Monday, June 28, 2010

Another update

Here is a 60 minute bar chart showing 24 hour trading in the e-minis.

A couple of hours ago I noted that the market's failure to climb above the 1080 level (horizontal re dash line) was a sign of weakness. At the time it seemed likely that the consequence would be a shakeout down to 1058 (green oval) to be followed by a strong rally.

In the event the market has held its morning low and has traded in a relatively narrow range all day. It has traded sideways in a 20 point box (blue rectangle) for the better part of three days and has done so after a break that so far has held above the last low at 1037 on June 8 (September contract). Finally there is a sequence of higher lows (rising green dash line) visible today which more often than not is an indication of an impending upside breakout.

All in all, it looks to me like the drop from last Monday's high at 1129.50 is over. At worst a quick shakeout to 1058 will develop early tomorrow. But I think it is more likely that a breakout above the high of the blue rectangle will occur without such a shakeout. I think tomorrow will be a generally bullish day and that the market will not drop more than 5-6 points below whatever level prevails at the pit open.

The next up swing should carry the ES to 1150 and be part of a much more extensive move to 1300.


Kishore said...

Though I think one should not trade when there exists the conundrum of trying to bet on continuation versus reversal, the congestion close to the bottom of a big fall, from 1129.50 to 1062.75, appears bearish to me. In other words, we are likely to see a breakdown of 1060.

Moreover, the higher highs from the low of 1062.75 can be looked upon as part of a bear flag.

And, let us not forget that we closed 1069.75, the low for the day.

Kishore said...

Sorry, the low for the day was 1066.50 but the closing at 1069.75 is closer to the low than the high for the day, and that is still bearish.

Adsense said...

Hi Carl
i mentioned the 60 minute chart and the 3 peakes domed house pattern , so far it has been accurate and it calls for a test of the lows , my own cycles works calls for a low july 2nd 12th . so i have to keep a bearish bias for now . The problem im begining to think through is the head and shoulders pattern which pretty much everyone now thinks is going to happen has me concerend we see the oposite .for now the key level is the june highs if we break above them i have to look for a retest if not a break above the april highs .
bottom line im open mind to the bullish potential yet untill it proves itself i have to keep my bearish posture . cyclically im not looking for a larger break down untill after july 26th -aug 3rd . the focal point being july 31
breaking above the june high;s will do alot of damage to the longer term bearish count based on the many longer term moving averages that surround that level .
i know it is just a moving average yet it is rare that the market stays below its 120 month moving average as well as its 40 month
the 240 month moving average rarely gets tested yet it now sits at 8081 on the dow . a decline back near that level is all im looking for . given the other time frames noted in prior posts here
i dont see the market begining a new cycle to the upside that will
be sustainable .
good luck

Naveedah said...

While health care stocks saw a decent 1-2 week rally when that legislation was passed, many think the financials won’t be so fortunate as there is still too much up in the air. The desk was quiet today and volumes were tepid. ~1070 is a level being watched and we were able to bounce there at ~10amET this morning, although there still isn’t a lot of real buying/selling occurring in this market (along w/the 1070 test, some people are citing the Supreme Court decision on Sarbanes Oxley as being a pos. for the market). The euro lagged as traders are still a bit nervous ahead of the expiration of the 12-month tender and the Spanish debt sale (both coming up on Thurs). While many continue to make the valuation argument (in WSJ, USA Today, CNBC today), seems like people won’t step into the market in a meaningful way until we get: 1) earnings; 2) European bank stress tests.
Thank you so much for immense support in difficult times!