Tuesday, February 09, 2010
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.