Thursday, May 13, 2010


Here is a 30 minute bar chart showing day session e-mini trading. I think last week's low at 1056 ended the drop from 1216 and that the market is now on its way to 1300 or so.

At the moment the market is advancing through a stack of 40 point boxes (blue rectangles). The top of the third box is 1176, just a bit below 1177 resistance (red dash line) at the temporary low point of April 28.

The biggest correction on the way up from 1056 amounted to 45 points. A drop from 1175 ( this mornings high in Europe) of that size would take the market down to 1130, just a bit below the bottom of the current box at 1136. But I don't expect to see a reaction that big until the market moves well into its fourth box (1176-1216).

In the meantime I see support at about the midpoint of the current box which is also the midpoint of the reaction on May10 (purple dotted line). This is at the 1155 level.


Bill said...

Another supply shock to the system?

This doesn't bode well. European stocks (Germany and Britain)were up today and the US is now selling off with 40 minutes to go before the close.

John said...

Market action still seems like bear market action...we'll know soon.

Bill said...


Are you going to update your analysis?

I was in agreement with you 100% until the market sold off at the end of the day and I changed my mind. It sounds to me that 1,173.57 on the S&P 500 cash today is the top of the rally for now. Usually when a day like today happens it signals a top, you open, you move higher, reach a high for this rally, and then at the end of the day you establish lows for the day and close at the lows, this is a signal of a market top. We'll see but now I think a 50 point drop is coming.

spycharter said...

This is the pullback/shakeout I was expecting and referred to a day ago. I expect this to continue tomorrow and present a good buying opportunity for mutual fund monday. In particular I am looking for SPY 115.14 to hold tomorrow. If it does not hold then SPY may drop as low as 113.8.

Win said...

Note the huge discrepancy between TICK and price in the last 10 minutes. Here's a chart:

SPX is in green.

This happens when a few stocks that comprise a large part of the index are sold heavily. This is quite easy to do, and drives fear into the market, brings the narrower indices down. This will increase volatility, lots of people will buy Puts, which will be shorted.

You could also look at the difference between the RUT and SPX in the last 5 minutes, and it would show you the same thing. Note the ending dip in the SPX and how you don't see it in the RUT?

Options Opex is next Friday.

E said...

Nice analysis Carl.

Risk reward considerations made more sense for the 75 to 77 as resistance today and retest the 56.

The big diffential in the globex/RTH range yesterday was the edge for regression today imo.

1053 may be a big idea pivot.

Thanks for your insights.