Monday, January 11, 2010

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.

2 comments:

jeff said...

Carl,

We are simply finishing up one last final SubWave V of of Wave C of a larger ABC wave formation that started in November. That being said, I concur that there isn't really a bubble here, but suffice to say that this market is simply being lifted by the billions of articifial stimulation. I received an email over the weekend that we have seen 30 out of 42 up Mondays since the March 2009 lows and 18 out of the last 20 Mondays. Just using these 30 Mondays has comprised 80% of tht total cash gains from last year's lows.

Whatever the reason (i.e. automated computer trading programs). These continued low volume trading days will catch up to this market. Using a basic head and shoulders formation, the market should get to 1200 and crash thereafter.

I wish you and others luck who think we will see a bull market the remainder of the 2010 market year without any justication or analytical information to share. Because, this rise has nothing to do with fundamentals or forward-looking principals.

jeff said...

Carl,

No rest here.

In Elliott Terms, we are in the subwave III up of the final Wave V up before a meaningful correction. I'm looking for us to get into the 1155 range before deploying short funds.

For now, I'm eyeing the 1110-1120 range as there is a large unfilled gap in this range. If this holds, I would expect to have another higher high in February. If this area does not hold, I suspect the top is in and we will be on our way down towards the S&P 400 range in the next 12-18 months.

Sorry to put a damper on your 'bull' parade.