A look ahead

Here is an hourly bar chart of day session e-mini trading in the September contract. The green line is the midpoint between the October 2008 rally top at 1067 and the March 2009 low at 666. It runs across the 867 level and should prove to be strong support for this market.

The May 2009 low points are at 874 or so (red dotted line). I expect them to be broken. When and if this happens we will get a quick read on the strength or weakness of this market. I am expecting a break below 874 on only modest volume and with little or no follow through. Such action would be evidence consistent with my view that the next rally will carry the market into the 965-80 zone.

I have drawn a pair of parallel trend lines which I expect to encompass this drop (purple dotted lines). If the market maintains the pace of its decline we should see a low in the 860-70 range late this week (red arrow).