Tuesday, June 07, 2011


Here is the updated version of the daily bar chart of the June e-minis which I discussed last week.

As you can see the market has dropped into the strong support zone which I had highlighted in that post. The next development should be a rally to 1340 or so which would represent the fourth wave of a five wave consolidation triangle (thinner purple lines). A subsequent break of 30-40 points down to the lower edge of the bullish trend channel I have drawn should complete the consolidation.

I think this triangle will be resolved by an upside breakout which should bring the ES at least to the 1440 level. I should point out that the bearish sentiment revealed by the put-call numbers is as high or higher than it was at last year's July and August low points. Those lows were followed by a 370 point advance in the ES. A similar rally now would put the ES above the 1600 level.


Bill said...

Excellent, Carl. A bold prediction on your part. Everything I read on CNBC or marketwatch is whether the 200 day moving average at 1261 will hold or the Fukushima 1249 March low will hold. Then 1185is the next key support. Market analysts have turned overwhelmingly bearish. This time you are a true contrarian, faith in the stock market is gone. Particularly because economic growth is slowly disappearing and also because QE3 is pretty much ruled out (the Fed is afraid of creating inflation this time around).

Edwin said...

Mean reversion is a powerful rule on Wall Street and it works until it doesn't.

We are oversold but it can stay oversold for a bit longer.

I like the fact that ppl are getting bearish and anxious. Yet, looking at many sectors like the PM miners, I get the sense that there is an urgency to sell.

Adsense said...

Interesting day today
the 10 day moving average on the daily advancers minus decliners on the nyse turned up even though the market averages closed down .
the 10 day trin closed yesterday
at 1.749 which is into the extreme
readings historically and today closed at 1.597 which implies buying the dip today dispite the down day .the 14 day rsi on the dow closed at 33.26 and typically a close below 30 is considered oversold .up volume minud down volume was slightly positive today on the nyse. i cannot label today a bottom though . typically the adv decline line turns first followed by the rsi followed by other indicators the trend line
from the nov 29 2010 low to the march 16th low crosses through tomorrow at 12045 + - . today was 25 tradings days down from the peak
1275 is where this decline would equal the point move down from feb to march. interesting note yet not sure if it works . the decline from feb to march lasted 121 trading hours , as of todays close
this market has been down 180 trading hours . if the market makes a low ( 1275 or otherwise )surrounding the first 1 1/2 hours
of trading tomorrow . there is a case to be made that we equaled the decline in terms of points yet it took 50 percent longer to get there . 121 * 1.50 = 181.5 trading hours from the may 2 high . in terms of trading days the feb march decline was 17 trade days
25 trade days down so far / 17
equals 1.47. 1.5 times 17 equals
25 1/2 trade days . hence if there is a low to be made in the first half of the day tomorrow it may relate to the feb march decline in terms of 1.50 % of time and possibly 100 percent in terms of points moved down .
bottom line : 12040.19 on the dow and 1275.56-1273.72 on the cash spx will be important and most likely will bring a bounce in the market .june 15-17th should be a swing high ??? ill stick to it untill proven wrong even if it is begining to look like a low

Carl said...

Please explain better why you think the market has to go up to 1450
I don't understand much your belief
Earnings have topped out. Economy is on the verge of a double dip recession
The Fed has failed with QE
China slowdown, Debt problems in all the world, employment situation horrible in the US: 9 millions jobs lost in 2008/2009 recovered only 1 million
This is happening now
What do you think?

I_Got_Prechterized said...

what happened to the 3PDH?

Jeff said...


I can't see how with your intelligence you think the market will rally higher. This is just not going to happen. We will remain in a slide through early July. Yes we will get a relief rally but that will be lucky to make it above 1305.00. JMHO.