Friday, January 08, 2010

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.


Win said...

Thank you once again, for your perspective. I can see a lot of what you see, but not even close to all of it. And your perspective helps me be more sure of my thinking.

For instance, I agree that a break is coming, but I didn't really see that we might get some more upside early next week. I can see that now -- the EURO/USD, for instance, is indicating some further bullishness to come. My indicators are lining up well for a break next week as well; for instance, 5 MA of TRIN, which was not toppy, is now getting toppy.

jeff said...


I know you're not an Elliott Wave fan, but consistent with your throughts, they are looking for at least one more high into the 1147-1155 S&P(cash range). However, they also believe this high will be a top.

I have no clue who is right; personally, I'm looking for this slightly higher high and have just began to scale into the short side. Like you, I don't think the bullish case is over just yet and am looking for that large 1110-1119unfilled gap to hit in the next couple weeks where I will at least put some tighter stops on my shorts.

I'm still in the camp that we will see a substancial leg down as the year progresses and think this market ascent from March 2009 is still nothing more than a strong bear market rally. The fundamentals and technicals are very clear. However, that is for another day. All we do is trade what is in front of us today.

Adsense said...

Hey Carl
i am use elliott wave allot and i find it blends with lindsays work very well im still thinkinking this is part of point 3 in the broader picture and this market will end up in a sideways range yet im also smart enough to admit i very well could be wrong . between now and march my prefrance is sideways . failing to do that will through my work off , i can handle that but mid jan should be a low of sorts as should march 16th . in doing that im bullish into august . and weather or not we get sideways or an uptrend i think the dow will have a hard time near 11000-11166 . the nasdaq is becooming to stretched though on the weekly charts , again i know overbought can become more overbought and divergences can continue to diverge . in the end though the risks are growing .
id much rather see a sideways to down market into mid march to releave the overbought readings ..
then up into mid august .
as always the market retains the right to change my mind once it proves me wrong .

PM said...

Hi Carl,

Too many people are calling for some sort of correction. I think the chart is telling me that this market is about to explode higher in some sort of melt UP.


Kindest regards,


Teich said...

I noticed, during this past week's advance, that the up-move had been steady, and every dip was bought. Specifically, after every buying climax, ES might dip at most approx. 2 points.

All 5 sessions this past week closed at close to session highs.

jeff said...

Just received an email from a friend that of the 42 Mondays since the march 2009 lows, 30 have been up and it has comprised 80% of the total gains.

To add, 18 out the last 20 Mondays have been up

that in itself wouldn't be a big deal except to say that of all of the trading days since the lows, the market has only been up 58% if the time

whatever this pattern, I find it curious that the bulk of gains occur on Mondays, no?

Win said...

Hmm,... to add to this Monday speculation: EUR-USD is threatening to break out -- to the UPside. Earnings season is here, and there may well be some positive surprises. I am changing my ST bearish outlook.