Guesstimates on January 29, 2010

March S&P E-mini Futures: Today's range estimate is 1074-1094. The electronic low early this morning was 1070.50. There is still a 50-50 chance that the market will hit 1060 before a sustained rally starts, but I am expecting the correction to end today or Monday. I also expect to see the ES trade up above 1200 during the next couple of months.

QQQ: This corrective phase should be followed by a rally to 50.00.

TYX (thirty year bond yield): I think this market is headed for 5.00%.

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

Euro-US Dollar: Resistance above the market is at 144.00. Support is at 137.50. Looking further ahead I think that a drop to 125 is likely over the coming months.

Dollar-Yen: A rally to 100.00 is underway. Support is at 90.00.

March Crude: I think the market is headed for 50.00.

GLD – April Gold: The longer term trend has turned downward. I expect gold to drop to 875 over the next few months. Resistance above the market is at 1170. Any strength above that level would mean that the market is instead headed for 1250.

SLV - March Silver: I now think silver has started a down move that will carry it to 10.00 over the next few months. Resistance above the market is at 19.40.

Google: Support is at 545. The next significant move should take GOOG above 700.

Nearly done

Here is an hourly chart of day session e-mini trading. I went long this morning figuring that there was a reasonable chance that yesterday's low ended the correction. But sellers took over the market and as you can see the ES has dropped to 1075, the first target level I pointed out a couple of days ago. At 1075 the drop from the 1148 top is as big as the October-November 2009 reaction from 1099 to 1026 (blue dash rectangle). At the secondary target of 1057 (solid blue rectangle) the current correction would equal the June-July 2009 drop.

I think the ES is about to begin a sustained rally. The first bullish sign would be a move above midpoint resistance (purple dotted line) and the descending red dash trend line.

As you know I think the ES will reach the 1200 level in the next couple of months.

sold long unit at 1089.25

Long one unit at 1092.25

Guesstimates on January 28, 2010

March S&P E-mini Futures: Today's range estimate is 1092-1105. I can't tell whether yesterday's low ended the correction or whether instead the ES will take out that low by a few points before a sustained rally begins. Strength on good volume above the 1105 level will mean that yesterday's low will hold. I expect to see the ES trade up above 1200 during the next couple of months.

QQQ: This corrective phase should be followed by a rally to 50.00.

TYX (thirty year bond yield): I think this market is headed for 5.00%.

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

Euro-US Dollar: Resistance above the market is at 144.00. Support is at 137.50. Looking further ahead I think that a drop to 125 is likely over the coming months.

Dollar-Yen: A rally to 100.00 is underway. Support is at 90.00.

March Crude: I think the market is headed for 50.00.

GLD – April Gold: The longer term trend has turned downward. I expect gold to drop to 875 over the next few months. Resistance above the market is at 1170. Any strength above that level would mean that the market is instead headed for 1250.

SLV - March Silver: I now think silver has started a down move that will carry it to 10.00 over the next few months. Resistance above the market is at 19.40.

Google: Support is at 545. The next significant move should take GOOG above 700.

Guesstimates on January 27, 2010

March S&P E-mini Futures: Today's range estimate is again 1076-1094. I am looking for a low this week either near 1075 or near 1058. Once the low has been established I expect to see the ES trade up above 1200 during the next couple of months.

QQQ: This corrective phase should end near 43.00 and be followed by a rally to 50.00.

TYX (thirty year bond yield): I think this market is headed for 5.00%.

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

Euro-US Dollar: Resistance above the market is at 144.00. Support is at 137.50. Looking further ahead I think that a drop to 125 is likely over the coming months.

Dollar-Yen: A rally to 100.00 is underway. Support is at 90.00.

March Crude: I think the market is headed for 50.00.

GLD – April Gold: The longer term trend has turned downward. I expect gold to drop to 875 over the next few months. Resistance above the market is at 1170. Any strength above that level would mean that the market is instead headed for 1250.

SLV - March Silver: I now think silver has started a down move that will carry it to 10.00 over the next few months. Resistance above the market is at 19.40.

Google: Support is at 545. The next significant move should take GOOG above 700.

Update

Here is an hourly chart of day session e-mini trading. I have drawn the progression of boxes from the start of the correction. Each is 12-15 points from top to bottom. The market has been a little stronger today than I initially expected. But it is trading near the top of its current box. I think another break will start later today and carry the ES down to a low near the bottom of the next box. This low should be in place this week and a rally to 1200 will be the next development.

Guesstimates on January 26, 2010

March S&P E-mini Futures: Today's range estimate is 1076-1094. I am looking for a low this week either near 1075 or near 1058. Once the low has been established I expect to see the ES trade up above 1200 during the next couple of months.

QQQ: This corrective phase should end near 43.00 and be followed by a rally to 50.00.

TYX (thirty year bond yield): I think this market is headed for 5.00%.

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

Euro-US Dollar: Resistance above the market is at 144.00. Support is at 137.50. Looking further ahead I think that a drop to 125 is likely over the coming months.

Dollar-Yen: A rally to 100.00 is underway. Support is at 90.00.

March Crude: I think the market is headed for 50.00.

GLD – April Gold: The longer term trend has turned downward. I expect gold to drop to 875 over the next few months. Resistance above the market is at 1170. Any strength above that level would mean that the market is instead headed for 1250.

SLV - March Silver: I now think silver has started a down move that will carry it to 10.00 over the next few months. Resistance above the market is at 19.40.

Google: Support is at 545. The next significant move should take GOOG above 700.

sold long unit at 1097.00

Update

Here is an hourly chart of day session e-mini trading. The market reached my initial 1090 target for the correction (green dash line) in only three days. I think there is more to go on the downside. A break as big as the October-November correction would carry the market down to 1075 (blue dash rectangle). A break as big as the June-July 2009 drop would end near 1058 (solid blue rectangle). I think one of these two downside targets will be reached within the next week. Meantime resistance above the market is in the 1104-08 zone.

Once this drop is complete I expect a strong rally to the 1200 level.

Long one unit at 1091.75

Guesstimates on January 25, 2010

March S&P E-mini Futures: Today's range estimate is 1088-1104. The 1090 target for this corrective phase was hit Friday. I think there is still more to go on the downside. However, the market will probably make its low near 1075 later this week. Once the low has been established I expect to see the ES trade up above 1200 during the subsequent couple of months.

QQQ: This corrective phase should end near 43.00 and be followed by a rally to 50.00.

TYX (thirty year bond yield): I think this market is headed for 5.00%.

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

Euro-US Dollar: Resistance above the market is at 144.00. Support is at 137.50. Looking further ahead I think that a drop to 125 is likely over the coming months.

Dollar-Yen: A rally to 100.00 is underway. Support is at 90.00.

March Crude: I think the market is headed for 50.00.

GLD – February Gold: The longer term trend has turned downward. I expect gold to drop to 875 over the next few months. Resistance above the market is at 1170. Any strength above that level would mean that the market is instead headed for 1250.

SLV - March Silver: I now think silver has started a down move that will carry it to 10.00 over the next few months. Resistance above the market is at 19.40.

Google: Next upside target is 660. Support is now at 545.

sold long unit at 1110.25

Long one unit at 1101.50

Guesstimates on January 22, 2010

March S&P E-mini Futures: Today's range estimate is 1100-1118. This corrective phase will probably end near 1090. Once it is over I expect to see the ES trade up above 1200 during the subsequent couple of months.

QQQ: Support is at 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: Resistance above the market is at 146.50. The next swing downwards should carry to 137.50. Looking further ahead I think that a drop to 125 is likely over the coming months.

Dollar-Yen: A rally to 100.00 is underway. Support is at 90.00.

March Crude: Crude has rallied more than I expected but I still think the next big move will be downward to 50.00.

GLD – February Gold: The longer term trend has turned downward. I expect gold to drop to 875 over the next few months. Resistance above the market is now at 1170. Any strength above that level would mean that the market is instead headed for 1250.

SLV - March Silver: I now think silver has started a down move that will carry it to 10.00 over the next few months. Resistance above the market is at 19.40.

Google: Next upside target is 660. Support is now at 545.

Update

Here is an hourly chart of day session e-mini trading. As you can see a supply shock this morning (red arrows and dash oval) created a high volume breakout from the trading range of the past week (highest blue rectangle). This trading range defined a box about 18 points high. The market has since dropped to the bottom of the next box and a modest rally of 6-10 points, to the midpoint of the box, would be normal now. I think this entire correction will carry the ES to the bottom of the third box down which is roughly the 1090 level.

I expect this corrective phase to be complete by the end of next week. The subsequent rally should carry the ES to 1200.

Guesstimates on January 21, 2010

March S&P E-mini Futures: Today's range estimate is 1124-1136. I still think a reaction to 1110 and more probably to 1090 is underway. Once it is over I expect to see the ES trade up above 1200 during the subsequent couple of months.

QQQ: Support is at 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: Resistance above the market is at 146.50. The next swing downwards should carry to 137.50. Looking further ahead I think that a drop to 125 is likely over the coming months.

Dollar-Yen: A rally to 100.00 is underway. Support is at 90.00.

March Crude: Crude has rallied more than I expected but I still think the next big move will be downward to 50.00.

GLD – February Gold: The longer term trend has turned downward. I expect gold to drop to 875 over the next few months. Resistance above the market is now at 1170. Any strength above that level would mean that the market is instead headed for 1250.

SLV - March Silver: I now think silver has started a down move that will carry it to 10.00 over the next few months. Resistance above the market is at 19.40.

Google: Next upside target is 660. Support is now at 565.

quick update

The e-minis have retraced all of yesterday's day session rally. This is bearish action and means the market is headed for 1110 and probably for 1090.

sold long unit at 1132.00

Long one unit at 1136.25

Guesstimates on January 20, 2010

March S&P E-mini Futures: Today's range estimate is 1134-1146. I still think this market will make it into the 1153-55 range soon. Weakness below 1134 today would mean that the ES is headed for 1110 instead. In any case I expect to see the ES trade up above 1200 during the next couple of months.

QQQ: Support is at 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: Resistance above the market is at 146.50. The next swing downwards should carry to 137.50. Looking further ahead I think that a drop to 125 is likely over the coming months.

Dollar-Yen: A rally to 100.00 is underway. Support is at 90.00.

February Crude: Crude has rallied more than I expected but I still think the next big move will be downward to 50.00.

GLD – February Gold: The longer term trend has turned downward. I expect gold to drop to 875 over the next few months. Resistance above the market is now at 1170. Any strength above that level would mean that the market is instead headed for 1250.

SLV - March Silver: I now think silver has started a down move that will carry it to 10.00 over the next few months. Resistance above the market is at 19.40.

Google: Next upside target is 660. Support is now at 565.

Update

Here is an hourly chart of day session e-mini trading. I had believed that Friday's supply shock was the start of a corrective move which would carry the ES at least to 1110 and probably to 1090. But today's activity has carried the market right back to the point where the supply shock began (green arrows). This tells me that the market is instead headed for resistance in the 1153-55 zone. This is the confluence of the top of the rising channel I have drawn on the chart and the top of what I estimate to be a 1135-1153 trading box (second blue rectangle). The bottom of this box is at midpoint support (purple dotted line).

I don't think this market is about to take off to the upside in any dramatic fashion. Instead we are likely to see a succession of rallies and breaks over the next week or two that won't make much net progress to the upside. At some point an oversold condition will develop on the advancing issues oscillators and that will mark the start of a sustained move to 1200 or so.

Guesstimates on January 19, 2010

March S&P E-mini Futures: Today's range estimate is 1124-1136. The break which started from 1148 should carry the market down to 1110 and more probably to 1090 by the end of the month. After it is over the ES will trade up above 1200 over the next couple of months.

QQQ: Support is at 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: Resistance above the market is at 146.50. The next swing downwards should carry to 137.50. Looking further ahead I think that a drop to 125 is likely over the coming months.

Dollar-Yen: A rally to 100.00 is underway. Support is at 90.00.

February Crude: Crude has rallied more than I expected but I still think the next big move will be downward to 50.00.

GLD – February Gold: The longer term trend has turned downward. I expect gold to drop to 875 over the next few months. Resistance above the market is now at 1170. Any strength above that level would mean that the market is instead headed for 1250.

SLV - March Silver: I now think silver has started a down move that will carry it to 10.00 over the next few months. Resistance above the market is at 19.40.

Google: Next upside target is 660. Support is now at 565.

Supply shock

Here is an hourly chart of e-mini day session trading. Earlier today I pointed out that a supply shock had hit the market (red arrows). Volume on the downside was visibly higher than at any time during the past month. Given the technical background (discussed here) this means that a corrective phase has begun.

I see two possible downside targets and I favor the lower of the two, at least for the moment. The market appears to be trading in boxes 15-20 points high (blue rectangles). It has broken down out of the first box and should drop to the low of the second box near 1110. This also coincides with the top of the December trading range (green dash line), a natural support level. I think this support will produce a rally of 10-20 points, but I also am guessing that any such rally will be followed by more downside activity. The low of the third box near 1090 seems like a plausible target, especially since it is close to midpoint support (purple dotted line).

This corrective phase will probably last for the rest of January. Once it ends I think the ES will head up to 1200.

Quick Update

I think we are seeing a supply shock this morning. This means that while the ES has already reached the low end of today's range estimate, the day's low will probably be 1125 or so. It also means that this drop is likely to carry the market at least to 1110 and more probably to 1090 over the next week or ten days.

More details later.

Guesstimates on January 15, 2010

March S&P E-mini Futures: U.S. markets will be closed Monday. Today's range estimate is 1134-1145. A break of 30-40 points is likely to start by early next week. After it is over I think the ES will trade up above 1200 over the next couple of months.

QQQ: Upside target is 47.50.

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: Resistance above the market is at 146.50. The next swing downwards should carry to 137.50. Looking further ahead I think that a drop to 125 is likely over the coming months.

Dollar-Yen: A rally to 100.00 is underway. Support is at 90.00.

February Crude: Crude has rallied more than I expected but I still think the next big move will be downward to 50.00.

GLD – February Gold: The longer term trend has turned downward. I expect gold to drop to 875 over the next few months. Resistance above the market is now at 1170. Any strength above that level would mean that the market is instead headed for 1250.

SLV - March Silver: I now think silver has started a down move that will carry it to 10.00 over the next few months. Resistance above the market is at 19.40.

Google: Next upside target is 660. Support is now at 565.

Guesstimates on January 14, 2010

March S&P E-mini Futures: Today's range estimate is 1136-1150. A break of 30-40 points is likely to start by early next week. After it is over I think the ES will trade up above 1200 over the next couple of months.

QQQ: Upside target is 47.50.

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: Resistance above the market is at 146.50. The next swing downwards should carry to 137.50. Looking further ahead I think that a drop to 125 is likely over the coming months.

Dollar-Yen: A rally to 100.00 is underway. Support is at 90.00.

February Crude: Crude has rallied more than I expected but I still think the next big move will be downward to 50.00.

GLD – February Gold: The longer term trend has turned downward. I expect gold to drop to 875 over the next few months. Resistance above the market is now at 1170. Any strength above that level would mean that the market is instead headed for 1250.

SLV - March Silver: I now think silver has started a down move that will carry it to 10.00 over the next few months. Resistance above the market is at 19.40.

Google: Next upside target is 660. Support is now at 565.

sold long unit at 1144.00

Update

I thought it would be useful to explain why I think a 40 point break is imminent but also why I think this bull market is still in good shape.

The chart immediately above this post show the 10 day moving average of the CBOE equity put call ratio. I regard this as strictly a short term timing indicator. A swing in the moving average past a recent extreme or to an obvious trend line usually means a reaction of a few days to a few weeks is imminent. In the present situation you can see that early this month this moving averae dropped below the low point it established in mid-October. This shows a lot of short term bullishness by put and call buyers and as such suggests that a reaction of at least 40 points or so is likely soon.

The second chart shows the 10 day moving average of the number of issues traded on the New York Stock exchange which advance in price each day. Earlier this month this moving average put in a second lower top even as the S&P reached new rally highs. This is a bearish divergence with only short term implications. It also suggests a break of 40 points or so dead ahead.

The third chart above this post shows the 20 day moving average of the number of issues traded on the NYSE which establish new 12 months highs each day. This indicator as moved above the highs established in 2007 and is now at its highest level since the March 2009 low.

The top chart shows the NYSE advance-decline ratio. Not only is it in a visibly strong up trend, but it stands above the highest levels it reached at the 2007 bull market top.

These last two indicators are telling us that this bull market is in good health and has much further to go before there is any danger of longer term top.

All in all these market generated clues suggest that a break of 40 or so points is likely but will be followed by new rally highs. I think we shall see the ES trade at or above the 1200 level during the next three months.

Guesstimates on January 13, 2010

March S&P E-mini Futures: Today's range estimate is 1132-1142. I think the ES will rally to 1150 or so. After that a break of 30-40 points is likely to develop. I also think the ES will trade up at least to 1170 and probably above 1200 over the next six weeks.

QQQ: Upside target is 47.50.

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: Resistance above the market is at 146.50. The next swing downwards should carry to 137.50. Looking further ahead I think that a drop to 125 is likely over the coming months.

Dollar-Yen: A rally to 100.00 is underway. Support is at 90.00.

February Crude: Crude has rallied more than I expected but I still think the next big move will be downward to 50.00.

GLD – February Gold: The longer term trend has turned downward. I expect gold to drop to 875 over the next few months. Resistance above the market is now at 1170. Any strength above that level would mean that the market is instead headed for 1250.

SLV - March Silver: I now think silver has started a down move that will carry it to 10.00 over the next few months. Resistance above the market is at 19.40.

Google: Next upside target is 660. Support is now at 585.

Tactical update

As we all have seen, volatility in the ES has dropped dramatically over the past year. This reduction in volatility makes it possible for me to return to a more comfortable trading style (for me). I expect to hold more and more trades overnight, and many for several days when the profit potential seems great.

At the moment I am long one unit (half a position). I think a move to 1150 is likely and I plan to hold this trade overnight. Naturally I'll let you know if I don't do this.

Long one unit at 1130.75

Guesstimates on January 12, 2010

March S&P E-mini Futures: Today's range estimate is 1128-1140. I think the ES will find support today and rally back to 1150 or so. After that a break of 30-40 points is likely to develop. I also think the ES will trade up at least to 1170 and probably above 1200 over the next six weeks.

QQQ: Upside target is 47.50.

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: Resistance above the market is at 146.50. The next swing downwards should carry to 137.50. Looking further ahead I think that a drop to 125 is likely over the coming months.

Dollar-Yen: A rally to 100.00 is underway. Support is at 90.00.

February Crude: Crude has rallied more than I expected but I still think the next big move will be downward to 50.00.

GLD – February Gold: The longer term trend has turned downward. I expect gold to drop to 875 over the next few months. Resistance above the market is now at 1170. Any strength above that level would mean that the market is instead headed for 1250.

SLV - March Silver: I now think silver has started a down move that will carry it to 10.00 over the next few months. Resistance above the market is at 19.40.

Google: Next upside target is 660. Support is now at 585.

Bubbles

Here is my latest post on "The Art of Contrarian Trading".

Update

Here is an hourly chart of day session e-mini trading. The market has reached the top of the trend channel I have drawn (green dash lines). It has also slightly exceeded the top of the second 17 point box (blue rectangles) of the up swing from the 1090 low of December 18. Volume today is a little higher than was typical last week, and today's wide range - high volume bars have been down bars.

All in all the picture I see is of a market that needs a rest. I think we shall see a break of 15-20 points, then a rally which will carry the ES into the 1150-60 range, and then another break of 40 points or so. This whole sequence will probably last through the end of January. Once this minor corrective phase is complete the market should begin a move that will carry it to the 1200 level.

Guesstimates on January 11, 2010

March S&P E-mini Futures: Today's range estimate is 1137-1150. I think a break of 30-40 points is imminent. I also think the ES will trade up at least to 1170 and probably above 1200 over the next six weeks.

QQQ: Upside target is 47.50.

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: Resistance above the market is at 146.50. The next swing downwards should carry to 137.50. Looking further ahead I think that a drop to 125 is likely over the coming months.

Dollar-Yen: A rally to 100.00 is underway. Support is at 90.00.

February Crude: Crude has rallied more than I expected but I still think the next big move will be downward to 50.00.

GLD – February Gold: The longer term trend has turned downward. I expect gold to drop to 875 over the next few months. Resistance above the market is now at 1170. Any strength above that level would mean that the market is instead headed for 1250.

SLV - March Silver: I now think silver has started a down move that will carry it to 10.00 over the next few months. Resistance above the market is at 19.40.

Google: Next upside target is 660. Support is now at 585.

Not much to say

Before today's pit open the employment numbers came out and were worse than expected. In the face of bearish news the market has held up remarkable well.

Still, the ES has traded in an extraordinarily narrow range (so far) for an employment number day. This continues the pattern of extreme dullness that began three weeks ago. As a general rule dullness and low volume after an extended rally or decline indicates an imminent (but sometimes temporary) reversal. In the current situation I see the ES trading a shade above the 1127 level which marks the midpoint of the 2007-09 bear market. The 1137 level was the low reached in September 2008 just after the collapse of Lehman Brothers. Coupled with dull trading at new rally highs these resistance levels are likely to produce a break to support in the 1100-10 range.

Has this break begun? Probably not quite yet. The indifferent response to this morning's bearish news suggests a little more to come on the upside first. I think we shall see a temporary top early next week somewhere in the 1140-50 range. Then a break of 40 points.

I still think this is a bull market. Over the next couple of months the ES should move up to 1200 or so.

Guesstimates on January 8, 2010

March S&P E-mini Futures: Today's range estimate for the March contract is 1125-1138. The employment number knocked the ES down about 9 points but no aggressive selling has developed yet. Increasing volume on a break below 1130 would be a sign that a reaction of 30-40 points is underway. Support then would be found in the 1100-1110 zone. In any event I still expect the market to reach the 1170 level during the next month.

QQQ: Upside target is 47.50.

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: A drop to 140 is underway. My best guess is that 140 will be only temporary support and that the market will drop to 125 over the next couple of months.

Dollar-Yen: A rally to 100.00 is underway.

February Crude: Crude has rallied more than I expected but I still think the next big move will be downward to 50.00.

GLD – February Gold: The longer term trend has turned downward. I expect gold to drop to 875 over the next few months. Resistance above the market still stands at 1125.

SLV - March Silver: I now think silver has started a down move that will carry it to 10.00 over the next few months.

Google: Next upside target is 660. Support is now at 585.

Guesstimates on January 7, 2010

March S&P E-mini Futures: Today's range estimate for the March contract is 1122-1132. After the employment number comes out tomorrow this market will probably begin a reaction of 30-50 points. Even so, I expect the market to reach the 1170 level during the next month.

QQQ: Upside target is 47.50.

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: A drop to 140 is underway. My best guess is that 140 will be only temporary support and that the market will drop to 125 over the next couple of months.

Dollar-Yen: A rally to 100.00 is underway.

February Crude: Crude has rallied more than I expected but I still think the next big move will be downward to 50.00.

GLD – February Gold: The longer term trend has turned downward. I expect gold to drop to 875 over the next few months. Resistance above the market still stands at 1125.

SLV - March Silver: I now think silver has started a down move that will carry it to 10.00 over the next few months.

Google: Next upside target is 660. Support is now at 585.

Dull, Dull, Dull

The title of this post speaks for itself. Frankly, I am very surprised that on the third day of the new year the market remains almost as quiet as it was during the last two weeks of December.

The fact that the market is narrow and dull and at the same time trading at new highs for the rally from the March 2009 low gives me pause. We have broken well above the 1080-1115 trading range, but no aggressive buying activity is evident. Experience shows that when the market gets dull after an extended move it is about to go into reverse. This leads me to believe that a break down to 1100 or even further is imminent.

Nonetheless, I am retaining my bullish bias. Any break of 30-50 points from here would only serve to shake out the weak longs and recharge the uptrend's battery. I still think that the ES will trade at or above the 1170 level before spring arrives.

Guesstimates on January 6, 2010

March S&P E-mini Futures: Today's range estimate for the March contract is 1125-1135. I think the market is headed for 1143 over the next week or so. I also expect the market to reach the 1170 level during the next month.

QQQ: Upside target is 47.50.

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: A drop to 140 is underway. My best guess is that 140 will be only temporary support and that the market will drop to 125 over the next couple of months.

Dollar-Yen: The yen has moved above the 91.00 level and this means that a rally to 100.00 is underway.

February Crude: Crude has rallied more than I expected but I still think the next big move will be downward to 50.00.

GLD – February Gold: The longer term trend has turned downward. I expect gold to drop to 875 over the next few months. Resistance above the market is at 1125.

SLV - March Silver: I now think silver has started a down move that will carry it to 10.00 over the next few months.

Google: Next upside target is 660. Support remains at 565.

Guesstimates on January 5, 2010

March S&P E-mini Futures: Today's range estimate for the March contract is 1118-1132. I think the market is headed for 1143 over the next week or so. I also expect the market to reach the 1170 level during the next month.

QQQ: Upside target is 47.50.

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: A drop to 140 is underway. My best guess is that 140 will be only temporary support and that the market will drop to 125 over the next couple of months.

Dollar-Yen: The yen has moved above the 91.00 level and this means that a rally to 100.00 is underway.

February Crude: Crude has rallied more than I expected but I still think the next big move will be downward to 50.00.

GLD – February Gold: The longer term trend has turned downward. I expect gold to drop to 875 over the next few months. Resistance above the market is at 1125.

SLV - March Silver: I now think silver has started a down move that will carry it to 10.00 over the next few months.

Google: Next upside target is 660. Support remains at 565.

Going higher

Here is an hourly bar chart of day session e-mini trading. Trading activity is subdued today but is much greater than it has been over the past two holiday weeks.

This morning I thought that the break that started last week from an overnight print of 1128.50 would continue after a brief rally to 1122. Instead the ES blew right past 1122, the level at which the rally from Thursday's late low would have equaled the length of the preceding rally. Moreover, Thursday's low was at the dotted green support line defined by the preceding short term high.

This price action means that the reaction from 1128.50 is over and that a breakout to new high ground is in progress. My upside target for the next week or so is the green oval, a tad above the 1140 level and at the confluence of the upper channel line and the estimated top of a trading box (solid blue rectangles). These boxes have a price range of 16 points or so.

Over the years I have observed that markets are often erratic during the first few trading days of a new year. With this in mind I suspect that we won't head straight for the target near 1143. Instead I expect the market to fluctuate in the box outlined by the dotted blue lines. The bottom of the box is at midpoint support near 1118 (purple dotted line) while the top of the dotted blue box is near 1133.

I continue to expect a bullish January and February. I think the ES will reach the 1170 level before there is any danger of a substantial reaction.