Friday, February 26, 2010
Guesstimates on February 26, 2010
March S&P E-mini Futures: Today's range estimate is 1095-1110. I think yesterday's afternoon rally means that the drop below the 1090 level was a terminal shakeout and that the market is headed higher. The 1130 level is the short term target and I expect the market to reach 1200 over the next three months.
QQQ: A rally to 50.00 is underway.
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: This market is now headed for support near 131.00. Resistance above the market is at 141.00. 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.
April 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 is at 1120.
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 17.00.
Google: The next significant move should take GOOG above 700.
Thursday, February 25, 2010
Quick update
If the ES can hold above 1090 the rest of today and early tomorrow I will try to get long again.
Breakout or shakeout?
I am still long one unit and am sitting here scratching my head. I can't figure out whether the move below 1090.25 on this morning's economic numbers is a breakout (implying a move to 1075-76) or a shakeout (implying that this morning's low will hold).The trend channels I have drawn on the lower chart ( 30 minute bars, 24 hour trading) and the upper chart (1 point box, 5 box reversal) still show room to the downside before the lower channel line is hit. This suggests we are seeing a breakout.
On the other hand, we have seen three pieces of bearish economic news this week which produced an immediate bearish market response (red arrows). But in each case once the initial selling was out of the way the market essentially traded sideways to up. This suggests we are seeing a shakeout.
I am not going to add to my position since I think that 1075 is stronger support than 1086 because it is the midpoint of the rally from 1040 to 1112 and also sits on a pair of channel lines (see upper chart). If the market struggles upward the rest of the day but can't move above the horizontal green line on the lower chart I will get out of my other unit expecting to repurchase both units near 1076.
Guesstimates on February 25, 2010
March S&P E-mini Futures: The ES has given back all of yesterday's rally plus a little more. My best guess is that the low at 1090.25 will be taken out briefly. I see support near 1086. I am going to estimate today's day session range as 1086-1100. The market will reach 1200 over the next three months.
QQQ: A rally to 50.00 is underway.
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: This market is now headed for support near 131.00. Resistance above the market is at 141.00. 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.
April 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 is at 1120.
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 17.00.
Google: The next significant move should take GOOG above 700.
Wednesday, February 24, 2010
Response to news
Here is a 30 minute bar chart showing day session e-mini trading. Market activity during the past 24 hours has been an interesting exemplar of the "dog that didn't bark" principle.Yesterday at 10 am the consumer confidence number was released and showed historically low levels of confidence in the current business situation. The market broke 10 points on the news (first red arrow). The interesting thing about this response is that the e-minis closed the pit session above the level at which they traded at 10:30 am, thus showing that there was no follow-through to initial selling. I thought this was a bullish development, especially since the market also closed above 1093, the level of the last low on the way to the 1112.75 high .
At 10 am this morning the market broke about 8 points on the combination of the lowest housing start number since 1963 and Bernanke's assertion that the economy was still in a fragile state ( second red arrow). But at 10:30 am a rally developed and was not accompanied by any news that I thought was important (green arrow).
The market's refusal the last two days to break further once the initial responses to bad economic news were out of the way was a bullish sign. An even more bullish sign was the rally this morning to levels higher than those at which the market stood prior to both those news releases.
I think a move to 1130 is underway. I expect to see 1200 sometime during the next three months.
Guesstimates on February 24, 2010
March S&P E-mini Futures: Today's day session range estimate is 1092-1105. The market will reach 1200 over the next three months.
QQQ: A rally to 50.00 is underway.
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: This market is now headed for support near 131.00. Resistance above the market is at 141.00. 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 is at 1120.
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 17.00.
Google: The next significant move should take GOOG above 700.
Tuesday, February 23, 2010
Update
Here is an hourly chart showing 24 hour trading in the e-minis. The market broke sharply on the consumer confidence news this morning. But so far it is holding just a shade above the lower bullish trendline and above the last low on the way to the high (red dash line). The drop from the 1112.75 high so far has also been just a little smaller than the last two substantial reactions in the up trend (purple rectangles).I think the drop from 1112.75 is nearly over and I doubt the market will spend much if any time trading below 1092. Even if I am wrong about this I still would be looking for a higher low near support at 1076 (solid green horizontal line). This is not only the level of the top of the initial part of the rally but is also the midpoint of the entire move from 1040 to 1112.
Once this reaction is over I will be looking for a move to 1130 and eventually to 1200.
Guesstimates on February 23, 2010
March S&P E-mini Futures: Today's day session range estimate is 1100-1112. The market will reach 1200 over the next three months.
QQQ: A rally to 50.00 is underway.
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: This market is now headed for support near 131.00. Resistance above the market is at 141.00. 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 is at 1120.
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 17.00.
Google: The next significant move should take GOOG above 700.
Monday, February 22, 2010
Here is a point and figure chart showing 24 hour trading in the e-minis. On this chart one box represents a one point move and a five point move is required to reverse a swing.
One simple way to identify a change in trend direction is to watch for a move past the terminal point of the last reaction prior to the potential terminal point of a trend. On this chart the lower green line is drawn at the high of the last reaction within the down swing from 1101 to 1040. Once it was broken to the upside I concluded that that particular swing was complete. Since the activity within the lowest blue box suggested strong support (terminal shake out accompanied by substantial sideways activity) I thought it was a good bet that this minor trend change indication would also lead to a similar signal showing the reversal of the entire drop from 1148. Such a signal did subsequently occur when the higher green line was broken to the upside.
The last reaction on the way up from 1040 ended at 1093 after the Fed raised the discount rate. As long as that 1093 low holds (red line) the move up from 1040 is in good shape. The succession of higher boxes (blue rectangles) just makes the trend direction obvious.
This market is headed for 1200.
Guesstimates on February 22, 2010
March S&P E-mini Futures: Today's day session range estimate is 1100-1116. The market will reach 1200 over the next three months.
QQQ: A rally to 50.00 is underway.
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: This market is now headed for support near 131.00. Resistance above the market is at 141.00. 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 is at 1120.
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 17.00.
Google: The next significant move should take GOOG above 700.
Friday, February 19, 2010
Guesstimates on February 19, 2010
March S&P E-mini Futures: Today's day session range estimate is 1093-1107. The market has shrugged off the hike in the US discount rate which was announced after yesterday's pit close. The market will reach 1200 over the next three months.
QQQ: A rally to 50.00 is underway.
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: This market is now headed for support near 131.00. Resistance above the market is at 141.00. 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 is at 1120.
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 17.00.
Google: The next significant move should take GOOG above 700.
Thursday, February 18, 2010
Not much to say
Note that 1103.50 and 1101.50 were high points of substantial rallies that ended on January 28 and February 2 respectively. The fact that the market has not run away from these previous high points (yet) contrasts with its action the last two times it traded at these levels. This is what makes me think that sellers are waiting for higher prices.
Guesstimates on February 18, 2010
March S&P E-mini Futures: Today's day session range estimate is 1088-1105. I think the ES has decisively broken out above its recent 1058-1080 trading range. The market will reach 1200 over the next three months.
QQQ: A rally to 50.00 is underway.
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: This market is now headed for support near 131.00. Resistance above the market is at 141.00. 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 is at 1120.
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 17.00.
Google: The next significant move should take GOOG above 700.
Wednesday, February 17, 2010
Guesstimates on February 17, 2010
March S&P E-mini Futures: Today's day session range estimate is 1088-1102. I think the ES has decisively broken out above its recent 1058-1080 trading range. The market will reach 1200 over the next three months.
QQQ: A rally to 50.00 is underway.
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: This market is now headed for support near 131.00. Resistance above the market is at 141.00. 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 is at 1120.
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 17.00.
Google: The next significant move should take GOOG above 700.
Tuesday, February 16, 2010
A bullish picture
Here is a point and figure chart showing 24 hour trading in the e-minis. The box size is five points and the chart is a one box reversal chart.
This chart is telling me that the correction from January's 1148 high is over. The 1040 low on February 5 developed at the lower channel line. Subsequent to that low a very extensive period of sideways trading developed and was associated with a sequence of higher lows. Then last night and this morning the market broke above that trading range and visibly above the descending trend line. And all of this is occurring above a rising 200 day moving average.
Note that the point and figure count across the base (horizontal green line) suggests an upside target of 1160 which would be a new high for the bull market that began in March of 2009.
Guesstimates on February 16, 2010
March S&P E-mini Futures: Today's day session range estimate is 1074-1094. I think the ES is in the process of breaking out above its recent 1058-1080 trading range. I think the market will reach 1200 over the next three months.
QQQ: A rally to 50.00 has begun.
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: This market is now headed for support near 131.00. Resistance above the market is at 141.00. 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 1120.
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 17.00.
Google: The next significant move should take GOOG above 700.
Friday, February 12, 2010
Breakout ahead
Here is a pair of point and figure charts showing 24 hour e-mini trading. The lower chart is a one point box, five box reversal chart. The upper chart is a five point box, one box reversal chart and is a condensed version of the lower chart.In the lower chart you can see that the market has broken above its descending trend channel while making a series of higher lows. I see a sequence of 35 point boxes evolving here and I think the market is currently in a 1057-1092 box (dash blue rectangle). I also think it bounced off of the support line of a green dash, bullish trend channel. Within a week or so the ES should be trading near the top of the current box and the upper line of the trend channel (green oval).
On the upper chart I have drawn a box of about 107 points in height encompassing the drop from 1148 to 1041. I think that during the coming weeks the market will establish itself in a 1095-1202 box. The lower line of the new box will be the midpoint of the current box. This is typical of the way boxes tend to stack on top of one another. The 1200 level is resistance for another reason. The July 2008 low, made when Fannie Mae and Freddie Mac collapsed, was 1200. This should prove to be resistance as strong as the resistance which was provided by the 1137 level, the low in September 2008 at the time of the Lehman Brothers collapse.
The sideways trading range that has developed during the past week on the upper chart is I think significant. It is bigger than any sideways range we have seen in the past year, and occurs at the bottom of a break in a bull market (still above a rising 200 day moving average). This combination of circumstances generally occurs prior to the start of a new bull market up leg. Counting across this base formation (horizontal green line) yields a target of 1155, a new bull market high.
Guesstimates on February 12, 2010
March S&P E-mini Futures: The ES didn't spend much time yesterday above its last top at 1077 and then broke to 1066 this morning. This kind of action is generally short term bearish. Because I think 1041 will hold I am going to give the market the benefit of the doubt and estimate today's day session range as 1065-1080. Weakness below 1065 will mean a drop to 1045 is likely. Remember that Monday is a bank holiday in the U.S. and there will be no pit trading that day.
QQQ: A rally to 50.00 has begun.
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: This market is now headed for support near 131.00. Resistance above the market is at 141.00. 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 1120.
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 17.00.
Google: The next significant move should take GOOG above 700.
Thursday, February 11, 2010
Second update
Here is a one point, five box reversal point and figure chart of 24 hour trading in the e-minis. I like point and figure charts because they eliminate a lot of the "noise" found on bar charts.Today I have been the yo-yo at the end of the market's string. Initially I thought yesterday's close would act as support for a breakout move today, but when the market traded 6 points below that close I gave up on that idea. But now it looks like the bullish forces have reasserted themselves. This morning's low point emphasized the pattern of higher lows seen since Friday's 1041 low. The rally from today's low has decisively taken out (the market just hit 1074) the declining trendline from the 1048 top.
Another bullish factor is that the sideways action we have seen across the 1060 level, accompanied by higher lows, is the longest period of sideways action since the 1148 top, and in fact is more extensive than the sideways action at that top. This suggests base building prior to a strong up move.
I think the ES is trading in 35 point boxes and that this morning's low at 1058 is the low of the second box in the uptrend. This means that the market is headed for 1094 before another reaction of 10-20 points develops.
Early Update
Guesstimates on February 11, 2010
March S&P E-mini Futures: I am going to bet on an upside breakout today. My range estimate is 1064-1082. If I am wrong and the market spends an hour below 1064 I will conclude that the ES is headed for 1045 before a sustained rally can start. I still expect the 1041 low to hold and think that a move to 1200 is underway.
QQQ: A rally to 50.00 has begun.
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: This market is now headed for support near 131.00. Resistance above the market is at 141.00. 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 1120.
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 17.00.
Google: The next significant move should take GOOG above 700.
Wednesday, February 10, 2010
Guesstimates on February 10, 2010
March S&P E-mini Futures: The ES is barely holding 1066 support as I write this after dropping as low as 1062.50 overnight. I can't offer a range estimate that I have any confidence in today. However, I still expect the 1041 low to hold and I think that a move to 1200 is underway.
QQQ: A rally to 50.00 has begun.
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: This market is now headed for support near 131.00. Resistance above the market is at 141.00. 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 1120.
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 17.00.
Google: The next significant move should take GOOG above 700.
Tuesday, February 09, 2010
Demand shock?
Here is an hourly chart of day session e-mini trading. I think a demand shock just hit the market (green oval and wide range, green bar just above it). This demand shock is also a high volume, upside breakout from the 1153-68 trading area that has developed this week. If I am reading this correctly the market should not go very far back into this trading area and support should be found near 1066, just a shade below the horizontal green dash line.
The only potentially bearish potential I see in this chart is that the market has rallied exactly the same number of points as it did in its previous rally (blue rectangles). Moreover, it is still below the red dash descending trend line and below midpoint resistance at 1084 (purple dotted line). If this is really a demand shock the ES should move above these resistance points within the next day or so with little hesitation in the mean time.
Even if this is not a demand shock I still think any reaction from current levels will end at a low above Friday's 1041 low. I think a move to 1200 has begun.
Guesstimates on February 9, 2010
March S&P E-mini Futures: Today's range estimate is 1058-1076. I expect Friday's 1041 low to hold. A move to 1200 is underway.
QQQ: A rally to 50.00 has begun.
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: This market is now headed for support near 131.00. Resistance above the market is at 141.00. 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 1120.
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 17.00.
Google: The next significant move should take GOOG above 700.
Monday, February 08, 2010
More evidence
Here is some more evidence that Friday's low ended the correction which started from the 1148 high in the ES. These two charts show the 5 day (purple line) and 10 day (red line) moving averages of the number of issues traded on the New York Stock Exchange which advance in price. Notice that both moving averages were higher last Thursday and Friday than at their low points of the previous week - yet the S&P 500 was lower than its previous week's low. These are bullish divergences. Coming as they have after these indicators dropped to "over sold" levels these divergences are more evidence that the correction has been completed.
Bull market boxes
Here is a daily chart of the cash S&P 500. I have drawn a stack of 87 point boxes (blue rectangles), starting with the one defined by the June-July 2009 reaction. Friday the market dropped to the bottom of the third box. In doing so it matched the percentage drop of last year's June-July corrections. These are two good reasons for thinking that Friday's 1041 low will hold.
Guesstimates on February 8, 2010
March S&P E-mini Futures: Today's range estimate is again 1048-1068. I expect Friday's 1041 low to hold and a move to 1200 to begin soon.
QQQ: A rally to 50.00 has begun.
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: This market is now headed for support near 131.00. Resistance above the market is at 141.00. 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 1120.
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 17.00.
Google: The next significant move should take GOOG above 700.
Friday, February 05, 2010
Box update
Here is an hourly chart of day session e-mini trading. I have drawn boxes of about 25 points in height which I believe have been controlling recent trading. The bottom of the current box is near 1048. From there I expect the market to move up into the 1075-1100 box. This in turn would be the first stage of a sustained rally to 1200.
Guesstimates on February 5, 2010
March S&P E-mini Futures: Today's range estimate is 1048-1068. I expect the ES to do some base building in this range and then begin a move to 1200
QQQ: A rally to 50.00 has begun.
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: This market is now headed for support near 131.00. Resistance above the market is at 141.00. 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 1120.
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 17.00.
Google: The next significant move should take GOOG above 700.
Thursday, February 04, 2010
Low just ahead
Here is an hourly chart showing day session e-mini trading. I had thought that last Friday's low at 1066.50 would hold. But sellers came into the market in force this morning and pushed the ES below that low.
Now I think that the drop from the January high at 1148 will end near 1058, the point where it would equal the length of the 90 point drop of June-July 2009 (blue rectangle). It is worth noting that the 1062 level is the midpoint of the reaction from 1099 to 1026 in October-November 2009, while 1054 is the midpoint between the May 2008 top at 1442 and the March 2009 low at 666.
So I expect the ES to sink into the green oval later today or tomorrow on the employment number. But I also think that this is the last gasp of the corrective move downward and that a rally to 1200 will soon be underway.
Early Update
Guesstimates on February 4, 2010
March S&P E-mini Futures: (Still long one unit from 1090.75) I think Friday's 1066 low ended the drop from 1148. Today's range estimate is 1083-1096. I expect a move to 1200 to develop over the next two or three months.
QQQ: A rally to 50.00 has begun.
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: The next significant move should take GOOG above 700.
Wednesday, February 03, 2010
Rhythm
Over the years I have found that the best way to identify the reversal of a trend is to look for a break in the trend's rhythm of reactions. Reactions within an extended move up or down show a strong tendency to be of the same length when measured along the price dimension. Sometimes they also show a tendency to last about the same number of days. It is this tendency which is the basis of my box theory of market action ( which I think shares many features with Darvas' original idea).From this point of view the bull market which began from the March 2009 low point in the S&P is still going strong. This is clearly evident in the first chart above this post. This line chart shows the daily cumulative total of the difference between advancing and declining issues traded on the New York Stock Exchange. Notice that over the past 11 months there have been three reactions within the up trend, each of about the same size, and each ending when the 50 day moving average was touched.
The top chart shows the daily trading ranges in the cash S&P 500, together with its 50 and 200 day moving averages. The recent drop from the 1150 high matched the average length of the two preceding big reactions. It also stopped just a shade above midpoint support (dotted purple line). The downside penetration of the 50 day moving average matched the size of a similar penetration last July.
All of these observations tell me that the rhythm of this 11 months up trend is still intact. The implication is that new highs for the bull market lie ahead. As you know I think the S&P will reach the 1200 level during the next three months.
What would it take to cast some doubt on the bull market trend?
On the top chart I have drawn a green dash line at the 1030 level, the last reaction low prior to the top. Should the S&P drop below that level and below the 200 day moving average (red line) I would have reason to worry about the continuation of the bull market trend. But I probably wouldn't give up on it unless and until the 200 day moving average itself were to turn lower.
Guesstimates on February 3, 2010
March S&P E-mini Futures: I think Friday's 1066 low ended the drop from 1148. Today's range estimate is 1087-1100. I expect a move to 1200 to develop over the next two or three months.
QQQ: A rally to 50.00 has begun.
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: The next significant move should take GOOG above 700.
Tuesday, February 02, 2010
Update
Here is an hourly chart of day session e-mini trading. Today the ES moved above the top of the last rally (green dash line) prior to its 1066 low made last Friday. This tells me that the trend has turned upward and that the drop from 1148 is probably over.The market is now close to the top of what I think is a 1075-1100 box. My best guess is that we shall see a reaction of a day or two that carries down to the middle of the box. Midpoint support (purple dotted line) is at 1080. After this reaction I expect the market to rally into the next higher box which should extend from 1100 to 1125 or so.
The ES should reach the 1200 level sometime during the next three months.
Guesstimates on February 2, 2010
March S&P E-mini Futures: Today's early morning rally has made the move up from Friday's low the biggest rally since the top at 1148 three weeks ago. This makes it likely that the 1066 low ended the correction. Today's range estimate is 1076-1093. I expect a move to 1200 to develop over the next two or three 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: The next significant move should take GOOG above 700.