Thursday, June 03, 2010

Base building

Here is a 10 point box, one box reversal chart showing 24 hour e-mini trading since the low in February 2010. The important thing to notice is that the trading area which has developed near last week's 1036.75 low is wider than the one which appeared at the start of the decline in April (dashed blue ovals). This means that the technical position of the market is potentially strong enough to reverse the drop from April's 1216 top.

There are two point and figure counts which allow us to estimate the potential of any rally from current levels. The more conservative one counts across the recent base area and shows a rally potential to 1220. The more optimistic one counts across the entire base beginning with the May 6 low at 1056. It shows rally potential to 1380. The latter number is not as outlandish as it may sound today. There have been three sustained up trends within the current bull market thus far, up trends which ended at 957 in June 2009, at 1148 in January 2010, and at 1216 in April 2010. These three trends carried the S&P up an average of 31%. A 31% gain from the 1037 low of May 25 would put the ES at 1358.

The start of a move to 1300 and higher will be confirmed by a penetration of the declining red trend line which currently stands near 1125.


E said...

Mr Futia,

right or wrong, fantastic insight into your analysis

thank you for sharing.

Kishore said...

Carl, longer term, weekly and monthly, charts of S&P 500 do not support a move for ES to 1358, at least not in the foreseeable future.

Just one day of a questionable rally does not make its potential to 1380!

curt said...

kishore...the point your missing, and the reason for the post is that Carl believes that the market is forming a base that will allow for a sustained rally. I agree with that logic.

Naveedah said...

1105 to downward 1095--Can see 1090!
After trade ,I'll spent hours on your blog to compare my work.
Live Long and Healthy Happy Life With Your Loved Ones!
So Proud To read Your Blogs!

Market Karma said...

Interesting to see your declining red line near 1125 coinciding with the 3-phase target resistance i calc. Should be an interesting pivot. Post on this target can be found at -MK

Kishore said...

curt, whether or not it was a base remains to be seen.

Another way to look at the so called "base" is that the market spent a lot more time in lower price range and that makes it a weak market.

Moreover, we have yet to see confirmation of a bottom. The extremely low volume in the market only shows that many traders have packed up and left. Very unhealthy for the longer term!

What is the point in being bullish when there are so many doubts about the economy, rampant fraud in the market, the world on fire with messed up governments.

It is a lot safer to just short the rallies, until the old highs are broken, if at all they are broken. Why should I bet my money on it?

Moreover, I don't mind missing an up move, especially under all the uncertainty, as I am not even greedy!

Once again, it is a lot safer to guess the tops and short the rallies than to guess the bottom and buy the dips. Leave buying of the dips for the PPT, the FED, the banksters and their stupid HFT computers!

tellzhang said...

Carl, your prediction to uptrend is supported by COT data posted last week: big boys are buying and retail guys are shorting or at least selling...

Harry said...

classic comment! With more people like you in the market I can guarantee that Carl's prediction will be correct.
I think you may find there is an asymmetric risk to the stock market but that's just a hunch I have..

pimaCanyon said...

Kishore, you talk with such certainty, makes me wonder about your age. Under 30... under 25?

Are you making money shorting rallies these days?

inversorX said...

LOL Kishore, now I know we will se not the 1230, but 1380 sooner than later.

Excuses, excuses...PPT, HFT, 9-11, Bilderberg.

Dude, market rise and drop. Just buy or sell, but don´t believe the world is a conspiration againts you.

In fact you are nobody for the world.

Edwin said...

The day when Kishore stop posting is the day when we all should turn bearish.

Kishore said...

Cult members coming out of the wood-works, making personal attacks!

Cult members, post something worthwhile, ABOUT THE MARKET!

Naveedah said...

I am learning from Carl's every word--Can't give wrong predictions like others boldly do.
Following him made my all trades positive except 4trades till now.I started ES_F trading in December.I acknowledge myself an extremely successful trader after following Dr.Carl Futia.
I am now actually getting rich in a short time,so who helped.Carl did.
Can go with huge risks against prifits which is going in my favour.

Kishore said...

pimaCanyon, you appear to be an infantile imbecile. Even someone under 30 would be like your genius grandfather!

Naveedah said...

Kishore---Can never dare to attack as I respect you for your comments--misunderstanding!we are friends.
I always respected you and read every word you wrote.
I was raising 35 orphans--don't know how I picked Carl to follow ---This Happened (Huge Profits)
and my Girls Are Safe With Profits Booked.
No fear as trading is against profits.
IT IS CARL and made Miracle happen to us.

I and my girls thank him from heart.

Kishore said...

Harry, investyorX & Edwin, I hope you are not making your investment decisions based on what I say? Won't that be REALLY stupid?

rockybalboa said...

Chill guys...I am sure Carl does not appreciate this noise.

let's stick to trading!!

inversorX said...

Well, a good portion of my trading decision is decided by people like you.

I read the online sites like Market Watch, Business Insider and Zero Hedge. Also I focus my atention in the comments of those sites, (also of people like you in this place). And finally in spanish online newspapers, cause Im from Spain.

When all this group say in big headlines that we are gonna crash, I check my data and look for buy signals. After the market rise a bit in the maximum pesimism I try to check again what all this people say.

After the initial bounce they all say the market is driven by the PPT and the HFTs and they will define the rally as a died cat bounce. They say there is a pattern A or pattern B wich would lead us to the abysm, they would say there is a recession in the next corner. Also they will say nobody is trading this market cause there is no volumen.

Of course, in the past the kids were more respectful with the olders and in the past all of us were more happier.

But you know what? the market is always falling and rising, all is about probabilities and we are in a expansionary phase, say the opposite is being drived by the emotions, the desires and the last month trend. But the uptrend is alive while is not demonstrated the opposite. And good trends are healthy is are generated between a lot of pesimism or skepticism, like nowadays.

This was my long answer, but my short answer is YES. I use people like you to confirm my trades.

Thank You.

tempo said...

VP Biden said on Larry King, the economy will add 900,000 jobs in the second half of 2010. Maybe they are temp jobs but the headlines will move ES higher. Biden would not make these statements wo inside info. I only wish I had found Carls site earlier this year. Great job Carl.

sandy allred said...

These are some of the most entertaining comments seen here to date!

Edwin said...

Kishore. Thank you for your concern. I am a TA guy and I trade accordingly. I also take full responsibility of my trades.

Well. The NYSE McClellan Osc. turned positive at the end of the day which is a buy signal. We will see if this will work or not.

TG4TA.stockman said...

Remember..."we will hit 1000 before 1150 again."

I wonder who said that? Where is Jeffie these days?

If I am not mistaken, we hit 1220 and STILL have not seen 1000. There was an A-B-C that was supposed to occur after the Jan highs, no?

The market is here to make liers/doubters of us all. Stick to your opinions/gut analysis and you will lose money.

Nice review, Carl. I was wondering where your 1300 was coming from.

Rajeev Bharol said...

Cash heads for the exits from stock funds after steady inflows in March and April. In the week ending May 26, U.S.-focused funds saw outflows of $13.4B (and $3.9B from international funds), the biggest outflows since March 11, 2009.

Win said...

Thanks, Bharol. March 2009 was a historic bottom, if you remember. This is helpful.

Ali said...

Rajeev, fear makes people sell their stocks. greed makes them combe back again.

I see record outflows from funds rather as a buy signal for longer term.

Peoples memory are short, they get greedy soon again and buy back their shares.

VS said...

few points

a) since the drops are sharper than rise, time spent at top need not be same as time spent forming so called base. The time spent forming so called base is merely a congestion area.

b) in a true P&F chart style, the projections are both ways. So if we start breaking down from the congestion area, we are looking at 100 and 200 pt drop bring ES to 1015 - 915 area (which is what my analysis prefers).

c) so the only question remains - are we breaking UP or DOWN - so far no one knows but my money is on DOWN unless proven wrong and for that I have the stops.

waw4 said...

On your point and figure chart, is this tick data, 5 minute data, or what? Thanks, Bill