Friday, January 15, 2010

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.


extrader said...

MAX LOW on ES should be 1129!

Stasi said...

Dr Carl Futia what an impressive work you are doing here, thank you.

Adsense said...

i tend to agree with you carl
yet i think mid feb to mid march for a tradable rally back to upside
somewhere near 3.6 percent down would be expected in 4 to 5 weeks
this would compare indicator wise with the declines of the peaks in the weeks of feb 11 1991 jan 24 1994 may 3 1999 and jan 12 2004 .
in each case the intial or total decline lasted 4-5 weeks and in one case 10 weeks initially
3.6 to 10 percent down overall before the rally phase . this morning though we had what i call a trin spike on the 60 minute trin .also the adv decline is in its lower range for the day . typically you get a rally the following day . not sure if that will happen with the long weekend but it is the norm from what ive seen . we will see soon enough .'
end of the month cycle wise is next short term cycle low .

E said...

Spot on with your calls lately.


Boxes have been quite mechanical and orderly.

A bit too much complacency... and vix signal gave nice heads up to confirm your idea of the 48 dt.

Thank you, and have a nice weekend.

Adsense said...

Hi Carl
i thought id add something here
in regards to lindsays mid section counts . i realise im stretching his work some here but it is worth
noting . back in 1997 1998 the concern was where to point E .
ill back track some . im looking at a monthly chart of the dow and transport and utilites all added together .placing point C at nov 1973, placing point E at july 1975 point H feb 1978 called for point J nov 1980 .using point C and measuring from point c to point J
called for a new point A nov 1987
this was the begining of a new bull market ( i know old news )
the new point C becomes july 1990
E june 1990 F becomes may 1992
G is best placed Feb 1994 even though the high was in jan. This places Point H in dec 1994 which is the print low not the closing low which was in novemeber .
measuring from point E to point H projected point J on june 1998 and the stock market had a mini crash following that date over the next 4 months following that date , the bulk of that collapse was 2 months . measuring from point C to point H projected point J on may 1999 which at the time was the all time high at the time( this is dow trans and utils added together monthly chart ) following this date the market fell for 41 months
and here lies the question .point G
was on feb 1994 , measuring from point G to point J ( the initial point j in june 1998) called for a low in oct 2002 . to me this leaves the door open for another point E labeling on feb 1994 which implys point F july 1997 point G and a point J june 1998 point H
oct 1998 and ofcourse both another point G and J may 1999. the also implies both an A and an H for oct 2002.this is where is gets tricky
measuring from this new point E
on feb 1994 to point H on oct 2002
technically calls for point J in june 2011 . my own cycles work calls this a low . lastly from oct 2002 to date i dont see any clear mid section counts .looks to me like may june 2011 should be important , my bias though is its alow not a high , ill keep my mind open though.
hope you find this of interest
lastly if i was to correlate point E on the monthly sp500 while the pattern does not look tha same at all in order for it to line up some and ill admit im only just looking at , maybe april 1991
to march 2000 that would call for
feb 2009 for a new point A . but its not clean, that would mean point J in jan 2018 which does fit my cycles much better following a 2011 2012 low . its a stretch though right now with out really researching it further .