Monday, June 28, 2010
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.