Sold one unit at 1089.00

update

Here is a 30 minute bar chart showing 24 hour e-mini trading. Last Thursday the market broke below its previous low at 1082.50 on the Dubai World default news. But it put in only one brief trading range below there (first blue oval). That downside breakout now looks like a false alarm to me because two subsequent trading ranges have formed completely above the 1082.50 level.

I conclude that the market is headed up from here. The 1130-40 range should be reached by mid-December.

PS I want to bring this to your attention!

Long one unit at 1089.00

Guesstimates on November 30, 2009

December S&P E-mini Futures: I think Friday's 1067 low will hold. In fact I do not expect to see the e-minis trade below 1082. Today's range estimate is 1085-1100. I think the market is headed for the 1130-40 range.

QQQ: Support is at 42.50.

TYX (thirty year bond yield): I think this market has begun a move to 5.00%.

TNX (ten year note yield): I think that the market has begun a swing up to 4.30%.

Euro-US Dollar: I have been leaning on resistance near 150 but New York closed above 151.00 on Wednesday so I now think the market is headed for 160. Meantime support is at 147.50. Dollar-Yen: I now thing the dollar-yen is headed down to 80.

January Crude: I think that crude is headed down to 50.00. Resistance is still at 81.00.

GLD – February Gold: Sentiment is very bullish. But I think this morning's 1130 low will hold and that continuation upward to 1230 is likely.

SLV - March Silver: The 1900 target has nearly been reached. Still no sign of a top so continuation upward to 2100 is likely.

Google: Support is now at 535. This step upward will carry to 610.

Never mind!

Here is a five minute bar chart showing globex trading in the e-minis from yesterday afternoon through the early part of today's pit trading.

In this morning's guesstimate I said that the drop below the previous low at 1082.50 implied that the market would continue down to 1040 or so during the next week. The top of my day session range estimate for today was 1086. I was expecting that a the trading range that formed after this morning's low (third blue oval from the left) would contain any rally from the open.

Instead the market burst through the top of that trading range at 1085 and thus far has rallied as far as 1092.50. The day session high thus far is above the 1089.50 midpoint of the drop from 1112.25 to this morning' s low at 1067. This combined with the visibly higher trading range that I think is forming (last blue oval) is pretty good evidence that the drop below 1082.50 was a shakeout, not the start of a bigger downtrend. If I am reading the market correctly any reaction we see today should halt at or above midpoint support which stands just about at the level of the 1082.50 low (purple dotted line).

The market's action subsequent to the Dubai Global shakeout that we saw during the past 36 hours shows that the shakeout was seen as a buying opportunity by longer time frame traders and investors. The implication is that the up trend from the November 2 low at 1026 is still intact and that the market is preparing for a move up to 1140-50.

Guesstimates on November 27, 2009

December S&P E-mini Futures: The Dubai World default sent world markets spiraling downward yesterday. The e-minis traded as low as 1067 last night. The drop below the 1082 level changes the short term picture. I now think that the reaction which started from the November 16 top at 1112 will carry the market down about as much as the late October - early November break which was 72 points. So the 1040 level should prove to be strong support, especially since it is just a shade above the 1038 top established on August 28. I think this drop will end next week and that the subsequent up move will carry the market up 100 points or so. Today's day session range estimate is 1066-1086. Remember that trading in New York ends early at 1:15 pm.

QQQ: Support is at 41.50.

TYX (thirty year bond yield): I think this market has begun a move to 5.00%.

TNX (ten year note yield): I think that the market has begun a swing up to 4.30%.

Euro-US Dollar: I have been leaning on resistance near 150 but New York closed above 151.00 on Wednesday so I now think the market is headed for 160. Meantime support is at 147.50.

Dollar-Yen: I now thing the dollar-yen is headed down to 80.

January Crude: I think that crude is headed down to 50.00. Resistance is still at 81.00.

GLD – December Gold: Sentiment is very bullish. But I think this morning's 1130 low will hold and that continuation upward to 1230 is likely.

SLV - December Silver: The 1900 target has nearly been reached. Still no sign of a top so continuation upward to 2100 is likely.

Google: Support is now at 535. This step upward will carry to 610.

Guesstimates on November 25, 2009

December S&P E-mini Futures: The day session range estimate is 1106- 1116. I think the 1126 level will be reached within a few days.

QQQ: Next upside target is 45.60. Support is at 43.25.

TYX (thirty year bond yield): I think this market has begun a move to 5.00%.

TNX (ten year note yield): I think that the market has begun a swing up to 4.30%.

Euro-US Dollar: I have been leaning on resistance near 150. A New York close above 151.00 will mean that this resistance has failed and that the market is headed for 160.

Dollar-Yen: I am still betting that the 87.13 low will hold, but a close below 86.50 will mean that the market is headed down to 80.

January Crude: I think that crude is headed down to 50.00. Resistance is now at 81.00.

GLD – December Gold: Sentiment is very bullish. But there is still no convincing evidence for an imminent top. I think that continuation upward to 1230 is likely.

SLV - December Silver: The 1900 target has nearly been reached. Still no sign of a top so continuation upward to 2100 is likely.

Google: Support is now at 525. This step upward will carry to 610.

sold long unit at 1099.25

Long one unit at 1103.50

Guesstimates on November 24, 2009

December S&P E-mini Futures: The day session range estimate is 1100- 1112. I think the 1126 level will be reached within the next week or so.

QQQ: Next upside target is 45.60. Support is at 43.25.

TYX (thirty year bond yield): I think this market has begun a move to 5.00%.

TNX (ten year note yield): I think that the market has begun a swing up to 4.30%.

Euro-US Dollar: I think a sustained drop to below 120 is about to start.

Dollar-Yen: I think the 87.13 low will hold and that the yen will soon begin a move to 105.00.

January Crude: I think that crude is headed down to 50.00. Resistance is now at 81.00.

GLD – December Gold: Upside target at 1165 has been reached. Sentiment is very bullish. But there is still no convincing evidence for an imminent top. So I now think that continuation upward to 1230 is likely.

SLV - December Silver: The 1900 target has nearly been reached. Still no sign of a top so continuation upward to 2100 is likely.

Google: Support is now at 525. This step upward will carry to 610.

Update

Here is a 30 minute bar chart of the last ten e-mini day sessions. The market started the pit session today with a high volume rally which carried to within a point of its recent high. There the buyers lost their enthusiasm. But sellers failed to turn out in force - the e-minis dropped only about as much as they have during recent reactions (purple rectangles).

As long as this reaction doesn't carry the market much below 1100 I will be operating on the hypothesis that it is headed for midpoint resistance at 1126 (red dashed line). This week is a holiday week in the U.S. so trading will be slow, especially during the afternoon and during Friday's short pit session.

sold long unit at 1104.25

Long one unit at 1106.25

Guesstimates on November 23, 2009

December S&P E-mini Futures: The day session range estimate is 1096- 1112. I think the 1126 level will be reached within the next week or so.

QQQ: Next upside target is 45.60. Support is at 43.25.

TYX (thirty year bond yield): I think this market has begun a move to 5.00%.

TNX (ten year note yield): I think that the market has begun a swing up to 4.30%.

Euro-US Dollar: I think a sustained drop to below 120 is about to start.

Dollar-Yen: I think the 87.13 low will hold and that the yen will soon begin a move to 105.00.

January Crude: I think that crude is headed down to 50.00. Resistance is now at 81.00.

GLD – December Gold: Upside target at 1165 has been reached. Sentiment is very bullish. But there is still no convincing evidence for an imminent top. So I now think that continuation upward to 1230 is likely.

SLV - December Silver: The 1900 target has nearly been reached. Still no sign of a top so continuation upward to 2100 is likely.

Google: Support is now at 525. This step upward will carry to 610.

Guesstimates on November 20, 2009

December S&P E-mini Futures: The day session range estimate is 1080- 1095. This morning the market dropped to within a point of its last low at 1082.50. I think that level will be broken briefly but a move up to 1126 should begin soon.

QQQ: Next upside target is 45.60. Support is at 43.25.

TYX (thirty year bond yield): I think this market has begun a move to 5.00%.

TNX (ten year note yield): I think that the market has begun a swing up to 4.30%.

Euro-US Dollar: I think a sustained drop to below 120 is about to start.

Dollar-Yen: I think the 87.13 low will hold and that the yen will soon begin a move to 105.00.

January Crude: I think that crude is headed down to 50.00. Resistance is now at 81.00.

GLD – December Gold: There is still no sign of a top in the making. Next upside target is 1165. Meantime support is at 1075.

SLV - December Silver: Continuation up to 1900 is likely.

Google: Support is now at 525. This step upward will carry to 610.

Supply shock

Here is a 30 minute bar chart of e-mini day session trading. A supply shock hit the market this morning (red arrows and red dash oval). The question now is whether or not this shock means that the market is headed back down to 1030 or so.

When I approach a question like this one I always try to interpret the new evidence provided by the market in the context of the longer term situation. I have said before that I think the 1026 low on November 2 was comparable in importance to the July 8 low at 866. As yet I see no evidence that would make me change my mind on this point.

So I am not inclined to interpret this supply shock too bearishly just yet. Instead I think the market is in the process of establishing a new trading area between roughly 1083 and 1100. If so it would only be the first lower area relative to the previous one between 1100 and 1112 (highest dashed rectangle). Most up trends survive one or even two lower trading ranges without reversing.

I am going to lean on the last reaction low on the way up at 1082.50 (horizontal green dash line).
As long as no significant trading activity occurs below that level I will stick with my view that a new step upwards is imminent and will take the e-minis to 1126 and eventually higher than that early next year.

Guesstimates on November 19, 2009

December S&P E-mini Futures: The day session range estimate is 1093- 1105. At the bottom of this range the market will match the length of the last break and stand at midpoint support defined by that break. I expect to see this rally reach the 1126 level within a few days.

QQQ: Next upside target is 45.60.

TYX (thirty year bond yield): I think this market has begun a move to 5.00%.

TNX (ten year note yield): I think that the market has begun a swing up to 4.30%.

Euro-US Dollar: I think a sustained drop to below 120 is about to start.

Dollar-Yen: I think the 87.13 low will hold and that the yen will soon begin a move to 105.00.

January Crude: I think that crude is headed down to 50.00. Resistance is now at 81.00.

GLD – December Gold: There is still no sign of a top in the making. Next upside target is 1165. Meantime support is at 1075.

SLV - December Silver: Continuation up to 1900 is likely.

Google: Support is now at 525. This step upward will carry to 610.

Update

I had thought that today would be a bullish day but instead the e-minis have remained locked in the 1100-1112 trading range. I still think the market will breakout above this range late today or more probably tomorrow. In the meantime I don't think any drop below 1100 will carry very far or last very long.

I am impressed by the fact that the highest prices of the past 8 months have not attracted any aggressive selling. This tells me that the market is going to have to move substantially higher to give the sellers waiting in the wings the opportunity they are waiting for. I still think we shall see 1126 in a few days and 1170 early in 2010.

sold one unit at 1104.00

long one unit at 1107.75

Guesstimates on November 18, 2009

December S&P E-mini Futures: The day session range estimate is 1105-1118. I expect to see this rally reach the 1126 level within a few days.

QQQ: Next upside target is 45.60.

TYX (thirty year bond yield): I think this market has begun a move to 5.00%.

TNX (ten year note yield): I think that the market has begun a swing up to 4.30%.

Euro-US Dollar: I think a sustained drop to below 120 is about to start.

Dollar-Yen: I think the 87.13 low will hold and that the yen will soon begin a move to 105.00.

December Crude: I think that crude is headed down to 50.00. Resistance is now at 81.00.

GLD – December Gold: There is still no sign of a top in the making. Next upside target is 1165. Meantime support is at 1075.

SLV - December Silver: Continuation up to 1900 is likely.

Google: Support is now at 490. Next step upward will carry to 610.

Update

Here is an hourly chart of day session e-mini trading. Today's session has been narrow and trendless (so far). Still, the market is conveying important information even as it apparently does nothing. Notice the blue dash oval which encompasses the past two day sessions. It stands entirely above the late September high of 1099. This means that no double top against the 1099 level will develop. It is further evidence that the market is headed for 1126 (green oval) and to 1170 during the early part of 2010.

I expect tomorrow to be a bullish day and think the 1126 level will be reached by the end of the week.

sold long unit at 1104.00 - will try again later

Long one unit at 1105.50

Guesstimates on November 17, 2009

December S&P E-mini Futures: The day session range estimate is 1098-1112. I expect to see this rally reach the 1126 level within a few days.

QQQ: Next upside target is 45.60.

TYX (thirty year bond yield): I think this market has begun a move to 5.00%.

TNX (ten year note yield): I think that the market has begun a swing up to 4.30%.

Euro-US Dollar: I think a sustained drop to below 120 is about to start.

Dollar-Yen: I think the 87.13 low will hold and that the yen will soon begin a move to 105.00.

December Crude: I think that crude is headed down to 50.00. Resistance is now at 81.00.

GLD – December Gold: There is still no sign of a top in the making. Next upside target is 1165. Meantime support is at 1075.

SLV - December Silver: Continuation up to 1900 is likely.

Google: Support is now at 490. Next step upward will carry to 610.

Update

Here is an hourly bar chart showing day session e-mini trading going back to late September. The short term trend turned upward in early November as you can see from the succession of higher trading ranges (blue ovals). I think midpoint resistance at 1126 and the top of the trend channel will be reached in a few days (green oval). Some sort of reaction is likely to begin there but I doubt that it will carry the market lower than 1075. In any event I still think the 1170 level will be reached early in 2010.

Elliott and Me

I first starting learning and trying to apply Elliott wave theory back in 1966. I became quite expert in its application and often discussed it in my forecasting letter, The Cyclic Forecast, back in 1977-83.

But while I think Elliott is a beautiful theory, and often can give insight into the market's position in longer time frames, I think it is a distraction for short term traders. Here is the problem. To be successful as a trader you have to tune in to the market's message about the current supply-demand balance. By this I mean that you have to be able to use the market's action to judge whether longer time frame traders have above-normal long positions (trend up) or below-normal long positions (trend down).

How is this information conveyed? By the progression of trading ranges and by the direction of unusually long, uncorrected moves in prices. Everything else is simply an attempt to interpret the market's message in artificial ways. I think most computerized technical indicators are among these "artificial ways". Elliott wave theory is also in this category as are cycle theories, astrology, etc.

The problem with using Elliott, technical indicators, etc. is that they at best distract you from the market's supply-demand message, and at worst deceive you about this message.

There were very successful traders before computers, before Elliott, before almost all currently popular approaches were invented. Ask yourself this. On what did these traders base their market insights?

So I say look for what has stood the test of time, for methods that don't obscure the market's action with a lot of complicated formulas and rules. This is what you need to know and apply in order to interpret the messages markets are sending you.

sold one unit at 1108.50

Long one unit at 1100.25

Guesstimates on November 16, 2009

December S&P E-mini Futures: The day session range estimate is 1093-1108. I expect to see this rally reach the 1126 level within a few days.

QQQ: Support is at 41.10. Next upside target is 45.60.

TYX (thirty year bond yield): I think this market has begun a move to 5.00%.

TNX (ten year note yield): I think that the market has begun a swing up to 4.30%.

Euro-US Dollar: I think a sustained drop to below 120 is about to start.

Dollar-Yen: I think the 87.13 low will hold and that the yen will soon begin a move to 105.00.

December Crude: I think that crude is headed down to 50.00. Resistance is now at 81.00.

GLD – December Gold: There is still no sign of a top in the making. Next upside target is 1165. Meantime support is at 1075.

SLV - December Silver: Continuation up to 1900 is likely.

Google: Support is now at 490. Next step upward will carry to 610.

Screw up! - sale at 1090.25 of long unit reported everywhere but here!

I just noticed that my sale of one unit at 1090.25 was posted by mistake on "The Art of Contrarian Trading" instead of on this blog. So sorry. However if you look to the right on this blog you will see that I did report the sale on Twitter in a timely manner.

Added later: I have now erased this trade report from "The Art of Contrarian Trading".

Update

The e-minis have dropped on increasing volume from the day's high at 1096. This has opened up the potential for a drop to 1075 or so, the lower limit of what I could see and still think a move to 1126 is underway. If the e-minis close within a point or two of 1087 and then open unchanged or higher Monday I would expect to see a bullish day Monday. A close below 1085 would make it likely that we'll see 1075 before the advance can resume.

A review of my book

Here is a very kind review of my book by someone I don't know and have never met. You can check out the rest of the Amazon reviews by clicking on this link.


~~~~~~~~~~~~~~~~~~~~~~~~~~

1 of 1 people found the following review helpful:

A Grateful Reader, November 12, 2009

By	Trading Truth Seeker "K" (Wesley Chapel, FL) - See all my reviews

Back in 1990 I read an article in the July/Aug issue of the Commodity Traders Consumer Report(CTCR)that forever turned my trading mindset around. Carl Futia wrote the article. And no, I don't personally know Mr. Futia, and I have no interests financial or otherwise in his world. But in my 25 years of trading, I can honestly say that this article helped to shape my trading mindset forever. To make a long story short, I'll quote and explain to you the two concepts from that 1990 article that engendered the changes in my trading mind.

Concept #1: Quote: "I had seen clearly that if I relied on oscillators and trend-following techniques, I was always getting into the trend too late. It struck me that I should try to "Anticipate" the beginning of trends rather than waiting to enter in the middle after they had started".

Concept #2: This concept was the idea of "Free Exposure" which Mr. Futia was taught from a seminar by the legendary trader Peter J. Steidlmayer. In essence Free Exposure meant; To enter the market where the risk is the least and the reward is the greatest, one must find, and be able to read where "Value" lies in the market. All entries made at "Value" are essentially tantamount to a "Free" ride in the market, with very little risk "Exposure".

These two concepts started me on my mental journey into what I now call "Anticipating Value" in the market. In any case, back then, after doing months of research and extensive reading on these two concepts my trading was completely turned around for the better. Today, both concepts have melded in one technique, and now form the foundational element of my trading strategy and methodology. Further, since reading this new book, I can see that most of his ideas have since matured into a cohesive philosophy, worthy of anyone's personal library. And by the way, my personal library once numbered over 800 books, so I believe I know a good one when I see it.

Thankfully, I too arrived at some of those same conclusions in his book a long time ago. This is because they were the natural and logical progression from his initial concepts in the 90's. Do yourself a favor and at least read this book, even though you may not agree with it now. Some time in the future, after you have been "sorely tested" in the market for a while, you may be truly thankful that you did. It might just spark a new way of looking at the market for you.

Long one unit at 1092.25

Guesstimates on November 13, 2009

December S&P E-mini Futures: The day session range estimate is again 1085-1100. I expect to see this rally reach the 1126 level within a week or two.

QQQ: Support is at 41.10. Next upside target is 45.00.

TYX (thirty year bond yield): I think this market has begun a move to 5.00%.

TNX (ten year note yield): I think that the market has begun a swing up to 4.30%.

Euro-US Dollar: I think a sustained drop to below 120 is about to start.

Dollar-Yen: I think the 87.13 low will hold and that the yen will soon begin a move to 105.00.

December Crude: I think that crude is headed down to 50.00. Resistance is now at 81.00.

GLD – December Gold: Gold has reached the 1120 level but there is still no sign of a top in the making. Next upside target is 1165. Meantime support is at 1075.

SLV - December Silver: Continuation up to 1900 is likely.

Google: Support is now at 490. Next step upward will carry to 610.

Update

Here is an hourly chart of day session e-mini trading going back to late September. The market has stalled after taking out its last top at 1099 (electronic) by 4 points (higher of the two horizontal, red dotted lines). The question now is whether the market is preparing for a move all the way back down to 1026 or whether instead it is ready to advance to my initial 1126 target (green oval).

Hesitation near a previous high is normal. Take a look at what happened in early October as the market approached its then previous high at 1076 (lower of the two horizontal, red dotted lines). The e-minis broke about 15 points before recovering and moving up to the 1099 high a week later.

In the current situation I am allowing the market to break as much as 25 points before I would give up (temporarily) on my 1126 target. A break as big as the biggest day session break during the current rally would take the market down to 1086 or so (where it is currently trading) (purple rectangles).

It looks like today's trading range will be visibly below yesterday's. This would break the pattern of steadily rising trading ranges (blue dash ovals). However, I generally am willing to tolerate one, maybe two, ranges in the "wrong" direction before I figure the trend has reversed. Since no supply shock is yet visible this is what I will do now.

All in all, the drop from 1103 still looks like a correction in an up trend and I think this market will reach the 1126 level in a week or so.

sold one unit at 1092.50

Long one unit at 1095.50

Guesstimates on November 12, 2009

December S&P E-mini Futures: The day session range estimate is again 1090-1105. I expect to see this rally reach the 1126 level within a week or two.

QQQ: Support is at 41.10. Next upside target is 45.00.

TYX (thirty year bond yield): I think this market has begun a move to 5.00%.

TNX (ten year note yield): I think that the market has begun a swing up to 4.30%.

Euro-US Dollar: I think a sustained drop to below 120 is about to start.

Dollar-Yen: I think the 87.13 low will hold and that the yen will soon begin a move to 105.00.

December Crude: I think that crude is headed down to 50.00. Resistance is now at 81.00.

GLD – December Gold: The market will probably keep going until it reaches 1120. Support is at 1030.

SLV - December Silver: Continuation up to 1900 is likely.

Google: Support is now at 490. Next step upward will carry to 610.

sold long unit at 1094.00

Repurchased one unit at 1094.75

sold one unit at 1094.00

bought one unit at 1099.50

Guesstimates on November 11, 2009

December S&P E-mini Futures: Today is a bank holiday in the US so trading will be slow. The day session range estimate is 1090-1105. I expect to see this rally reach the 1126 level within a week or two.

QQQ: Support is at 41.10. Next upside target is 45.00.

TYX (thirty year bond yield): I think this market has begun a move to 5.00%.

TNX (ten year note yield): I think that the market has begun a swing up to 4.30%.

Euro-US Dollar: I think a sustained drop to below 120 is about to start.

Dollar-Yen: I think the 87.13 low will hold and that the yen will soon begin a move to 105.00.

December Crude: I think that crude is headed down to 50.00. Resistance is now at 81.00.

GLD – December Gold: The market will probably keep going until it reaches 1120. Support is at 1030.

SLV - December Silver: Continuation up to 1900 is likely.

Google: Support is now at 490. Next step upward will carry to 610.

sold long unit at 1090.25

bought one unit at 1088.25

Reaction

Here is a five minute bar chart showing the last three days of e-mini day session trading. A reaction has started from today's high at 1094.50. I have drawn the bearish trend channel which appears likely to delimit the market's activity during this normal correction. A correction as big as the last one would carry the market down to 1082 (purple rectangles). The midpoint of yesterday's day session is 1083. So my target for this break is the green oval drawn at the confluence of the lower channel line, the lower boundary of the rectangle, and yesterday's midpoint.

Once this drop is over I expect the e-minis to rally to 1105 or so, just a few points above the October 20 high at 1099. Over the next week or ten days I expect to see the 1126 level.

Guesstimates on November 10, 2009

December S&P E-mini Futures: Today's day session range estimate is 1080-1100. I expect to see this rally reach the 1120 level within a week or two.

QQQ: Support is at 41.10. Next upside target is 45.00.

TYX (thirty year bond yield): I think this market has begun a move to 5.00%.

TNX (ten year note yield): I think that the market has begun a swing up to 4.30%.

Euro-US Dollar: I think a sustained drop to below 120 is about to start.

Dollar-Yen: I think the 87.13 low will hold and that the yen will soon begin a move to 105.00.

December Crude: I think that crude is headed down to 50.00. Resistance is now at 81.00.

GLD – December Gold: The market will probably keep going until it reaches 1120. Support is at 1030.

SLV - December Silver: Continuation up to 1900 is likely.

Google: Support is now at 490. Next step upward will carry to 610.

Update

Here is an hourly chart showing e-mini day session trading going back to early September. I have drawn a trend channel on this chart which I believe accurately delimits the market's recent swings around the underlying upward tendency. I think we shall hit the top of the channel within the next 10 days. I have drawn a horizontal, red dash line at the 1126 level which marks the exact midpoint between the 2007 high at 1587 and the 2009 low at 666. The green oval marks my target zone at the confluence of the upper channel line and this midpoint resistance.

I also think the November 2 low will in retrospect be seen as comparable in importance to the July 8 low at 866. If I am right about this the e-minis will rally into the high 1100's over the next three months.

More bearish than at 866

Here is a chart showing the weekly sentiment survey conducted by the American Association of Individual Investors (chart courtesy of DecisionPoint.com). The red bars represent the percentage of responses that were bearish, the green bars represent the bullish percentage, while the purple bars at the bottom express the ratio of bulls to bears.

Notice that the bearish percentage is currently higher than it was at the July low of 866 while the bull/bear ratio is lower than it was then. This is one piece of evidence that makes me think the November 2 low is comparable in importance to the July 8 low. If I am right about this then the market has probably started a rally that will carry well past the 1120 level I have been mentioning. How far past 1120? The most optimistic projection would be to the 1240 level. This would put the next top as far above the 1099 top as the 1099 top was above the June 2009 top of 957. Cutting that 140 point difference in half still projects to 1170.

Main Street Hates Wall Street

Check out my latest post on "The Art of Contrarian Trading".

Guesstimates on November 9, 2009

December S&P E-mini Futures: Today's day session range estimate is 1068-1082. I expect to see this rally reach the 1120 level

QQQ: Support is at 41.10. Next upside target is 45.00.

TYX (thirty year bond yield): I think this market has begun a move to 5.00%.

TNX (ten year note yield): I think that the market has begun a swing up to 4.30%.

Euro-US Dollar: I think a sustained drop to below 120 is about to start.

Dollar-Yen: I think the 87.13 low will hold and that the yen will soon begin a move to 105.00.

December Crude: I think that crude is headed down to 50.00. Resistance is now at 81.00.

GLD – December Gold: The market will probably keep going until it reaches 1120. Support is at 1030.

SLV - December Silver: Continuation up to 1900 is likely.

Google: Support is now at 490. Next step upward will carry to 610.

Still upward

Here is a 30 minute bar chart showing day session e-mini trading. The trend of trading ranges is still visibly upward (blue ovals). The biggest day session break has been 16 points and a similar break from today's high would carry the e-minis down to 1053 (purple rectangles). That level is just a shade above midpoint support at 1050 (purple dotted line).

The market has been very erratic today after the release of the employment numbers. But this has only served to highlight a trading range between 1053.50 (the low in electronic trading after the news) and today's high at 1069.50. I don't think we will break out of this range today, but I do expect an upside breakout above 1069.50 next week. I still think this market is headed for 1120 and higher.

Guesstimates on November 6, 2009

December S&P E-mini Futures: I am going to stick with my bullish prognosis as long as the market doesn't spend much time below the 1051 level. At 1051 the drop from the electronic high of 1069 before the employment number would equal the length of the two reaction we have seen on the way up from 1026. My range estimate for today is 1051-1065.

QQQ: Support is at 41.10. Next upside target is 45.00.

TYX (thirty year bond yield): I think this market has begun a move to 5.00%.

TNX (ten year note yield): I think that the market has begun a swing up to 4.30%.

Euro-US Dollar: I think a sustained drop to below 120 is about to start.

Dollar-Yen: I think the 87.13 low will hold and that the yen will soon begin a move to 105.00.

December Crude: I think that crude is headed down to 50.00. Resistance is now at 81.00.

GLD – December Gold: The market will probably keep going until it reaches 1120. Support is at 1030.

SLV - December Silver: Continuation up to 1900 is likely.

Google: Support is now at 490. Next step upward will carry to 610.

sold long unit at 1061.25 - will try again tomorrow

Why I think the trend is up

Here are two charts showing e-mini trading activity. The top chart is a 15 minute bar chart showing day session trading recently. The bottom chart is a daily bar chart going back to the early July low.

On both charts I have drawn blue ovals. These ovals are meant to encompass trading ranges that the market has established. They are impressionistic, but I think impressions built from experience matter a lot. In each case you can see that the sequence of blue ovals moves steadily higher. This is the most basic behavior that you can observe in any auction market. The pattern of successive trading areas, higher or lower, tells you the trend.

Up

The market has spent more than 30 minutes trading above yesterday's high. This confirms my earlier guess that the trend is up now. Over the next few weeks I expect to see prints of 1120 and higher.

Long one unit at 1059.00

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Guesstimates on November 5, 2009

December S&P E-mini Futures: Yesterday's late selling has been completely retraced in electronic trading early this morning. As I write this the market is also trading above the midpoint of yesterday's range at 1050. In light of these two facts I am withdrawing the "down to 1015-20" prognosis offered near yesterday's close. I am going to estimate today's day session range as 1044-1061, essentially the same range as yesterday. Trading above yesterday's high at 1058.50 for more than 30 minutes will mean that the e-minis are headed for 1120.

QQQ: Support is at 41.10. Next upside target is 45.00.

TYX (thirty year bond yield): I think this market has begun a move to 5.00%.

TNX (ten year note yield): I think that the market has begun a swing up to 4.30%.

Euro-US Dollar: I think a sustained drop to below 120 is about to start.

Dollar-Yen: I think the 87.13 low will hold and that the yen will soon begin a move to 105.00.

December Crude: I think that crude is headed down to 50.00. Resistance is now at 81.00.

GLD – December Gold: The market will probably keep going until it reaches 1120. Support is at 1030.

SLV - December Silver: Continuation up to 1900 is likely.

Google: Support is now at 490. Next step upward will carry to 610.

Well, OK then

The e-minis have just dropped more than 12 points without a significant correction on what I judge to be the highest volume of the day. The market has traded more than 4 points below the previous low of 1046. I think this means that the sellers have once again taken control of the market.
The prognosis now is for a drop into the 1015-20 range.

Grasping the obvious

Here is a 60 minute bar chart showing e-mini day session trading. As a trader my job is to stay on the side of the market favored by the order flow. I want to be bullish and long when the market shows progressively higher trading areas, breaks and holds above previous highs, or puts in an unusually big, uncorrected rally on good volume. I want to be bearish and short in the opposite circumstances.

From this perspective here is what I see in the chart above. First, the pace of the drop from the 1099 high has been broken (declining trend channel) because the market has traded all day entirely above the channel's upper boundary. The market has also spent most of today's session trading above the last significant top on the way down (horizontal green dash line). Today's day's day session range has been entirely above yesterday's (purple dash ovals). These are all bullish indications. The only thing lacking now is a sustained, uncorrected up move on good volume. We may get that tomorrow.

In any case, I am now going to lean on the 1046 level, today's day session low thus far. As long as the market doesn't spend much time below there I shall expect a higher day session range tomorrow and continuation upward to 1120 or higher.

Guesstimates on November 4, 2009

December S&P E-mini Futures: Today's day session range estimate is 1040-60. The market appears poised to accelerate past the last top at 1049.75. Such action would mean that the move to 1120 has begun.

QQQ: Support is at 41.10. Next upside target is 45.00.

TYX (thirty year bond yield): I think this market has begun a move to 5.00%.

TNX (ten year note yield): I think that the market has begun a swing up to 4.30%.

Euro-US Dollar: I think a sustained drop to below 120 is about to start.

Dollar-Yen: I think the 87.13 low will hold and that the yen will soon begin a move to 105.00.

December Crude: I think that crude is headed down to 50.00. Resistance is now at 81.00.

GLD – December Gold: The market will probably keep going until it reaches 1120. Support is at 1030.

SLV - December Silver: Continuation up to 1900 is likely.

Google: Support is now at 490. Next step upward will carry to 610.