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.

11 comments:

Nick said...

Carl,
I'm still holding short in the fleeting hopes we pull back. I've seen a lot of bearish bloggers on other sites getting run over as they keep pushing their calls for a top higher and higher. We are now resting on the 20 sma on the daily. If the 20 can get above the 50 and we can close over the 1100 resistance I'll eat my losses and reload on the long side. Thanks, as always, on your take of the markets (even if it's not what I want to hear right now).

jeff said...

Carl,

Though I'm bearish, I think this is great analysis. However, we have yet to hit 1100, but I suspect we might.

As I suspected, the market made another high, but I'm still sticking with my intermediate term indicators that say this is simply a retracement and we will continue to see lower highs and lower lows for many months ahead.

Notice too the direct relationship between oil, the euro, the S&P to that of the dollar.

I know you are bearish on oil, but unless you've had your head under a rock, there is no way the S&P makes new highs without the help of oil. Undoubtedly, you'll need to revisit your analysis the next big move for oil down with your bullish S&P stance.

Jeff

P.S. - If I'm proven wrong, who wants one of the 5 copies of Carl's book?

George said...

Jeff, what you mean in your P.S.? If you are wrong, you will give away a copy of his book?

Teich said...

I am worrying a bit about the lack of volume in today's otherwise nice rally. Almost all green candles have volume less than 100k contracts per 30 min.

http://www.screencast.com/users/Teich/folders/2010-02-16/media/2b64cfce-d4ae-4da4-bc49-ea88ef560464

In contrast, look at last Friday's, where the up-moves are associated with up-volumes of ~200k contracts per 30 min.

http://www.screencast.com/users/Teich/folders/2010-02-12/media/0d21637b-b796-45be-8d2d-7b05370a4ae9

Daniel said...

Carl,

It looks like there is some resistance at this level(1090.97)
The 20 Day MVG is at 1089;
The 100 Day MVG is at 1092; and
The 20 Week MVG is at 1092.

Although I think a better short would be at the 50 Day MVG at 1108 will also coincides with 62% Fibo retracement level from the high in mid jan -1110.

Daniel

Jack said...

Carl,
Went Long (Calls) on the Qs last 5mins on Friday.

Yes, sentiment is way too negative. When Suze Orman goes negative then you know it's time to take the contrarian view! Ha!

Thanks for the update.

Jack

ga said...

I'm in for one copy of the book Jeff.

Dave Narby said...

IMO unless we hit 1200 before March, it ain't gonna happen. That's when QE ends, and there will be no more cash for crap mortgages for the banks, and therfore no more money to gun futures & equities to xxx times earnings.

Wouldn't surprise me to see institutions getting out before the mad rush.

Bill said...

Since the March 2009 low, every time the bull market pulled back it followed with a bigger rally.

The pullback that we just had from 1150 to 1040 is bigger than the July pullback last year. So this rally will probably be bigger than the rally we had last summer after the July pullback.

Should we say 1250 on the horizon?

jacob.joon said...

What makes you think QE will end in March? And there's a lot more stimulus mobney to come.

ga said...

Bill the recent decline was bigger in points but was almost the same 9.2%...something to keep in mind.