Tuesday, February 02, 2010


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.


jeff said...


By next week, we should have a very good idea whether your move is correct or not. I'm still sticking that this is a simple ABC retracement before another big fall down.

Here is what I'm looking for:

Wave (a) up has played out and wave (b) to fall back to the 1083 mark, which would represent a 61.8% retracment from Friday's low. This should play itself out over the next couple days. Thereafter, wave (c) up to make an equal ascent as wave (a) up to the 1113 level around Tuesday of next week. Coincidentally, 1113 is around the 50 DMA, which has historically has been decent support.

A couple other observations:

1. Notice how the last few months advances have been on decreasing volume yet the movements down have been on higher volume? A sign of a tired market.
2. the largest decline from the March 2009 lows occurred over a month's timeframe, yet this latest decline, which almost matched that one, occured in roughly 10 days.
3. the latest 10 day market decline wiped out 3-4 months of the prior gains.

If we climb above 1120-1130, I will reconsider my bearish approach, but I seriously doubt we get that high.

TA.Stockman said...

The answer my friend is blowing in the wind. :)

Nick said...

Thanks again for your insight Carl. I dumped half my sso after this two day run up and I'm looking for that 1080 area for a possible entry if we close below 1100. If we close above 1100 I will be looking to short a break of the 1100 level however there is support at 1095 and even stronger at 1085-86.

Kishore said...

TA, even if we have a pile of BS on one side and pile of berries on the other, we still can't tell which way the wind is blowing! Beat me!

Wags94596 said...

1.618 x (A) = 1114

TA.Stockman said...


I believe that the wind is blowing UP...for now. ;)

jeff said...

i also put myself in this camp, but only the liars know 100% of the time where we are headed. that being said, i unloaded my sso here and bought sds for a couple days and will buy back sso until we make a higher high on wave c up. after that, we will will have to see the action.

with a peak today, that certainly puts the 1120 in play or a 61.8% retracement of Wave I down from 1150-1171.

We should have a good feel if this my predicted ABC up or Carl's much larger market move by the middle of next week. As I've stated before, any break above 1130 means new highs. Otherwise, Wave III down will be stronger than the one we just saw.

khoekz said...


I can appreciate that you are sticking with your bear scenario.

Even if the worst of the worst happens, I don't think your bear prediction will occur.

Regardless, I want you to own your prediction. When 1130 is broken to the upside - own it. When 1150 is broken as well, I will be waiting for my check, or three additional shares of UPRO, whichever you prefer. In both cases, I want you to own it.

As always, good luck to all.

And Carl, this last month you have been ridiculous. Nice work and thanks. I will be donating next year.

Kishore said...

jeff, for ES Retracements:

38.2% = 1097.87
50% = 1107.25
61.8% = 1116.63

Due to the ferocity of the first down wave, I doubt if we will make it above 1108, i.e. 50%. There are a lot of bears waiting to go short.

If we go up to 1108, then there is only 50% chance of the low of 1066 being broken.

But if we turn down right here, without even making it to 50% retracement, then the probabilty of breakdown of 1066 is much higher than 50%.

Kishore said...

TA, the original joke about "which way the wind is blowing" was about a real-estate agent who was trying to sell a house, sandwiched between a buthcher shop on one side and garbage dump on the other.

Nevertheless, it is hard to tell which way the wind is blowing even though we are always in the midst of BS on one side and berries on the other.

jeff said...


This was a nice day for the bulls. But I have these observations:

1. Volume declined for the second day in a row as well. During a normal pullback, volume should decline on down days and increase on up days. During the January 2010 downturn, volume has done just the opposite -- increasing on down days and decreasing on up days.
2. All three stock indexes shown below remain below their 50-day moving averages(I suspect they will go above them for a day or two after this retracement is complete).
3. I'm leaning toward the view that the market is in the midst of an intermediate correction which could eventually take it down toward its early November lows (or a 10% drop in the S&P).

We should definitely find out which way the wind is blowing by the middle of next week. I think the around this 1121 level(61.8% retracement from 1071 low)will be the line in the sand that we find out.

All the best!

Market Karma said...

To get a sense of the magnitudes we are dealing with, I have posted critical dates based on market data out to Dec 2011. Jan 2010 is signficiant! -MK