Tuesday, May 25, 2010
Here is a five point box, three box reversal point and figure chart. It shows 24 hour e-mini trading since the April 26 top at 1216.
The initial drop from the 1174 high of May 13 carried the market down 60 points (first blue rectangle). Then we had a 35 point rally (first purple rectangle). The next low occurred this past Friday at 1051 and was followed by a 37 point rally (second purple rectangle). I am guessing that the drop from yesterday's high at 1088 will match the initial drop from 1174 (second blue rectangle). If it does the low would be about 1028 (hence the 1030 low of today's range forecast).
I still think we shall see a print pretty close to or a little below the 1030 level before the market stabilizes and begins an extended rally (green oval). At this juncture the start of this rally would be indicated by a move above yesterday's high (green dash line) which would also imply an upside penetration of the steeper descending red trend line.