Monday, October 26, 2009

Yo-Yo redux

Here is a 60 minute bar chart of day session e-mini trading. Earlier this morning the market put in a wide range up bar which carried it above the range of most of Friday's trading. This convinced me that the e-minis had started the move to 1120 that I have been anticipating.

Instead the e-minis pulled yet another U-turn, this time on very high volume (second set of blue arrows. Volume matched the level it attained on Thursday's late break and the market dropped to new reaction lows. The sellers have reasserted their control over this market. I am going back to my original downside target for this reaction which should be reached later this week. It is the green oval which marks the confluence of a rising trendline, a declining trendline, and the bottom of a reaction (purple rectangle) that would match the average length of the last three reactions on the way up from the early July low at 866.

21 comments:

jeff said...

Carl,

Though you've been wrong a lot of late, I have to respect the fact you do not stay married to what you want to happen, but rather react to what is happening and adjust accordingly. A sign of a good trader.

Teoh said...

I hope you have made up your mind: Up or down now?

Yo-Yo and continue Yo-Yo.

Trading getting more difficult nowadays. The trend changed multiple time in short time frame. Life as a trader is no as easy as I assumed. :-)

MaverickUK said...

Carl. I think the market top is in as I mentioned earlier. We are looking at most likely a 10% correction in these markets, but I don't think new highs will be made afterwards. Instead a retest of March lows is my preferred scenario.

Adsense said...

Hi Carl
this peak in the overall market resembles the peak in june 2009
if this is going to continue then we should not see a decent bottom
untill mid november roughly the 12th. a similar price decline would
target the dow very close to 9,000
which would imply the spx near 980
i intend to let this bearish cycle run its course .
good luck
joe

Alex said...

extrader,

I have to say, after watching you short this thing for a long time, your market calls as of late is quite impressive.

Nice calls, you and Andi both.

Enjoy the profits :)

extrader said...

Look for a double bottom at 1062-1063, would consider a Long position with a possible close of 1070!

extrader said...

Thanks Alex...

Just trying to give my thoughts and ideas to what I see and trade... This is not an easy game, very hard to predict the market, must give Carl credit for his overall market direction the past 6 months...

Win said...

Carl,

Thank you for your charts, opinions, and commentary. You are a wonderful teacher.

Remember back in the summer of 2008 when oil was topping, GS had called for $150 oil, and there was some very weird volatility? There were huge swings around the $125 to 145 area, up and down, and you characterized this increased volatility as signs of a top. To my mind, there are other parallels as well, including a clear disconnect between the fundamentals and reality.

We have not as yet experienced that mania phase when everyone and their mother (EATM) believes that the market can only go up and any correction will be minor. And importantly, we are coming off a time when EATM believes that the market can only go down.

However, we are in a cyclical bear, and we are hitting important overhead trend lines. Note also the failed breakouts on the horsemen's good earnings. All these, to my mind, make this a really good short (for at least one month), not to 1050, but to 1000 or further.

BTW, I read your long-term forecast, and I like the idea of a big bull starting in 2010 or 2012, at the end of this cyclical bear.

janet said...

"I hope you have made up your mind" Teoh says.... Up or down now?? How "obnoxious" can you be Teoh!. You think Carl has some crystal ball???

TradingNuggets said...

Good job Carl seeing the market turn. Sign of a great trader being able to read the market and trade what's there instead of being biased to a predetermined outcome.

jack

pimaCanyon said...

You are funny, Carl. Great post title. Good to see you don't lose your sense of humor when the market does the unexpected.

Urban said...

I think Carl does a heck of job in a very demanding market.

I would like to hear more about the simultaneous dollar/yield rally with continued equity strength and also about the quite substantial oil price fall view.

Kishore said...

Carl, I have just started using Range Charts. They filter out a lot of noise and offer a clear picture of market movements as discrete steps of smaller ranges. As your analysis is based on your understanding of ES ranges, why do you still have a preference for Time Charts instead of Range Charts?

extrader said...

would love to see a retest of the lows or close to it, pretty good area to get long and looking for a close to 1070-1072... think the selling is down for now...

Kishore said...

The 800-Range Chart clearly shows that the current sell-off is nothing to get very excited about. The market has gone up 100s of points and we are a mere 30 points down from the top. In fact, we are making a bull flag channel and are just a few points shy of the bottom of the channel.

michaeld said...

It is hard to figure out why the market moves up and down.

An investor should examine the daily charts that smooth hourly behavior. Also, should use timing signals to figure out when to get in and when to get out of the market.

admin
P.S. I get my timing signals at http://invetrics.com

Eloy said...

if the market confirms it's going down, at least for today, don't fight it. Either stay out or short with your stops in place

MC said...

i see a lot of postings in the past few hours so i jump in as well ahah..

let me quote a few paragraphs of a well known trader...

"when the main trend is up for weeks or months, the stronger it gets and the smaller the reactions in the last stage, because in these last stages, hope gives way to euphoria."

reading the latest 16 posts i see only 3 bulls 3 bears and 10 with no clue about what's next...

Is this the typical behaviour of a topping market ? mmmh....

Further, "Economic reports point to bumpy recorvery" was one Reuter's headline...any sign of feverishly active markets...? mmmh...

My bullish bias is intact even though I have to admit I do not mix miself within the intraday arena anymore and for everything else I have a stop loss. :-) Cheers.MC

Win said...

Sorry, I meant "secular" bear. Not "cyclical."

Kishore said...

MC, your market survey technique leaves a lot to be desired.

Also, if you were trading ES, your stop loss would be hit during overnight hours. Guaranteed loss every night!

However, we can trade ES intraday with stop loss.

DW said...

Looks like tomorrow we are headed back north again from what I can tell...1085-1090 range.