Wednesday, March 16, 2011

nearing the low of the correction

Here is a daily bar chart showing the June e-mini contract going back to last November.

The market dropped below the low of the first parallel trend line I drew on this chart. In such circumstances I usually draw a second parallel an equal distance below the first one as I have done above. Right now this second parallel is at about 1225. I don't think the ES will drop that low, but it is worth noting that there is also support in the 1215-1225 zone defined by the April 2010 top and the November 2010 top.

The first drop from the February 18 top carried the market down 50 points. It often happens that the end of a downward correction can be predicted by multiplying the size of the first drop by a whole number or a whole number plus 1/2. In this case 100 point drop ( = 2 x 50) would end near 1238 (blue rectangles). So my target zone (green oval) is 1225-1240.

Once this correction is complete I expect to see the start of a strong rally which will carry the ES to 1400 or so.


AG said...

1243. Pretty much 100 points on the dot. Wow. Great job on price target Carl.

Bill said...

Carl, agree with your target in the 1225 - 1240 area. We'll get a good bounce from there, that said I'm not sure the market is going to 1,400. The 1225 - 1240 could be a temporary short term bottom, the market can bounce from there to let's the 1280 - 1290 area and then start another leg down to 1170. Either way I see the market getting a good bounce from support in the 1225 - 1240 area.

Edwin said...

Highest Put/Call ratio and lowest NYSE McClellan Osc. reading since June 24 , due for a nice bounce and this is my short term play.

Long Term play: money debasement as UUP is at all time low.

I appreciate your work.