Monday, May 24, 2010


Here is a five point box, three box reversal chart showing 24 hour trading in the e-minis. I am treating the activity on May 6 that occurred below the 1100 level as a "mistake" (black dash oval). This puts the low of the first leg down from 1216 at 1091 and makes that swing 125 points in length. The second leg down started from 1174 and so far has been 123 points in length. At its 1051 low last Friday the ES also kissed the lower parallel trend line drawn from the intervening 1091 low. These two facts are preliminary evidence that a low has either already occurred or will soon develop.

Another important observation is that the sideways length of the recent trading range (lower blue line) is greater than that associated with the trading range at the 1174 top (upper blue line). Usually this means that the swing down from 1174 has ended or will soon do so.

I am going to stick with my view that the low is not yet in place and will develop in the 1030-40 range (green oval). But I will change my mind about this if I see strength above the 1100 level. Such strength would break the steeper red down trend line I have drawn and would also take the market above the high of the last reaction on the way down to the 1051 low (green dash line).

In either event I think the next significant move from current levels will be upward and will eventually take the ES to 1300.


kcounty said...

i love your conviction and cant thank you enuf for your obvious hard work analyzing your charts!

keep it up!

Bill said...

Carl, that's a gutsy call. When the pundits are calling an end to the bull market you are calling an end to the correction. If you are proven right, you are the ultimate successful contrarian.

The rest of the week should be critical. I still think that what'll take is at least a couple of good rally days in Europe to reverse the current trend. And we haven't seen that, Europe is still hitting new intra-day lows.

Naveedah said...

So Much helpful blog.
Low is still to come,and then as you earlier been mentioning the expected rally continuation to 1200+
Thank you so much for being so kind and generous to share so valuable insight.

tempo said...

With the summer lull around the corner, it will probably be September before we see 1300. The market will likely want to see how the EU shakes out before moving one way or the other. IMO, trading range over the summer.

Naveedah said...

Day was too rough and tough.Your chart and detailed insight made my going easy today.I did good because I made my trading plan and then following you made my going successful.
I tried to learn from your every word.
No one of us can pay enough thanks to the learnings and help received.
Your teachings will surely take me from better to the best.
Thank you,Sir!

Jack said...

Yup, Not much catalyst to drive the market upward. Earnings over.

Have to see what happens on the charts.

Rajeev Bharol said...

Carl is not the only one bullish. I follow a newsletter and all 6 six experts in that letter are BULLISH!
Not a single one is bearish.

What does that mean?

Patrick said...

Bullish sentiment is not really decreasing with the market going down recently, maybe we'll see 1200-1300 but on the Dow...