Thursday, January 21, 2010

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.

8 comments:

curt said...

being a bear this site has forced me to step back and look at the longer term chart, rather than listen to all the bear rhetoric. After all, the trend is your friend....until its not! I see 1080 as support and will take profit somewhere in that vicinity, and then force myself to get long!!
thanks Carl

PM said...

Hi Carl,

It seems your work dove tails with mine here, my model tells me that 1088.10 is where we should find solid support, give or take a few ticks and provided we actually get down to that price.

Thanks.

Kindest regards,

PM

jeff said...

as much as I want this market to top, there is still no compelling evidence to the contrary, especially since we left a rather large unfilled gap from yesterday. And what i do know is these unfilled gaps eventually get filled.

I'm looking for 1110 on the cash index to provide support and that would fill a nice unfilled gap from nov/december.

However, if we do manage to meaninfully break below 1090, I think the top is in and, at minimum, we're headed to 1030-1050.

As always, I'm not staying married to what I want to see as the market doesn't care what I think. But, what is most important is to define your risk when you know you're wrong.

Kishore said...

Instead of far out speculation, the questions here and now are:

If today's low of 1110.75 on ES will break, when? Are we going up first? If so, by how much?

Wags94596 said...

Wow, still looking for SPX 1200 after this decline?

That's gonna be awfully tough given that China has just started to take the "punch bowl" away and our Fed is about to do the same shortly.

Good Luck to All.
:)

andi said...

must congratulate Carl..he's been almost prophetic..may be he has got some inside knowledge (lol)

Kishore said...

andi, Dr. Carl may be an old buddy of Dr. Bernanke?

E said...

Kudos

We examined your thesis (DT 48 and plunge 40 points )and I suggested to a few friends your logic made perfect sense.

The 26 was a dangerous pivot we felt, and the daily chart suggested a freefall possible today for the box flip.

Absolutely briliant call... thank you.

Step by step, as Kishore says.