Friday, October 30, 2009

Here is an hourly chart showing day session e-mini trading. Today's break took me by surprise - the drop below yesterday's midpoint at 1054.50 was the signal that something was wrong with today's bullish outlook.

Since yesterday's high at 1064 was a lower top I have to expect that the market will drop visibly below Wednesday's low at 1037.25. So far today we have hit 1033 but I am guessing that the e-minis will drop further to 1025 or so before turning around (green oval). Already midpoint support at 1044 and support at the last top at 1038 have been broken decisively. By itself this is not enough to force me off of my "up to 1120" scenario for the next few weeks. But any significant activity below the 1008 level would mean that the market will drop even lower, to 960 or so. The last low on the way up was at 1012 on October 12. The June-July break was 91 points and a drop from 1099 of that size would take the market down to 1008.

I want to emphasize that I still think this break is a good buying opportunity and that my "line in the sand" will not be breeched.


jeff said...

a good buying opportunity? c'mon Carl.

we just broke support and there is absolutely nothing to suggest that the market won't simply blow through that 'line in the sand'. Why wouldn't you simply wait for confirmation that either the bottom of the hourly chart holds or 1008 holds before buying?

andi said...

i recommend buying the dips here..some get scared when faced w/ a sell off like this but this a godsend for the brave ones..remember folks, rates are zero or negative

truyenh said...

I think the shorterm bottom is in for spx at 1035 and spx will spend whole next week to slowly (up and down) crawl back to 1069 level and there might be another big drop to take it down to 1012 level before we see any significant rally.

Wags94596 said...

The media is ranting and raving about the strength of the Dollar today, yet the FXE (euro) still hasn't taken out Wednesday's low at 146.85 The Euro is currently 147.32 last.

Adsense said...

i see your logic with the 1008 price target yet on percentage terms the cash spx was down 9 %
and the futures 9.15 %
using the average of the 2 a similar decline would be 9.075 %
this decline ( june to july ) lasted 19 trading days high to low
on the futures and 18 trading days
on the cash index .the closing high on the cash index was on oct 19 while the print high was oct 21
the futures closing high was oct 19while the print high was oct 20
using the decline in terms of time
as 18 to 19 trade days and adding
that time count to oct 19-21
you get a time count of nov 11 to nov 13 . in percentage a terms a decline on average of 9.075 % decline would target 991.84 in the futures and 993.98 in the cash spx
obviously perfect comparisons rarily work yet there is more
reasons to allow for a turn near
the nov 11 - 13th turn for a low
and it has to do with the seasonal
bias from nov 7th to jan 15th
as a bullish period . take the time to look that up over the past
20 plus years .
good luck

khoekz said...

I just went long into the weekend, something I usually do not do. This market is oversold, and this break was a good one (as opposed to a scary one). it was a needed breather. With the new month, new money will enter the market, people will keep buying the dips. i think carl's 1025 will hold and that this is a great buying opportunity. thanks again carl, enjoy your weekend.

tapped out said...

I'm getting a little jumpy on this market! I think I fall into the majority with blinders on and can only see what is happening rather than understand what I'm being told! That's the edge Carl has on most of us.

Wags94596 said...

Nice "line in the sand" Carl.
Gotta love a man with conviction!
Stay tuned for the FULL MOON low early next week, just like on October 2nd, and the month before that.


jeff said...


I don't know if you follow Elliott Wave theory, but they have called a top in this market. The most recent activity finished its first 5 waves down in a bunch of future 5 waves down over the next year. They are now looking for a short term move should be an “(a)-(b)-(c)” rise, or some variation of this pattern to correct the recently completed decline. As such, the E-mini’s should work their way back up into the 1056-1072 area, which would then lead to a steep third-wave decline thereafter.

Best Regards,

Win said...

Haven't EWT folks called for a top in this market several times over the past two-three months? Not trying to be snarky, just wondering how much credence I should give their interpretation of EWT.

Wags94596 said...


Yes, you have neatly summarized the latest short-term update from Steven Hochberg and Robert Prechter's Elliott Wave International.

One caveat though.

These guys have been anxiously anticipating the end of this Primary 2 (counter-trend rally) and the beginning of the very long and deep Primary 3 wave that would go all the way down and take out the March lows at 666. They've been wrong since August 5th in calling for a major TOP and the end of Primary 2. Everything is lined-up for them now and there is no more "wiggle" room for them anymore. Should be interesting. Stay tuned.

P.S. Today, the CBOE Equity Put/Call ratio registered the highest daily reading since October 2nd (.80 vs.84), which happened to be the last major trading low.

Win said...

Wags - thanks. In addition to CBOE, $TRIN is indicating a bounce as well. If I could watch my computer on Monday, I would have gone long today, at least for a trade.

MaverickUK said...

Looking for 980 to trade this week (if not Monday).

jeff said...

Win and Wags -

Notice how the S&P close was only 3 points below the August high. They may be wrong, but I am confident that the dollar is in the 5th wave down from earlier this year. Any break outside the bull forming wedge will confirm the dollar has bottomed.

Notice too how the Euro made a blow through the upper trendline of the bear formation wedge.

I do find it interesting that Carl is calling for the Euro to fall below 120. If this occurs(and I think it will), oil will fall below $35, the dollar will rally to over $90 and the S&P will fall below the March 2009 low.

Now is not the time to be keeping any longs in my opinion.