Guesstimates on January 31

March S&P E-mini Futures: Today's range estimate is 1268-1281. I think the overnight drop below 1267.50 was a terminal shakeout and that the market will soon be heading for 1300 or above. A daily close below 1270.50 would have more bearish implications and suggest a move down to the 50 day moving average will develop first. In any case by the end of April this market will have traded at 1350.

QQQQ: I think the market will rally to 58.50.

TYX (thirty year bond yield): The 30 year bond yield is on its way to 5.40%.

TNX (ten year note yield): The 10 year yield is headed for 4.50%.

Euro-US Dollar: I think the euro will soon begin a move up to 145.00.

Dollar-Yen: A drop into the 78.00 - 79.00 range is underway and I think an important low will form in that zone.

March Crude: I still think crude oil is headed for 50.00. The 91.50 level is strong resistance because it is the midpoint of the 2008 drop from 147.80 to 35.00.

GLD – February Gold: A move to new highs is underway. 1495 is the next upside target. Support is at 1315.

SLV - March Silver: The upside target at 31.00 has been reached but there is still no sign of a top. Next upside target is 36.00. Support is at 25.50.

Google: The 540 level is support. A move that should take GOOG above 700 is underway.

Apple: Has reached the 350 target. Next upside target is 375. Support is at 310.

Guesstimates on January 28

March S&P E-mini Futures: Today's range estimate is 1293-1305. Next resistance above the market is at 1310. The ES has been very resilient in dull, narrow trading at new bull market highs. I also note that the AAII survey of investor sentiment shows the most bearish sentiment since the November low. I think this means that any 50-75 point break will begin from higher levels. In any case by the end of April this market will have traded at 1350.

QQQQ: I think the market will rally to 58.50.

TYX (thirty year bond yield): The 30 year bond yield is on its way to 5.40%.

TNX (ten year note yield): The 10 year yield is headed for 4.50%.

Euro-US Dollar: I think the euro will soon begin a move up to 145.00.

Dollar-Yen: A drop into the 78.00 - 79.00 range is underway and I think an important low will form in that zone.

March Crude: I still think crude oil is headed for 50.00. The 91.50 level is strong resistance because it is the midpoint of the 2008 drop from 147.80 to 35.00.

GLD – February Gold: A move to new highs is underway. 1495 is the next upside target. Support is at 1315.

SLV - March Silver: The upside target at 31.00 has been reached but there is still no sign of a top. Next upside target is 36.00. Support is at 25.50.

Google: The 540 level is support. A move that should take GOOG above 700 is underway.

Apple: Has reached the 350 target. Next upside target is 375. Support is at 310.

Guesstimates on January 27

March S&P E-mini Futures: Today's range estimate is 1288-1299. A daily close below 1267.50 would mean that a drop to or below the 50 day moving average (currently at 1243 cash) has started. In any case by the end of April this market will have traded at 1350.

QQQQ: I think the market will rally to 58.50.

TYX (thirty year bond yield): The 30 year bond yield is on its way to 5.40%.

TNX (ten year note yield): The 10 year yield is headed for 4.50%.

Euro-US Dollar: I think the euro will soon begin a move up to 145.00.

Dollar-Yen: A drop into the 78.00 - 79.00 range is underway and I think an important low will form in that zone.

March Crude: I still think crude oil is headed for 50.00. The 91.50 level is strong resistance because it is the midpoint of the 2008 drop from 147.80 to 35.00.

GLD – February Gold: A move to new highs is underway. 1495 is the next upside target. Support is at 1315.

SLV - March Silver: The upside target at 31.00 has been reached but there is still no sign of a top. Next upside target is 36.00. Support is at 25.50.

Google: The 540 level is support. A move that should take GOOG above 700 is underway.

Apple: Has reached the 350 target. Next upside target is 375. Support is at 310.

Guesstimates on January 26

March S&P E-mini Futures: Today's range estimate is 1286-1298. I still think a drop to 1260 or so is likely. A daily close below 1267.50 would probably mean that a drop to or below the 50 day moving average (currently at 1240 cash) has started. In any case by the end of April this market will have traded at 1350.

QQQQ: I think the market will rally to 58.50.

TYX (thirty year bond yield): The 30 year bond yield is on its way to 5.40%.

TNX (ten year note yield): The 10 year yield is headed for 4.50%.

Euro-US Dollar: I think the euro will soon begin a move up to 145.00.

Dollar-Yen: A drop into the 78.00 - 79.00 range is underway and I think an important low will form in that zone.

March Crude: I still think crude oil is headed for 50.00. The 91.50 level is strong resistance because it is the midpoint of the 2008 drop from 147.80 to 35.00.

GLD – February Gold: A move to new highs is underway. 1495 is the next upside target. Support is at 1315.

SLV - March Silver: The upside target at 31.00 has been reached but there is still no sign of a top. Next upside target is 36.00. Support is at 25.50.

Google: The 540 level is support. A move that should take GOOG above 700 is underway.

Apple: Has reached the 350 target. Next upside target is 375. Support is at 310.

update

Here is a daily chart of the e-mini futures. The market has stalled for the past week at the 1290 level which I had described previously as strong resistance.

A daily close below last week's low at 1267.50 (dash red line) would mean that the ES is headed down to its 50 day moving average (green arrow - currently at 1241 in the cash S&P 500). A drop to 1240 or so would duplicate the November break (blue dash rectangles). And the market there would meet the lower channel line of the bullish trend channel I have drawn.

So the 1240 level should prove to be strong support and currently my best guess is that the ES will trade there before it trades as high as 1305.

Guesstimates on January 25

March S&P E-mini Futures: Today's range estimate is 1275-1286. I think a drop to 1260 or so is likely. A daily close below 1267.50 would probably mean that a drop to or below the 50 day moving average (currently at 1240 cash) has started. In any case by the end of April this market will have traded at 1350.

QQQQ: I think the market will rally to 58.50.

TYX (thirty year bond yield): The 30 year bond yield is on its way to 5.40%.

TNX (ten year note yield): The 10 year yield is headed for 4.50%.

Euro-US Dollar: I think the euro will soon begin a move up to 145.00.

Dollar-Yen: A drop into the 78.00 - 79.00 range is underway and I think an important low will form in that zone.

March Crude: I still think crude oil is headed for 50.00. The 91.50 level is strong resistance because it is the midpoint of the 2008 drop from 147.80 to 35.00.

GLD – February Gold: A move to new highs is underway. 1495 is the next upside target. Support is at 1315.

SLV - March Silver: The upside target at 31.00 has been reached but there is still no sign of a top. Next upside target is 36.00. Support is at 25.50.

Google: The 540 level is support. A move that should take GOOG above 700 is underway.

Apple: Has reached the 350 target. Next upside target is 375. Support is at 310.

Guesstimates on January 24, 2011

March S&P E-mini Futures: Today's range estimate is 1273-1283. I think a drop to 1260 or so is likely before the market rallies all the way back to 1296 or a little higher. Then a break to or below the 50 day moving average (currently at 1238 in cash) will become likely. In any case by the end of April this market will have traded at 1350.

QQQQ: I think the market will rally to 58.50.

TYX (thirty year bond yield): The 30 year bond yield is on its way to 5.40%.

TNX (ten year note yield): The 10 year yield is headed for 4.50%.

Euro-US Dollar: I think the euro will soon begin a move up to 145.00.

Dollar-Yen: A drop into the 78.00 - 79.00 range is underway and I think an important low will form in that zone.

March Crude: I still think crude oil is headed for 50.00. The 91.50 level is strong resistance because it is the midpoint of the 2008 drop from 147.80 to 35.00.

GLD – February Gold: A move to new highs is underway. 1495 is the next upside target.

SLV - March Silver: The upside target at 31.00 has been reached but there is still no sign of a top. Next upside target is 36.00.

Google: The 540 level is support. A move that should take GOOG above 700 is underway.

Apple: Has reached the 350 target. Next upside target is 375. Support is at 310.

QE2

I was asked by a friend what I thought about the US dollar and the Feds policy of quantitative easing (QE2). Here is my e-mail reply:

Catherine:

I think Bernanke did exactly the right thing when he pushed the Fed into QE2. Moreover, at least so far, QE2 is a success. How do I know? First, the dollar index is going down (and I think it has a good shot at 65 - but when QE stops the dollar will rally, and rally big time). Second, the yield on the US 10 year is going up while the tips spreads are pretty much unchanged. This shows the bond market is expecting more economic growth, not more inflation. Third, the US stock market is going up, also reflecting expectations of higher growth.

QE works by inflating asset prices (stocks, commodities, real estate and other real assets) which rise initially because investors re-balance their portfolios after they sell assets to the Fed. But rising asset prices encourage their production (real investment) and also make people more optimistic about the future (more bullish "animal spirits" to borrow Keynes' phrase). These last two effects boost economic growth if there is slack in the economy as there is now.

Carl

Guesstimates on January 21, 2011

March S&P E-mini Futures: Today's range estimate is 1275-1286. I think a drop to 1260 or so is likely before the market rallies all the way back to 1296 or a little higher. In any case by the end of April this market will have traded at 1350.

QQQQ: I think the market will rally to 58.50.

TYX (thirty year bond yield): The 30 year bond yield is on its way to 5.40%.

TNX (ten year note yield): The 10 year yield is headed for 4.50%.

Euro-US Dollar: I think the euro will soon begin a move up to 145.00.

Dollar-Yen: A drop into the 78.00 - 79.00 range is underway and I think an important low will form in that zone.

March Crude: I still think crude oil is headed for 50.00. The 91.50 level is strong resistance because it is the midpoint of the 2008 drop from 147.80 to 35.00.

GLD – February Gold: A move to new highs is underway. 1495 is the next upside target.

SLV - March Silver: The upside target at 31.00 has been reached but there is still no sign of a top. Next upside target is 36.00.

Google: The 540 level is support. A move that should take GOOG above 700 is underway.

Apple: Has reached the 350 target. Next upside target is 375. Support is at 310.

selling pressure

A couple of days ago I explained why I thought the 1290 level would be strong resistance. During the past couple of days sellers have shown up in force and the market has been expanding its daily range as it has dropped. I suspect that that 50-75 point break I have been expecting for the last month has started, but it would take a Friday close below 1258 this week to convince me.

If that break is indeed underway it pays to start thinking about where it might end. There have been two previous reaction since the July 2010 low at 1010 in the cash S&P (daily chart is above this post). The first was about 90 points in length (first dash blue rectangle) and the second about 55 points (first solid blue rectangle). If this reaction turns out to be as long as either of those two preceding ones it would end either at 1245 or at 1205.

This is still a bull market. The average is well above its rising 200 day moving average (wiggly red line). In a bull market substantial reactions typically drop the market to or somewhat below its 50 day moving average which currently stands at 1237 (red arrows).

I have also drawn a doubled trend channel from the July lows (green dash lines). The rally stopped about 10 points shy of the upper channel line which stands now at 1305. A drop to the middle line would end around the 1215 level.

Note that there is support at the November top at 1226 (purple dash line) and at the April 2010 top of 1216. My guess is that the market will have a hard time dropping below either of these levels.

All of these considerations suggest that if this is the break I have been expecting then it will end somewhere in the green target oval I have drawn.

Guesstimates on January 20, 2011

March S&P E-mini Futures: Today's range estimate is 1270-1281. A two or three day reaction to 1265 is underway. By the end of April this market will have traded at 1350.

QQQQ: I think the market will rally to 58.50.

TYX (thirty year bond yield): The 30 year bond yield is on its way to 5.40%.

TNX (ten year note yield): The 10 year yield is headed for 4.50%.

Euro-US Dollar: I think the euro will soon begin a move up to 145.00.

Dollar-Yen: A drop into the 78.00 - 79.00 range is underway and I think an important low will form in that zone.

March Crude: I still think crude oil is headed for 50.00. The 91.50 level is strong resistance because it is the midpoint of the 2008 drop from 147.80 to 35.00.

GLD – February Gold: A move to new highs is underway. 1495 is the next upside target.

SLV - March Silver: The upside target at 31.00 has been reached but there is still no sign of a top. Next upside target is 36.00.

Google: The 540 level is support. A move that should take GOOG above 700 is underway.

Apple: Has just reached the 350 target. The break on the Jobs health news is of little long term significance and was quickly retraced. Next upside target is 375. Support is at 310.

Guesstimates on January 19, 2011

March S&P E-mini Futures: Today's range estimate is 1288-1296. By the end of April this market will have traded at 1350.

QQQQ: I think the market will rally to 58.50.

TYX (thirty year bond yield): The 30 year bond yield is on its way to 5.40%.

TNX (ten year note yield): The 10 year yield is headed for 4.50%.

Euro-US Dollar: I think the euro will soon begin a move up to 145.00.

Dollar-Yen: A drop into the 78.00 - 79.00 range is underway and I think an important low will form in that zone.

February Crude: I still think crude oil is headed for 50.00. The 91.50 level is strong resistance because it is the midpoint of the 2008 drop from 147.80 to 35.00.

GLD – February Gold: A move to new highs is underway. 1495 is the next upside target.

SLV - March Silver: The upside target at 31.00 has been reached but there is still no sign of a top. Next upside target is 36.00.

Google: The 540 level is support. A move that should take GOOG above 700 is underway.

Apple: Has just reached the 350 target. The break on the Jobs health news is of little long term significance and was quickly retraced. Next upside target is 375. Support is at 310.

at strong resistance

Here is a daily chart of the cash S&P 500 going back to the start of the bull market in March 2009. The wavy red line is the 200 day moving average while the wavy blue line is the 50 day moving average.

At its current reading of 1290 the cash S&P is about 280 points above its July 2010 low (last blue rectangle). I think this is important because the last two time the S&P advanced 280 points from a significant low during this bull market the market dropped 90-100 points back to and below its 50 day moving average (first two blue rectangles).

1290 is likely to be strong resistance for two other reasons. First, the midpoint between the May 2008 top at 1442 and the September 2008 low at 837 on the Lehman bankruptcy is at 1289.50 (red arrow). Secondly, the S&P is about 120 points above its November 2010 low. The advance from the July 2010 low halted after it had gone 120 points (purple dash rectangles).

The reasonable inference is that a drop back to or even below the 50 day moving average (green arrows) will begin soon.

Even so, this remains a bull market. Any such drop would be a valuable buying opportunity and would probably be followed by another upswing into the 1350-1400 range.

Guesstimates on January 18, 2011

March S&P E-mini Futures: Today's range estimate is 1282-1294. By the end of April I expect this market will have traded at 1350.

QQQQ: I think the market will rally to 58.50.

TYX (thirty year bond yield): The 30 year bond yield is on its way to 5.40%.

TNX (ten year note yield): The 10 year yield is headed for 4.50%.

Euro-US Dollar: I think the euro will soon begin a move up to 145.00.

Dollar-Yen: A drop into the 78.00 - 79.00 range is underway and I think an important low will form in that zone.

February Crude: I still think crude oil is headed for 50.00. The 91.50 level is strong resistance because it is the midpoint of the 2008 drop from 147.80 to 35.00.

GLD – February Gold: A move to new highs is underway. 1495 is the next upside target.

SLV - March Silver: The upside target at 31.00 has been reached but there is still no sign of a top. Next upside target is 36.00.

Google: The 540 level is support. A move that should take GOOG above 700 is underway.

Apple: Nearly reached the 350 target Friday. The break on the Jobs health news is of little long term significance. Next upside target is 375. Support is at 310.

Guesstimates on January 14, 2011

March S&P E-mini Futures: Today's range estimate is 1270-1280. A small reaction into the 1265-70 range is underway. It would take a drop below 1257 to signal the start of a 50-75 point break. By early April this market will be trading well above 1300.

QQQQ: I think the market will rally to 58.50.

TYX (thirty year bond yield): The 30 year bond yield is on its way to 5.40%.

TNX (ten year note yield): The 10 year yield is headed for 4.50%.

Euro-US Dollar: I think the euro will soon begin a move up to 145.00.

Dollar-Yen: A drop into the 78.00 - 79.00 range is underway and I think an important low will form in that zone.

February Crude: I still think crude oil is headed for 50.00.

GLD – February Gold: A move to new highs is underway. 1495 is the next upside target.

SLV - March Silver: The upside target at 31.00 has been reached but there is still no sign of a top. Next upside target is 36.00.

Google: The 540 level is support. A move that should take GOOG above 700 is underway.

Apple: Should reach 350 (at least) before the bull market ends. Support is at 265.

Guesstimates on January 13, 2011

March S&P E-mini Futures: Today's range estimate is 1277-1287. The top which I saw building in the 1257-77 range was has become temporary support instead because yesterday's day session range was entirely above it. Until some substantial sideways activity again develops the right thing to do is be a buyer on 20 point breaks. By early April this market will be trading well above 1300.

QQQQ: I think the market will rally to 58.50.

TYX (thirty year bond yield): The 30 year bond yield is on its way to 5.40%.

TNX (ten year note yield): The 10 year yield is headed for 4.50%.

Euro-US Dollar: I think the euro will soon begin a move up to 145.00.

Dollar-Yen: A drop into the 78.00 - 79.00 range is underway and I think an important low will form in that zone.

February Crude: I still think crude oil is headed for 50.00.

GLD – February Gold: A move to new highs is underway. 1495 is the next upside target.

SLV - March Silver: The upside target at 31.00 has been reached but there is still no sign of a top. Next upside target is 36.00.

Google: The 540 level is support. A move that should take GOOG above 700 is underway.

Apple: Should reach 350 (at least) before the bull market ends. Support is at 265.

Guesstimates on January 12, 2011

March S&P E-mini Futures: Today's range estimate is 1270-1282. I think a top building process is underway and will be followed by a drop of 50 points. Once it is complete the market will resume its advance to 1300.

QQQQ: I think the market will rally to 58.50.

TYX (thirty year bond yield): The 30 year bond yield is on its way to 5.40%.

TNX (ten year note yield): The 10 year yield is headed for 4.50%.

Euro-US Dollar: I think the euro will soon begin a move up to 145.00.

Dollar-Yen: A drop into the 78.00 - 79.00 range is underway and I think an important low will form in that zone.

February Crude: I still think crude oil is headed for 50.00.

GLD – February Gold: A move to new highs is underway. 1495 is the next upside target.

SLV - March Silver: The upside target at 31.00 has been reached but there is still no sign of a top. Next upside target is 36.00.

Google: The 540 level is support. A move that should take GOOG above 700 is underway.

Apple: Should reach 350 (at least) before the bull market ends. Support is at 265.

bullish sentiment

The lower chart is a weekly line chart going back to mid-2008. It depicts the average of the weekly readings for the percentage of bears divided by the sum of the percentages of bulls plus bears. These percentages are reported by the weekly sentiment surveys conducted by Investors Intelligence and by the American Association of Individual Investors. Low numbers indicate fewer bears and bullish market sentiment. High numbers indicate more bears and bearish market sentiment.

As you can see on this chart market sentiment now is more bullish than at any time during this bull market which started in March of 2009. The average percentage of bears (red wiggly line) recently dropped below the low it had reached at the April 2010 top and it also approached the lower end the of the trend channel i have drawn.

Bullish sentiment by itself will not kill a rally. But as you can see on the upper chart, the market's technical condition is also relatively weak. This chart is the 10 day moving average of the number of issues which advance in price on the New York Stock Exchange. Its current reading (second blue arrow) is below the reading of early November 2010 (purple dash arrow) when the S&P was trading around the 1225 level. Currently the S&P is around 1275. The current reading is also below the level reached at the April 2010 top (first blue arrow).

These facts lead me to believe that this market is due for a break, probably of 50 points in the S&P, possibly a little more. Such a drop would produce an oversold condition by sending the 10 day moving average of advancing issues down to the dark green horizontal line on the chart. This in turn would set up a rally to an April top somewhere above the 1300 level.

Guesstimates on January 11, 2011

March S&P E-mini Futures: Today's range estimate is 1266-1277. I think a top building process is underway and will be followed by a drop of 50 points. Once it is complete the market will resume its advance to 1300.

QQQQ: Next upside target at 55.00 has been reached. After a brief reaction I think the market will rally to 58.50.

TYX (thirty year bond yield): The 30 year bond yield is on its way to 5.40%.

TNX (ten year note yield): The 10 year yield is headed for 4.50%.

Euro-US Dollar: I think the euro will soon begin a move up to 145.00.

Dollar-Yen: A drop into the 78.00 - 79.00 range is underway and I think an important low will form in that zone.

February Crude: I still think crude oil is headed for 50.00.

GLD – February Gold: A move to new highs is underway. 1495 is the next upside target.

SLV - March Silver: The upside target at 31.00 has been reached but there is still no sign of a top. Next upside target is 36.00.

Google: The 540 level is support. A move that should take GOOG above 700 is underway.

Apple: Should reach 350 (at least) before the bull market ends. Support is at 265.

Guesstimates on January 10. 2011

March S&P E-mini Futures: Today's range estimate is 1251-1265. I think a top building process is underway and will be followed by a drop of 50 points. Once it is complete the market will resume its advance to 1300.

QQQQ: Next upside target at 55.00 has been reached. After a brief reaction I think the market will rally to 58.50.

TYX (thirty year bond yield): The 30 year bond yield is on its way to 5.40%.

TNX (ten year note yield): The 10 year yield is headed for 4.50%.

Euro-US Dollar: I think the euro will soon begin a move up to 145.00.

Dollar-Yen: A drop into the 78.00 - 79.00 range is underway and I think an important low will form in that zone.

February Crude: I still think crude oil is headed for 50.00.

GLD – February Gold: A move to new highs is underway. 1495 is the next upside target.

SLV - March Silver: The upside target at 31.00 has been reached but there is still no sign of a top. Next upside target is 36.00.

Google: The 540 level is support. A move that should take GOOG above 700 is underway.

Apple: Should reach 350 (at least) before the bull market ends. Support is at 265.

Guesstimates on January 7, 2011

March S&P E-mini Futures: Today's range estimate is 1260-1272. I think a top building process is underway and will be followed by a drop of 50 points. Once it is complete the market will resume its advance to 1300.

QQQQ: Next upside target at 55.00 has been reached. After a brief reaction I think the market will rally to 58.50.

TYX (thirty year bond yield): The 30 year bond yield is on its way to 5.40%.

TNX (ten year note yield): The 10 year yield is headed for 4.50%.

Euro-US Dollar: I think the euro will be supported near 130 and from there will move up to 145.00.

Dollar-Yen: A drop into the 78.00 - 79.00 range is underway and I think an important low will form in that zone.

February Crude: I still think crude oil is headed for 50.00.

GLD – February Gold: A move to new highs is underway. 1495 is the next upside target.

SLV - March Silver: The upside target at 31.00 has been reached but there is still no sign of a top. Next upside target is 36.00.

Google: The 540 level is support. A move that should take GOOG above 700 is underway.

Apple: Should reach 350 (at least) before the bull market ends. Support is at 265.

Guesstimates on January 6, 2011

March S&P E-mini Futures: Today's range estimate is 1265-1278. I think a top building process is underway and will be followed by a drop of 50 points. Once it is complete the market will resume its advance to 1300.

QQQQ: Next upside target at 55.00 has been reached. After a brief reaction I think the market will rally to 58.50.

TYX (thirty year bond yield): The 30 year bond yield is on its way to 5.40%.

TNX (ten year note yield): The 10 year yield is headed for 4.50%.

Euro-US Dollar: I think the euro will be supported near 130 and from there will move up to 145.00.

Dollar-Yen: A drop into the 78.00 - 79.00 range is underway and I think an important low will form in that zone.

February Crude: I still think crude oil is headed for 50.00.

GLD – February Gold: A move to new highs is underway. 1495 is the next upside target.

SLV - March Silver: The upside target at 31.00 has been reached but there is still no sign of a top. Next upside target is 36.00.

Google: The 540 level is support. A move that should take GOOG above 700 is underway.

Apple: Should reach 350 (at least) before the bull market ends. Support is at 265.

Guesstimates on January 5, 2011

March S&P E-mini Futures: Today's range estimate is 1252-1264. I think a top building process is underway and will be followed by a drop of 50 points. Once it is complete the market will resume its advance to 1300.

QQQQ: Next upside target at 55.00 has been reached. After a brief reaction I think the market will rally to 58.50.

TYX (thirty year bond yield): The 30 year bond yield is on its way to 5.40%.

TNX (ten year note yield): The 10 year yield is headed for 4.50%.

Euro-US Dollar: I think the euro will be supported near 130 and from there will move up to 145.00.

Dollar-Yen: A drop into the 78.00 - 79.00 range is underway and I think an important low will form in that zone.

February Crude: I still think crude oil is headed for 50.00.

GLD – February Gold: A move to new highs is underway. 1495 is the next upside target.

SLV - March Silver: The upside target at 31.00 has been reached but there is still no sign of a top. Next upside target is 36.00.

Google: The 540 level is support. A move that should take GOOG above 700 is underway.

Apple: Should reach 350 (at least) before the bull market ends. Support is at 265.

short term top then 50 point break

Here is a 30 minute bar chart showing day session e-mini trading for the past two weeks.

I think the rally to yesterday's 1272.50 high was climactic and marked the start of a trading range that will culminate in a 50 point break. This initial drop from that top will probably end near the lower channel line of the bullish trend channel I have drawn. This target area (green oval) is just below support defined by the last short term top at 1258.50 (red dash line). It is also a shade lower that the length of a reaction which would match the size of the last reaction (blue dotted rectangle).

As you know I expect the S&P to rally above the 1300 level by early April. That is when the top of the domed house formation is due. At the moment my best guess for that top level is 1350.

Guesstimates on January 4, 2011

March S&P E-mini Futures: Today's range estimate is 1265-12745. Short term support is now at 1255. I think a top building process is underway and will be followed by a drop of 50 points. Once it is complete the market will resume its advance to 1300.

QQQQ: Next upside target at 55.00 has been reached. After a brief reaction I think the market will rally to 58.50.

TYX (thirty year bond yield): The 30 year bond yield is on its way to 5.40%.

TNX (ten year note yield): The 10 year yield is headed for 4.50%.

Euro-US Dollar: I think the euro will be supported near 130 and from there will move up to 145.00.

Dollar-Yen: A drop into the 78.00 - 79.00 range is underway and I think an important low will form in that zone.

February Crude: I still think crude oil is headed for 50.00.

GLD – February Gold: A move to new highs is underway. 1495 is the next upside target.

SLV - March Silver: The upside target at 31.00 has been reached but there is still no sign of a top. Next upside target is 36.00.

Google: The 540 level is support. A move that should take GOOG above 700 is underway.

Apple: Should reach 350 (at least) before the bull market ends. Support is at 265.

Guesstimates on January 3, 2011

March S&P E-mini Futures: Today's range estimate is 1255-1265. Short term support remains at 1237. I think a top building process is underway and will be followed by a drop of 50-75 points. Once it is complete the market will resume its advance to 1300.

QQQQ: Next upside target is at 55.00 and has nearly been reached.

TYX (thirty year bond yield): The 30 year bond yield is on its way to 5.40%.

TNX (ten year note yield): The 10 year yield is headed for 4.50%.

Euro-US Dollar: I think the euro will be supported near 130 and from there will move up to 145.00.

Dollar-Yen: A drop into the 78.00 - 79.00 range is underway and I think an important low will form in that zone.

February Crude: I still think crude oil is headed for 50.00.

GLD – February Gold: A move to new highs is underway. 1495 is the next upside target.

SLV - March Silver: The upside target at 31.00 has been reached but there is still no sign of a top. Next upside target is 36.00.

Google: The 540 level is support. A move that should take GOOG above 700 is underway.

Apple: Should reach 350 (at least) before the bull market ends. Support is at 265.