Tuesday, December 08, 2009

Update

Here is a daily chart of 24 hour e-mini trading. The market broke Friday's 1095 low this morning on high volume. I interpret this action as a kickoff for a move down to the green oval near 1040. That target is at the confluence of the lower channel line (green dash) and a midpoint support level (purple dotted line). Moreover, if the drop from Friday's high at 1119 carries the market down as far as the last reaction did it would end at 1046 (purple rectangles).

So far I see no reason for thinking this break is anything other than a normal interruption of a continuing up trend. So I still think we shall see the e-minis trading near 1170 sometime during the next couple of months.

6 comments:

greg said...

carl, is it possible for you to interpret the near term action in gold in terms of box-trading range theory? thanks and happy holidays!

jeff said...

As much as I want to respect the 1170 call, I think it's important to also consider the action on the other indices. To date, the only two indexes that have not broken are the DOW and S&P(most everything else such as oil, financials, and small-caps are already broken). To me, the last line of the bulls argument lies in the blue chips. Also, when I take a look at the weekly MACD on the S&P, it's on the verge of falling down, which is a very precarious for the longs.

For now, I still don't think we break below 1078 as this will represent point E on a triangle formation that started since mid-November.

Carl, this is fun part. Everyone is up to interpretation, no?

jeff said...

Greg,

If I draw line from Setember, GLD should bounce around the 108-110 level. But I believe we’ve seen the bulk of the gold rally for now. After it has a major correction and goes off everyone’s radar screen, after everyone tells us how you can’t buy gold, it will become more interesting.

As such, I would look to sell GLD on any bounce up to 115 or so.

jeff said...

Carl,

I love you your analysis, but I don't know how you can say "I see no reason for thinking this break is anything other than a normal interruption..."

Notice your hourly parallel lines are getting flatter and flatter and the incremental highs are getting smaller and smaller? Since the September highs, the S&P now up just ~10 points, breadth is worsening, and volume is declining. With the rolling over of the secondary indexes(e.g. RUT), oil(USO), the Euro(FXE), financials(XLF) and other stocks(AAPL, GS), and talk of raising taxes, there is plenty of evidence that the Catastrophic Wave C down is fast approaching. Once I get confirmation that we have a Hindenberg Effect, this will 'prove' confirmation to me that a top is in and the bear market will resume it's downtrend.

Jeff

greatscott4949 said...

Jeff your comments:

"there is plenty of evidence that the Catastrophic Wave C down is fast approaching. Once I get confirmation that we have a Hindenberg Effect, this will 'prove' confirmation to me that a top is in and the bear market will resume it's downtrend."

Are almost identical to Robert McHugh's site?

https://www.technicalindicatorindex.com/Default.asp

I would be careful about using someone elses work (as seen in other posts on EW counts)?

jeff said...

I'm not familiar with mchue, but with many posts, I follow EW

primary wave c is fast approaching

this past 2 1/2 years action is almost identical to the 1930 charts and the last 15 years of excesses and bubbles is just like the excesses we saw from the roaring 20's

this market will ultimately sink like the titantic...thanks to Greenspan and others, we have hit the iceburg