Tuesday, April 20, 2010


Here is a point and figure chart showing day session e-mini trading. The box size is one point and this is a 3 point reversal chart.

Yesterday afternoon, after the 1180 low was printed, I thought that this market would continue down to 1175 before it rallied 12-15 points. I also expected a lower low near 1163 later this week.

But shortly afterward the market took off on a strong, 16 point rally and has continued upward today. The fact that by yesterday's close near 1196 the ES had rallied 16 points without even a three point reaction was very bullish (green arrow). In addition, the market closed yesterday above Friday's close and above the last reaction high on the way down to the low (red dash line) - again bullish indications. To these considerations one has to add the fact that the ES closed yesterday well into the range in which heavy selling had occurred Friday. Finally, Monday's 1180 low developed on the lower green dash trend line and also at the point at which the drop from 1210 had slightly exceeded the biggest previous drop on the way up from 1041 (purple rectangle).

All of these considerations entered into my conclusion this morning that the 1180 low ended the drop from 1210 and that the ES had started a move to 1270.

Yes, I know - the market might just pull a U-turn and go right back down again. In such an event I might look a little foolish for buying the ES. But better to look foolish after the fact than to act foolishly before the fact! I am bullish, and can only make money by betting on my bullish views. If the market shows strength when I am basically bullish I have to act accordingly. The worst thing I could do in such a circumstance is to be on the sidelines as the market rallied.

That said I also must acknowledge that the move up from yesterday's low has been fast and only corrected by a six point drop. I think it will approach the 1210 level, perhaps even exceed it slightly, but then will drop 8-10 points before moving higher to new bull market highs.


kcounty said...

thanks carl. you continue to call the bull run correctly, very impressive.

Bill said...

Carl, the only concern with your view is that this market has been up for 7 consecutive weeks. Will it make it to week 8 this Friday with the Goldman lawsuit? The probability that the market will not have a week 8 of gains is real, and with the market being up yesterday and today a correction is probable in the last 3 days of the week.

Denali92 said...


Your range call yesterday was spot on and impressive... As your 2pm change was right at the turn in the market, one must think that was the time the markets have made you look foolish....

Otherwise, your bullishness has been spot on... the only issues have been
1) Most of the gains have been on Mondays with lots of gaps up
2) The market has only given a few solid, non gap up buying opportunities

Basically, it has meant that the Bears have always been messed around, but the bulls have not had that many clean and clear opportunities either. Yesterday was a classic example of that - we did look like we would finally go lower and correct for a few days, so why would one buy??? then the sudden reversal - quite something!

Edwin said...

It is good for the bullish case that Bill is concern and he "thinks" instead of looking at what is happening.

Rob said...

It's refreshing to see that Carl quickly admits when he is wrong - unlike most bloggers who only speak up when they're right.

Kishore said...

Denali92, I agree with you. There has neither been a reason nor an opportunity to go long in this market. The bulk of the moves up have been gap ups, mostly gap ups, and some scary stick rallies like the one we had yesterday afternoon. By comparison, bears have a lot more time on their hands, time to think and decide, though only very rare but sharp opportunities, like one coming up. Patience can be a virtue, especially if we have a mind to mind riding the crazy bull (El Loco Toro).

Kishore said...

Sorry, my Spanish is not up to the mark. The crazy bull is called "El Toro Loco".

Tim Mack said...

Bill – The market can be irrational longer than traders can stay solvent. I prefer the short side because I get paid faster. I am not happy about this quick return to bullishness. But when the market tell us that its going up not matter how much we believe it cant go further or is “over bought” or advancing on lower volume or hit some fib resistance number if its going up you must be long…

BTW – there were huge paper buyers off the open in the S&P pit, locals were short and couldn’t get the market to break. If they cant get it to break that’s a major bullish signal.

That all being said watch us crash tomorrow- lol

Tim Mack

E said...

Agree with all the basics said here, including the obvious that it hasn't been easy for either side.

Nobody does it better than Carl right now. The trap and squeeze approach still working.

Learning more by following this blog than from all the books out there.

Range correct again, if you include the globex after hours.

Thank you.