Thursday, March 18, 2010

A little more on the downside

Here is a five minute bar chart showing day session e-mini trading. I started the day thinking that the midpoint of today's range would be higher than yesterday's, but once the market broke yesterday's low I gave up that notion. Now I think the ES is in the midst of a reaction that will be about as big as the last reaction which carried from 1152 to 1136.50 on March 12 and 15 (purple rectangle).

The downside target is the green oval, roughly the 1151-53 zone. This marks the confluence of the lower trend channel line, the purple rectangle and is also midpoint support defined by the reaction after the Fed meeting earlier this week.

Once this minor reaction is out of the way the advance to 1200 and higher will resume.


Wags94596 said...

The SPX is obviously underperforming due to the fairly large sell-off in Energy related names . . . The offshore drillers in the OIH like DO and RIG, not too mention nat-gas names like HP, APA, DVN, and PTEN are getting hit as Nat-Gas continues its huge sell-off this week towards $4.00

Coal and Mining issues are also succumbing to sizeable profit taking.

This could be the beginning of the first major "divergence" in the technicals of this market.

Yāvar said...

I agree with you about the high probability of having a reaction very soon. But I think it will be larger, and I think S&P500 will be lower than 1150 at the end of March.

Teich said...

Internal is degrading --- ES is close to unchanged as of 3:40 PM EST, but the number of NYSE adv-dec issues is at -550.

Urban said...

I was impressed by the ability of the Spx to hold flat on a day when the DX was up 3/4 of a percent. This market has legs, imo.

Thank you Carl; I'm learning.

Wags94596 said...


The NYSE A/D Line finally presented a negative divergence today at -730 net.


Market Karma said...

I dont think people understand the power of reversion to the mean for volatility itself. Tomorrow through Monday should be very interesting. I hope I am wrong, but I see signs of systemic risk being present. This does not appear to be your usual whimper market. MK

Kishore said...

HFT algos have been the predominant market participants for the entire rally from March 2009 and they have generated a lot of bad Karma, using their manipulative trading tactics.

Though the perpetrators, Ben Bernanake and his bank buddies, behind these bad Market Karma may continue to run around free, the reversion to the mean, of volatility or the good, for the good of the society as a whole, is bound to happen sooner than later.

The market can not, forever, run on lies. Truth will prevail.