Monday, February 01, 2010

Guesstimates on February 1, 2010

March S&P E-mini Futures: Today's range estimate is 1060-1080. This correction should end today and the market will soon begin a move that will carry it to 1200 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.


Yāvar said...

Today's range seems more like 1080-1095.

boris said...

Dear Carl,
Our outline looks similar to yours, but we think, that market has to prove, first, that it can get to 1200. That may not be in the cards, unless new highs are seen by early/mid March. Anybody that has our YellowBrickRoad Outline, knows precise path market should take to those levels.

Meanwhile , thank you for the opportunity that we have expressed here, couple months ago.

We said.

First 100 pts on Emini will come on the downside from above 1100.

Well, we did about 85 or so points and we now modify our initial call and call it done(not that we could not emagine more down, but we think that 100 was a round bumber and 88 is just as good for our purpose).

The only reason this thinking mattered was that we were MORE conentrated on shorting within that period.

Good Trading All

jeff said...

top is in Carl.

i think Wave V down of subwave i completed on Friday and we should expect a classic ABC Wave II retracement over the next week or so to around 1/3 or 2/3 or the climb. With the 30 day advance/decline not even close to oversold, I think the 50 DMA will prove formidable resistance. For all of the intermediate term indicators I mention on Saturday, I think once this retracement is complete, Wave III down will surprise and even scare a lot of folks who still think we're in a climbing market.

I wish you luck on the long, but I suspect you won't be drinking the Kool-Aid that much longer.

That being said, I fully expect us to make new lows over the next couple years; however, there will be many rallies along the way.

Here is how I see the next month playing out:

1. We climb to 1114 or so in the next 7-10 days, which is the 50 DMA moving average.
2. We start the next fall to around 1018, which used to serve as resistance months back. Coincidentally, 1018 is a 38.2% retracement of the fall from the 2007 highs to the March 2009 lows.
3. 1018 area holds and have another mini-rally.
4. the market will then start a drastic fall over the next couple months to 800 or so, which will really catch folks by surprise.
5. per my review of the monthly S&P charts, I fully expect the market to hit at least 480, which will complete a "M" pattern.

During this time, I would expect to see a major geo-political event and other world panic that will make 9/11 and the 2008 stock market crash look like a picnic

my lower prediction on the S&P would be around the 250 mark. If this were to happen, Wave C down would equal Wave A down from 2007.

Carl, again, I won't discount there will many mini-rallies along the way, but the key is we will see lower highs and lower lows.

George said...

Just to share a couple of thoughts: I believe today's rally will fail, and we will drop to either 1060, like Carl says, or around 1045 on the cash. I believe this will occur later this week, not today.

Most, if not all, the bears are convinced that the bull market top is in, just as they were in June. The coming rally when this correction ends this week will be fueled by massive short squeezes.

Kishore said...

Today has a bullish bias of an up trend day, based on a gap up open, that was not closed, good breadth, lower VIX and TRIN.

Nevertheless, I won't discount a sell-off later in the day, as George said above, i.e. today's rally may fail.

maria said...

Jeff,, surprised to hear your conservative outlook! I think once S&P drops below 1.0, the authorities will then reverse split the SPY by a very large factor to raise the price (opposite to the QQQQ split during the yr 2000 top!). This will solve everything and a new bull market will then begin.

Shlomo said...

A question for you: when looking at your forecast for the Euro, are you being a "contrarian". I remember your feeling that 75 would hold on the dollar index based on widespread pessimism. Currently, the level of pessimism in the Euro is EXTREME. Check out the headlines for the last couple of days: seems like everyone sees it at 1.25 by end of year.
Being on either side of Euro trade is a bit scary now, since the Greece situation could throw you for 2% in either direction in a day, but I will look for a long entry a bit lower than we are now

George said...

Allow me to clarify. I think today is analogous to Oct 29, 2009. The trading day prior to it, a gap had been filled and the market closed at the bottom, exactly what happened last Friday. On the 29th, the market closed near the high of the day. However, the next day it sold off and prices did not bottom until two days later.

TA.Stockman said...

@ Jeff:

(Comment to your comment on 01/29)
I subscribe to what you are saying also re: the bearish signs since the weekly momentum indicators are now down.

HOWEVER, that does not mean this manipulated market cannot push higher. I mean, a double-top to 1150 or higher might be possible...anything is when the Fed/world is printing money to prop up this market. It's when they pull out that we're in trouble, and who says that that will happen anytime soon?

I don't listen to EWT either b/c it's like H&S patterns. Nice to see on a historical chart, but in real-time, it gives me nothing. I frequent a EWT blog daily, too, and he's always revising whether or not the current leg has ended. That is not helpful to me. (Oh, and I read really to learn of his pivots, which I think are really good and pretty close to Carl's).

As for Carl being a Contrarian, with all due respect to Carl, he is least not this blog. Wouldn't the contrarian be bearish during the last half of this run-up when the media has been screaming bull market? Maybe, I do not understand Carl's definition of contrarian.

TA.Stockman said...


250, really?

I know that that is what Prechter says, but come on?

I (like everyone else on this blog) believes in charts, but you're saying that your charts and EWT are oracles?

Think about 250. What needs to happen for that to occur? WWIII? asteroid?

I don't like predictions b/c as I have learned everyone has one and they're usually wrong.

My charts tell me which direction...that is it. No target. Just when to get in...when to get out.

Kishore said...

The market is trying very hard to jump, like Jack in the box.

Will Jack be set free or will it be hammered down?

I think Jack will get at least one more pounding.

maria said...

Jeff,, dont forget about the human coping mechanism that dissipates all effects over time. Otherwise, you are liable to find yourself using EWT to project S&P below unity as my silly example tried to illustrate. Emotions, both fear and euphoria, decay with time. In fact, when modeling longer term projections, it is always useful to think in terms of option premia and implied vol skew term structure. And believe it or not, Barton Biggs even commented a bit on the human coping mechanism in his book "hedge hogging". And even more importantly, if the S&P reaches 250, none of us will be tapping away on Carl's blog!

Harry said...

Anybody have predictions for the rpice of oil ?

jeff said...

TA Stockman,

I think Elliott serves a purpose from a high level perspective, but given the subjectivity associated with 15 minute charts, it doesn't do much for me on a day to day basis. That being said, I wanted to share how I come up with a possible 250 level using Supercyle C that started in October 2007(consist of an A down, B up, and C down):

1) Wave A down from October 2007 to March 2009 of 909 points (1576-666)
2) Wave B up from March 2009 to January 2010 of ~483 points or a 53% retracement (Normal Wave B retracements are 50% or so of Wave A, even on shorter time frames)
3) A final Wave C down should at least mirror Wave A down or 909 points. And that gives you 241 (1150-909) on the S&P. However, sometimes Wave C can retrace as much as 1.618 of Wave A and you know what happens there.

For me, I do not expect either of two scenarios to occur, but as a longer-term ‘investor’, I like to look at the big picture, it would not completely surprise to see it happen.

As for this blog, Carl know I’m obviously comparing apples and oranges. For those of you know say, ‘what do you mean’. Carl looks at very short-time frames (days and weeks, and sometimes a few months out). My analysis is obviously looking out at least a couple years. So obviously, there will be some pretty good rallies during my timeframe.

I think what is important to define your approach as an investor and trade accordingly. For example, I count a clear 5 wave down from 1150, but given the number of intermediate and long-term indicators that have recently rolled-over, I think this climb will represent only a ABC retracement. Carl is using short-term analysis like oversold market stats and 60 minute charts to arrive at his conclude that the market approaches 1200 in the next couple months so obviously, the difference is his belief that we continue to chug along to the upside. To define my risk and tell me that I am wrong is if we retrace more than 2/3 of this decline over the next 7-10 days. If so, than I have to reconsider my ‘Top is in’ thought.

In sum, define your timeframe and your risk and you can be successful trader or investor (the two definitions are very different)

I find no better evidence that Carl's trades on this site. Many times he is right and when he is not, he stops himself out at very small losses and adjust accordingly. And that is a sign of a good critical trader!


Kishore said...

TA: "My charts tell me which direction...that is it. No target. Just when to get in...when to get out."

TA, I agree. Why waste time speculating with what the market may do a month from now, or even next week. We need to trade in the present.

However, each market movement has a theme that we must not lose sight of, e.g. retest, Fibannaci's retracement etc..

Carl's themes, based on trading ranges have been very accurate.

Kishore said...

The market has spent the whole hovering around the downward trendline on 30 minute chart of ES. Incodentally, the there was a false breakout a couple of days back.

Today's attempts at the breakout, as revealed by Accumulated Tick, Breadth, VIX and TRIN have been very sincere, but, so far, no cigar!

TA.Stockman said...

Kishore: "However, each market movement has a theme that we must not lose sight of, e.g. retest, Fibannaci's retracement etc.."

I think this is a very important lesson also. For example, when we rallied to 1150, we were hitting the upper channel trendline. Even though my indicators were buy at 1130-1140, I was thinking that a sell would come soon as a move above 1150 would've required HUGE momentum. A move above 1150 could have happened, but that would have meant a rectangle formation first, or a parabolic move.

However, there are times when support/resistance do get taken out. I was long at 1090 last week. Lo and behold 1090 cracked, and we saw 1070. My shorter term indicators were a buy until the crack. My medium term indicators were still a sell throughout the whole thing. Timeframe (as Jeff) mentioned is very important. Likewise is resetting a trade if it goes against you early; I exited my long and am still waiting on getting back in; if I had not, I would have seen a 20 point ride to the downside.

jeff said...

I think today's action represented Wave A of Wave C retracement, I'm looking for some additional upside before Wave B down begins. Thereafter Wave C should start and take us to either 1102 or 1118. I will be looking for this A up, B down, and C down action to occur over the next week or so before we resume more strongly to the downside. Any trade above 1130 will have me to reconsider. For now, I'm mostly cash here as the action over the next week should be choppy to the upside before the 10 day advance/decline gets overbought again. As I mentioned earlier, the 30 day advance/decline is still overbought so like one of my other intermediate term indicators, I think that will put a lid on this rally attempt.

Best of luck everyone and Carl, thank you for letting post my thoughs eventough we may have differing intermediate term direction opinions on the market!

Market Karma said...

Some nice comments here... Ranging from the unrealistic to maria's less is more reality check!