Thursday, July 01, 2010
Counting the ways
Here is an hourly bar chart showing day session e-mini trading in the September contract from the beginning of May.
I think the 1000-1010 zone is very strong support and I expect a low here which will end the drop from 1216 on April 26.
The drop from the May 13 high to the May 25 low was 138 points in length. A drop from the 1129 top on June 21 of the same length would end at 991 (blue rectangles). The lower channel line connecting the flash crash low and the May 25 low currently stands near 991 also. The purple dash line at 1006 represents the .382 Fibonacci retracement of the advance from 666 to 1216. The lower green dash line at 1007 is the midpoint between the January 2010 top at 1148 and The July 2009 low at 866. The upper green dash line was the midpoint between 866 and the 1216 top.
For Elliott fans I would point out that the entire drop from 1216 now counts very simply as a flat correction: three waves down to the May 25 low (1032 in the September contract) - three waves up to the June 21 top at 1129 - then a fast "C" wave down to today's low (or maybe a bit lower tomorrow). The market has dropped 11% during the last 9 trading sessions, certainly characteristic of a "C" wave decline. At 1018 the "C=.618 A " target was met. The .382 retracement of the advance from 666 to 1216 (which exhibits a clear five wave structure) offers 1006 as support and the logical end to intermediate degree wave 2 from 666.
My advancing issues oscillators are showing bullish divergences at oversold levels here. Everything is in place for a low that will begin a sustained move up to 1300 and above over the next 9 months.