Thursday, October 29, 2009

1037.25 was the low of the correction

Here is an hourly chart of day session e-mini trading. I think last night's low at 1037.25 ended the drop from 1099. At the low the market had penetrated the rising, green dash trend line by about 3 points, had matched almost exactly the size of the late-September to early-October reaction (green dash rectangle), and had dropped just a tad below support at 1039 defined by the late August temporary high point (horizontal red dash line). This morning's rally has been persistent and has carried the market well above the midpoint of yesterday's day session range at 1049.25. All these signs are evidence that the drop from 1099 is over.

The initial leg up will probably match the size of the biggest reaction on the way down - about 25 points (purple rectangles). This would bring the e-minis up to 1062-63, a level that is also midpoint resistance (purple dotted line). After a reaction from there which should end at a higher low the market will resume an advance that I expect will carry it to 1120 or higher.


MaverickUK said...

I can't agree. I think the tops are in and that the S&P will trade to 1068 before another fall down to 1022.

andi said...

i agree w/ the pommie. This rise is on weak vol and dollar selloff that was just too cute..4 times can't happen in a row. ( contrarian) .this will be lower high..

MaverickUK said...

Ha ha. I've never been called a Pommie before. That is funny.

Wags94596 said...

Not sure why anyone would doubt what the market was telling them in regards to the dollar here. The FXE came into a 61.8% retracement from the Oct. 1st low which coincided with extremely important 40-day MA support coming through at 147.00

The Euro has held this MA ever since May. Ever hear "The Trend is Your Friend"?

MaverickUK said...

Yes but the trend is now down not up. The upward trend was decisively broken yesterday.

Wags94596 said...

Maverick- What evidence do you have that supports your claim that the upward trend in the Euro was decisively broken yesterday, especially when it held significant support and merely retraced 61.8% of the recent rally?

Has the Euro taken out the last previous intermediate term low back on October 1st at 145.06?

No, it hasn't.

jeff said...

I think we've topped for the day and will look for the SPY to close at 106.00 or so. Perhaps we'll get to as high as 108.00 or so, but that is it.

I am still respecting the upward trend, but on the intermediate term, this rally is extremely long in the tooth. McClellan Occ. made a lower high and lower low, the Russell 2000 is still down big from it's all time highs, the Naz chart is making lower lows, many of the ETFs have started to crumble below long-term support(i.e. XLF, XLU, Japan), GS has broken below key support.

Wags94596 said...

FYI... Tomorrow is the last day of the fiscal year for most funds. Can you say mark them up???


jeff said...

It's evident that Carl is a great technician.

But I have no understanding how he would know we have another leg up to 1120(could it be the intermediate longer term trend line that started in 2007, 50% retracement, or something else?

jeff said...

Almost like clockwork, we're up roughly 25 points from the low right now. I wonder if we'll see that small retracement around here?

evi-und-juergen said...


as 1x1 Gann-Line or Gann-Angle coming from oct 2 was support yesterday (1012+26x1 = 1038) so is 2x1 Gann-Line resistance today (1012+27x2 = 1066). 1066 should be the maximum for today.

Regards from Germany

andi said...

sold my remaining longs here at ES1062..i disagree w/ carl and do not see market going up to 1100+..this will at most stall in another 10-15 pts..

TradingNuggets said...

This market does have the legs to higher. Lot of short covering today. (IMO)


jeff said...

I am looking for a 50% retracement from yesterday's low and today's high followed by another wave higher. However, I too am not convinced we will hit 1120, but rather, we'll hit 1080 and we will see the right shoulder of a head and shoulder pattern(similar to what we saw in June). That's not say we can't all enjoy a little more wave down and wave up before that. If, by chance, we get to 1120, I think that would prove the best shorting opportunity. Though Carl is a long term bull, I recall he is looking for a 100 point decline from 1120. Perhaps he'll have an opporunity to discuss should we get closer to capturing the 1120 level.

Wags94596 said...

If the SPX trades up over 1074 SPX then the "P3" count by all of the Elliott Wave perma-bears gets thrown out the window as this latest Wave (ii) pushed too far up into the low of Wave (i) from Oct. 22nd.

Interestingly enough, the Dow Jones has already pushed up into the Wave (i) low of 9917.01 from Oct. 22nd.

Also, any close tomorrow above the 20 MONTH EMA at 1053 will be incredibly constructive for the BULLS going forward.

Tomorrow is also the fiscal year end for most mutual funds. Can you say mark 'em up???


extrader said...

Tomorrow range looks like 1069-1052... Think we have lots of Resistance in the 1069 and will find Support down to 1052.

If we break above 1069, then I would switch hats and be a Bull, but this up auction today was suspect, due to the low volume.

Good Luck

michaeld said...

I believe we need confirmation of the bounce higher, prior to getting the all clear.

They'll probably let it rise further prior to doing some more selling.