Here is a five minute bar chart of today's e-mini day session. The market has been strong all day after opening up about 18 points from yesterday's close. This is strong breakout action above the last high at 830.50. This breakout level now stands just a shade below the midpoint of the day's range so far at roughly 832 (dashed red line).Volume today has been moderate even as the market has moved to new rally highs. This tells me two things.
First, we are probably going to see a modest reaction before the move to 875 resumes. I think this is especially likely in view of the e-mini's position just above the top of today's range estimate (blue rectangle).
How big a reaction? I think a drop as big as yesterday's late break - about 11 points - would be normal (purple dotted rectangle). This would put the market just above today's midpoint (red dashed line) which should also be support for the rest of the day.
Secondly, before this move upward ends I expect to see something resembling a volume climax - probably one that shows up on the daily charts as well. So I think the downside from here is limited, even if the market doesn't like the employment number which comes out tomorrow morning. The worst I see on the downside for the time being would be a drop similar in size to the March 31 - April 1 drop - about 28 points (green rectangle).
The 875 level remains my upside target, a target I think the market will reach sometime next week.
6 comments:
Hi carl
for what its worth , i am following 3 mid section counts
of differing degrees on the dow 60 minute chart , there is a symetry
between all of them , the origonal point E i mentioned several weeks ago just hit its point jj in this hour . we are now into point H based on the past few days trading
if all this is going to come together then we will have another
2 point jj's coming together early monday . i know lindsay stated you cannot use the mid section count to call a bull market peak it must be used to calculate the next bear market low . the point im making though is we are very close to what should become a reactionary high point and from that point once it comes we can calcualte that low
it is in my opinion that this next decline phase when it comes ( probably either begining now or probably sometime next week ) we will be able to begin the larger mid section count . to sum it up the next reactionary decline weather shallow or brief will be of an intermediate degree . maybe just a sideways consolidation phase or something more i dont know , but it is time to expect it
joe
Carl,
And once your target is met(875), we reverse and presume a stair step decline all the way back where we started from? Because I see no fundementals in this rally other than to relieve the selling pressure from Oct 2007. Don't get me wrong, I'm making money now, but I like down better than up.
I've closed out my short as we have had a nice reaction to resistance. I do find it very interesting that the financials have been trending down and are now at the lows of the day. The right play may have been to hold on.
was today a headfake--or would they sell on the non-farm payrolls..given that these guys are forward looking
:-) i guess thats old stuff now
The low volume I think is indicative of so many people beleiving this is just another bear market rally and the over-all pessimism that still abounds. (Which portends bullish to me). Janet, P.S. Thanks Carl for your GREAT analysis.
Covered 838 short near 831 and went long. Price action looks like 850 close possible. Will see!
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