Monday, October 05, 2009

Afternoon update

Here is a five minute bar chart of day session e-mini trading. The market has broken out above resistance at 1035 (horizontal red dash line) and did so on a pretty good volume burst (green oval). This is a bullish sign and means that reactions are likely to be limited to 10 points or so as the market rallies toward the September 23 top at 1075.

I expect to see hesitation and a reaction from the 1042 level (purple solid line) at which point the rally will equal the size of the biggest previous rally on the way down from 1075. But a reaction from 1042 will probably only match today's early reaction in size (purple rectangles), bringing the market down to support at a reaction midpoint and a previous top (purple dotted line).


andi said...

while prima facie, it appears the vol ticked up, the extent of that still seems very weak and could be just manipulation ( i have seen many evidence of manipulating high vol for a short time and then a trap..
any way i am short ES 1037 now...expect at least some retrace..but a bigger sell off is not out of question

Wags94596 said...

NYSE breadth of 4.4 to 1 today along with today's reversal in crude oil and the US Dollar back on the defensive after last Friday's spike low in price and sentiment on horrible employment numbers and not getting the 2016 Olympics argues for higher prices and an invalidation of the P3 camp's bearish wave count, in my opinion.