Friday, March 26, 2010

Update

Here is a 30 minute bar chart showing day session e-mini trading. I think the drop from yesterday's high at 1176.50 will end late today or on Monday. I expect the low to develop somewhere in the green oval, i.e. in the 1154-56 zone. This marks the confluence of the two lower channel lines I have drawn on this chart. It is also midpoint support (purple dotted line). Finally, a reaction which ends in that zone will be only a tad bigger than the previous reaction you see on this chart.

Early next week I think a move upward will start. I expect the market to be much stronger than it has been during the past 10 days. The first step upward will probably carry to 1185. By the end of May I think the ES will have reached or exceeded the 1225 level.

13 comments:

Joe said...

If we call it an irregular flat correction the down target would be around 1152 S&P cash. This would coincide with the shoulder head shoulder formation currently building up. If triangle it should move up from 1162, if irregular flat down to ~1152 and then up. Of course this does not change the big picture which is bullish.
Joe

Bill said...

I agree the big picture is bullish long term.

Over the next few weeks I'm not so sure. The McLellan summation indesx is showing some very overbought levels. Maybe sideways trading will resolve this overbought condition, but it wouldn't surprise that we'll see a 5% to 7% correction over the next 2to 4 weeks before the bullish trend resumes.

Win said...

Carl,
Thank you for the analysis. One question: It appears odd that the market (stronger than it has been) would take two months (beginning April to end May) to cover 70 odd points (1155 to 1225).

Bill said...

Just read this on CNBC. Very interesting:

"The S&P 500 [.SPX 1163.47 -2.26 (-0.19%) ] hasn’t declined more than 1 percent during a single trading day since Feb. 23, a 30-day stretch that is the longest of the bull market that began last March, according to the Bespoke Investment Group, one of the top trend-finding firms at work on Wall Street today.

“Guys are just chasing the market at this point,” said Tim Seymour, founder of EmergingMoney.com and a hedge fund manager. “Mutual fund managers are lucky if they’ve even caught a third of this rally from last March.”

Seymour, also a ‘Fast Money’ trader, believes that’s why there are always plenty of buyers to swoop in during the day on any pullback. While he’s still constructive on the market long-term, he warns that this streak speaks to a “dangerous overshoot at some point.”

One barometer of future movements for the overall market started to breakdown this week. The iShares Dow Jones Transport ETF [IYT 78.05 -0.30 (-0.38%) ] is a widely followed leading indicator of the overall market because it encompasses companies such as FedEx [FDX 90.90 -0.04 (-0.04%) ] and railroad CSX [.DJIA 10839.55 -1.66 (-0.02%) ], which are the first to see changes in economic activity. The transports have separated from the market this week, down almost 1 percent as the Dow Jones Industrial Average continues to creep higher."

Win said...

Carl,
One more comment: One scenario I'm examining would have the dollar move up to 83.7 or so by April 1 or 2. I'm not yet sure if this will pan out, but if it does, such a large, quick move in the dollar would cause a big drop in at least the commodity sector. In that case, I don't think the drop will stop at 1155 on /ES.

kcounty said...

where is this 'correction' everyone keeps talking about? SnP hasn't looked back since 3Mar09. unbelievable.

Joe said...

The battle for 1162 is on. By the end of this session we'll know if it was the low before the next move up or if we'll go down to 1152first(S&P cash). It's exciting!
Joe

Wags94596 said...

Joe,

Looks like we just did an A-B-C pullback with C being .618 of the "A" leg down off the highs ... at 116.25

Had C = A, we would have seen 115.55, but we never got there.

.618 of "A" it is!

Joe said...

Wags: I agree we most likely saw the end of the current mini-correction (if you want to call this "correction" ;-) ). Next step will be new highs IMO.
Joe

Joe said...

I guess Carl nailed it again. He's incredible. I wonder if he comes to Arizona soon, then I'd like to take him out for dinner.
Joe

S Mohiuddin said...

Monday openings have been incredibly positive since early 2009 -- in fact you have to go back to October 2009 to see a monday with SPX losing more than 1%.

Teich said...

I think the bulls have to prove themselves next week for ES to stay within the channel depicted by Carl -- i) Friday's bounce to ES 1170 retraced about only 50% of Thursday's drop; ii) after dropping from ES 1170 to 1156 intraday, the market bounced but managed to retrace only 50% again.

$NYMO, which is similar to the 5-day-moving-averaged $NYAD Carl looks at, is already negative:

http://stockcharts.com/h-sc/ui?s=$NYMO&p=D&b=5&g=0&id=p38613197659

MKS said...

If you noticed, the big boys bought a TON of sso after hours on Friday and pushed it up over 1%.....that could mean a very bullish Monday ( I am not sure), but then the last 4 days in march have been down 70% of the time regardless of Bull or Bear market