: I think today’s day session will see its low near 845 and its high near 868. There is substantial resistance in the 865-80 range and I think a break of 40 points or so will develop from there.
QQQ: The 30.80 level is support and I think the Q’s are headed for 35.00.
June Bonds: I don’t think the longer term bearish picture has changed. Resistance above the market is 132-16. Next downside target is 115.
June 10 Year Notes: I think a bear market in the notes is underway. Resistance above the market is at 125-20. Next downside target is 118.
Euro-US Dollar: Support remains at 131.00. I still think that the euro is headed for the 141.00 level.
Dollar-Yen: Then yen is headed for the 104.00 level.
May Crude: I think May crude is on its way to the 58.00 level. Support is at 46.00.
GLD – June Gold: I think the market is headed below 700. Resistance above the market is at 915.
SLV - May Silver: Silver has broken 1240 support and is now headed for 750.
Google: I think that its drop from 747 is over. Support is at 340. Next upside target is 410.
Monday, April 13, 2009
Update at 3:30 pm
Here is a five minute bar chart of today's e-mini session. I bought two units this morning at an average of 846.75 and sold them at 855.00. The market was approaching the top of my range estimate for today at 858.00 (first blue rectangle). Trading was very slow today, even slower than Thursday's pre-holiday session. I think things will pick up tomorrow, and before the move up from the March low at 666 is over I expect to see one or more upside volume climax days.I expect to see a range tomorrow of about 20 points for the day session. The low will probably be near 848. This is midpoint support based on the reaction from Thursday's high to this morning's low. The high should be near 868, not far from the 875 level I think we shall reach this week.
Wave Chart at 10:30 am
Here is a five minute bar chart of today's e-mini day session. I think we have seen the day's low at 841.50. I now estimate the day's high will be near 858 (blue rectangle). If I am right about this the market should hold midpoint support (purple dotted line). A reaction as big as the reaction just after the open would would carry the market down about five points (purple rectangle). I think that we shall see the the e-minis trading at 875 sometime this week.
Guesstimates on April 13, 2009
June S&P E-mini Futures: Today is shaping up as another slow day. I estimate the range will extend from 840 to 855. The market is on its way to 875.
QQQ: The 30.80 level is support and I think the Q’s are headed for 35.00.
June Bonds: I don’t think the longer term bearish picture has changed. Resistance above the market is 132-16. Next downside target is 115.
June 10 Year Notes: I think a bear market in the notes is underway. Resistance above the market is at 125-20. Next downside target is 118.
Euro-US Dollar: Support remains at 131.00. I still think that the euro is headed for the 141.00 level.
Dollar-Yen: Then yen is headed for the 104.00 level.
May Crude: I think May crude is on its way to the 58.00 level. Support is at 46.00.
GLD – June Gold: I think the market is headed below 700. Resistance above the market is at 915.
SLV - May Silver: Silver has broken 1240 support and is now headed for 750.
Google: I think that its drop from 747 is over. Support is at 340. Next upside target is 410.
Thursday, April 09, 2009
New Range Estimate
Here is a five minute chart of today's e-mini day session. A three day weekend starts tomorrow. Trading today is shaping up as even slower than I expected. So I am narrowing my range estimate to 835-850 (blue rectangle). The red dashed line is the high of 848 which was reached in electronic trading this past Monday, April 6, before the day session started.I expect to see the e-minis trade at 875 sometime next week.
Guesstimates on April 9, 2009
June S&P E-mini Futures: Late yesterday the e-minis bounced a third time off of the 811 level and the subsequent rally has brought them to the 840 level. I estimate today’s range as 830-850. The market is on its way to 875.
QQQ: The 30.80 level is support and I think the Q’s are headed for 35.00.
June Bonds: I don’t think the longer term bearish picture has changed. Resistance above the market is 132-16. Next downside target is 115.
June 10 Year Notes: I think a bear market in the notes is underway. Resistance above the market is at 125-20. Next downside target is 118.
Euro-US Dollar: Support remains at 131.00. I still think that the euro is headed for the 141.00 level.
Dollar-Yen: Then yen is headed for the 104.00 level.
May Crude: I think May crude is on its way to the 58.00 level. Support is at 46.00.
GLD – June Gold: I think the market is headed below 700. Resistance above the market is at 915.
SLV - May Silver: Silver has broken 1240 support and is now headed for 750.
Google: I think that its drop from 747 is over. Support is at 340. Next upside target is 410.
Wednesday, April 08, 2009
Support Fails
Here is a five minute bar chart of today's e-mini session. I thought midpoint support at 816.50 would hold (dashed purple line). Instead we just had a break below that level on a wide range bar with visibly increasing volume. I am out of my two long units.It now looks like the market will drop to 800 or so before it can begin a rally to 875. I expect to be a buyer near that level tomorrow.
Near Support
Here is a five minute bar chart of the e-mini day session today. I am long 2 units at an average of 815.50. The market is approaching the midpoint of the reaction early this morning (purple dotted line). I expect this support to hold and am looking for the market to rally the rest of the session.
New Range Estimate
Here is a five minute bar chart of the last two e-mini day sessions. I am revising my range estimate to 811-831 for today's day session (dashed green rectangle). I bought one unit at 813.75.The rally from last night's low at 802.25 to this morning's high of 821.50 was big enough to indicate that the low of the reaction from 848 is now in place. Given this hypothesis it made sense to be a buyer near the lows of yesterday's daytime range.
Weakness below 810, especially on increasing volume would mean that the market is headed back to 803 again.
Guesstimates on April 8, 2009
June S&P E-mini Futures: The e-minis reached the 803 downside target last night and have rallied this morning back to 815. For the time being I am going to stick with my range estimate for today of 803-823. I think that a rally to 875 is imminent.
QQQ: The 30.80 level is support and I think the Q’s are headed for 35.00.
June Bonds: I don’t think the longer term bearish picture has changed. Resistance above the market is 132-16. Next downside target is 115.
June 10 Year Notes: I think a bear market in the notes is underway. Resistance above the market is at 125-20. Next downside target is 118.
Euro-US Dollar: Support remains at 131.00. I still think that the euro is headed for the 141.00 level.
Dollar-Yen: Then yen is headed for the 104.00 level.
May Crude: I think May crude is on its way to the 58.00 level. Support is at 46.00.
GLD – June Gold: I think the market is headed below 700. Resistance above the market is at 915.
SLV - May Silver: Silver has broken 1240 support and is now headed for 750.
Google: I think that its drop from 747 is over. Support is at 340. Next upside target is 410.
Tuesday, April 07, 2009
Tomorrow
Here is a five minute bar chart of today's e-mini day session. Volume has been very low, making today the dullest trading session in months. I think this is a bullish sign. It means that the market has to go higher before it can find more sellers.I expect tomorrow's low to be close to the 803 level and its high to be near 823 (blue rectangle). Any strength on increasing volume above the top of this rectangle will tell me that the reaction is over and that the move to 875 has started.
Revised range estimate
Its turning out to be another slow day. I have contracted my range estimate from 25 points to 20 (blue rectangle). I think we have seen the high of the day. The low should be around the 803 level which coincides with midpoint support based on the preceding reaction from 830 to 775 (purple dotted line).Once the reaction low develops I shall be expecting a move up to 875.
Range Estimate
Here is a five minute bar chart of the last two e-mini day sessions. My range estimate for today is 800-825 (blue rectangle). I think the midpoint of yesterday's range (dotted purple line) near 826 will be resistance above the market. A rally from this morning's low of 812.25 which matches the size of yesterday's afternoon rally would carry to 827 (purple rectangles). So I think that the 825-27 range will be the ceiling on today's market action. Assuming it holds I think that the reaction will resume and carry the e-minis down to 803.
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