Wednesday, May 04, 2011
Here is an hourly bar chart showing e-mini trading going back to the March 17 low at 1241.25. I think the market is in a corrective phase which will probably last about two weeks. The ES has dropped to support at its February top of 1338 (horizontal green dotted line). This makes me think that a rally of 2-3 days is now likely to develop and carry the ES up 25 points or so. But most corrections have two distinct down phases. The second down phase of this one will probably carry the market to 1327 or so where the entire drop from 1373 would equal the size of the April break which ended at 1290 (blue dash rectangles). That 1327 support level will also be close to the lower channel line of the trend channel I have drawn in about a week or so.
I have no reason to think this break is anything but a normal corrections within a bull market. Once it is complete the ES should resume its move to prices well above 1400.