Thursday, November 12, 2009


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.


jeff said...


I think we are almost done with the Wave IV retracement. The 1085 mark would represent the ~38.2% retracement from Wave III up.

I'm looking for oil to stay around this mid $76 level and gold to hover around the $1100 level. Once we see things stabilize, Wave V is up to your expected 1126 level.

After that, I would look out below, but that will depend upon where the dollar is trading at that time. I still the dollar gets down the 2008 lows. As such, if these lows are not yet tested by the time we reach your 1126 level, I could easily foresee another ABC retracement and 5 wave up to 1175-1200.

Wags94596 said...

Looks like we came down to Carl's 1086 pullback level with 45 minutes left in the session. If he's right that we find support here for yet another push back up above 1100 and eventually that 1126 area, this could be the greatest call I've seen in awhile!


Urban said...


Appreciate your update.


As always, excellent analysis.

Thanks everyone.

dcatlowpj said...

Yes, Carl and Jeff...TY!