Monday, May 10, 2010

Breakout

Here is an updated version of the point and figure chart I posted late last week.

As you can see the ES formed a higher trading range late Thursday and all day Friday (second blue oval). Then in Europe this morning the market broke above the top of this second trading range making it to 1162, the top of the trend channel I have drawn. This sequence of successively higher trading ranges is convincing evidence that the trend is upward once more and that the 1056 low will hold for many months.

The point and figure count across the second trading range projects a move to 1275, a new bull market high by a wide margin. My best guess is that before the market continues its advance it will first react to a level close to the breakout point and to the lower channel line.

14 comments:

TMG2010 said...

I've been trading for 20+ yrs and I've never seen it worse than what I have seen on different Blogs this year and especially since last week's drop (I look at over 20 or so Blogs a day). You have some Traders that are calling the bottom and S&P to new highs at 1300+ and the other extremes at 666 or lower, maybe even 600 or lower. Traders that state they have many, many yrs. of Trading experience and success and have had had their Blog open for yrs as well. Everyone is looking at the SAME market, SAME technicals, SAME Charts, etc and there are so many different Market directions (not even close) seen and everything in between. Truely amazing! If anyone has the direct line to the Lord let me know because at this point He is the only one that really knows what will happen. Yes, some Traders have a better track record, BUT still wild, wild differences...amazing, truly eye opening in my humble opinion...

Kishore said...

TMG2010, the volume is extremely low today. No one, probably not even Carl, is buying this grotesque rally.

We have to wait and let the bulls exhaust themselves. The higher it goes, greater will be the fall.

But we need to wait for bearish divergences and failures of retests of the highs. Today is a do-nothing day. Patient bears will be amply rewarded.

Chad said...

TMG2010 this is the Lord (just kidding)if you check the various track records (CXO) you can see that even with some of the greatest stock pickers the best you can get is about 65% accuracy which is good.

Most are under 50% which on any given day can either make you or lose money. With your observation on market pundits it comes to mind that these kind of swings will scare even more people in the bond market which is a disaster waiting to happen sometime in the near future.

Be careful as these recent lows from last week will get tested.

best of luck !

EricH said...

"If anyone has the direct line to the Lord let me know because at this point He is the only one that really knows what will happen."

I read Goldman Sachs did not have one losing session last quarter and in 35 occasions last quarter they made 100 million in profits trading.

We don't need God to know where this market is going...we need Goldman Sachs.

Edwin said...

Carl,

I see three peaks almost completed and the doomed house is about to be to be built at the SPX 60 minutes chart. Am I crazy?

This would be consistent with your speculation.

Kishore said...

Godman is doing the work of God or vice versa. I am not sure who is pulling the strings. Maybe God works for the baldy Godman.

Kishore said...

Who said something like: Behind creation of every great wealth, there is a crime.

Was it Rockefeller?

It must be an old American tradition, called American Greed on CNBS.

Bill said...

Everybody is saying the market will retest the lows (including me). From a contrarian perspective this is bullish, nobody believes in this rally. Because of this the rally may have legs.

Only a week ago analysts were blindly bullish, today they are very skeptical having lost faith in the market. Based on this it wouldn't surprise the market heading higher.

janet said...

Carl, last week when everything seemed like it was ready to fall apart, you remained bullish. Kudos to your call!!!!!!!!!!

TG4TA.stockman said...

How many got stopped out of long positions...only to not be able to get back in and lose profits??

I'm sure a lot of people did. I'm sure GS made a lot of money.

dcatlowpj said...

It is greed and fear that drive human behavior. All we traders have is Price Action alone to drive our trades...rather than prognosticating on where we "think" this market may go...drive your trading with volume, Carl's ranges, and price action.

nietgek said...

Carl,

In your 2009 Stock Market forecast, you had multiple reasons to expect a bullmarkettop somewhere in 2010.

It has been a long time ago that you wrote this ( and I really missed the 2010 forecast), so I like to ask you whether you still think we get an important top in 2010. If so, is there any time period you expect it or is there a possibility this maybe was that top.

Maybe you can mention something about your view on this in one of your updates?

thx Ron

Atrader said...

I finally signed up a google account. I have been reading Carl for over 2 months and all the other posters.

Carl and Dave (Emini addict) are the best.

Sandy Allered is the best poster here after Carl.

There was a trader back in 2006 named tradergod who gave daily calls on ES and he made 2,500% return in 9 months starting with $10,000 on Jan 1, 2006 and by Sept it was 250,000 dollars. He made 1 or 2 calls a day and let the market run. He was the best I've seen. 2.5 pt stop. At the height he would be trading 40 to 50 contracts!!! and let it run. Just amazing. He made his trade and let it run NO SCALPING.

Sandy Allered is the best here after Carl from my observation here from 2 months. He called the drop of 93 ( or 54 pts) back in 1st week of April 2010 and mentioned once SPX hit 1215 it would drop 93 pts.

Only his date was off...Sandy stated by April 30 it would be done but it was May 6. But still great.

Sandy where are your "posts." He has not posted after that but I wish he keeps posting.

Carl had the 1091 in his point and figure chart...I guess he did not believe it..the low would occur. It happens to all of us. Now we see the 1275.

Even on the short from 1216.75/1207area the target(s) are 50 % front month daily/ weekly/monthly and all have been hit.

So with 1126.25 hit and being the weekly and monthly 50% ( like physics/fulcrum) it has to go up and test 1216.75 and get to 1275.

Can't go past 1176.75 or 1207 or 1216...then we go down to 1126.25. Below 1126.25 is test of 665.75.

Watch your daily closes.

Very simple. Follow simple people and rules make a lot of money...small energies producing BIG results. ( Buffet...small energies....produce big results.

I find Carl Futia and Dave Halsley (emini addict) simple in their trading with big results. I'm sure there are 3 more like them.

Its all in the 50%. Simple my friends and YOU too can be better than Guiltman Sucks!!!

Best

Wags94596 said...

People need to understand what "Intermarket Sweeps Orders" (ISO) are and what the "Liquidity Retention Point" (LRP) is on the NYSE.

Only then, will people begin to understand that only 30 million shares traded during those 3-5 minutes last Thursday and that ISO's printed the market down due to their PRIORITIZING TIME, over price.

As for Goldman Sachs... please stop with the conspiracy theories and learn what a market-maker does for a customer when it comes to "facilitating" trade - - - especially when it comes to the indexes and sector indexes.

For example, there is a bid AND an ask on the SPX on any sophisticated equity derivatives desk. Thus, any order from a customer that gets facilitated will allow the broker to have an "edge" from the spread, which gives him an automatic cushion to undwind the other side of the "trade" for a profit.

This is simple market mechanics.
Yet, it is mind-boggling just how many people DO NOT UNDERSTAND how a trading desk (like at GS) makes money given the bid/ask spread and the ability to hedge with options and futures!

Instead, these naive and ignorant people embrace the conspiracy theory of the day. Pathetic.