Jumbled

Here is a thirty minute bar chart showing 24 hour e-mini trading. I always try to follow the market's trend as indicated by unusual activity (high volume and/or uncorrected price movements). I also try to follow the trend as indicated by sequences of successively higher or successively lower trading areas (blue rectangles).

After the housing number came out at 10am this morning the e-minis pulled a high volume, u-turn that broke the market out of its overnight trading range (last blue rectangle). This action forced me out of my long position even though the bottom of my range estimate was 1085. The reason I ignored the range estimate is that the high volume selling started at almost exactly the same price as Wednesdays high volume selling (red arrows). I figured that the same sellers were at work. The big uncertainty now is just how much ammunition they have left in their clip.

I still think that the odds favor the market heading for 1120 instead of for 1050. The critical line of support I am watching is the midpoint of yesterday's range (green dash line). If the market holds it I will try to get long later today or on Monday.

sold long unit at 1085.50

long one unit at 1089.75

Guesstimates on October 23, 2009

December S&P E-mini Futures: Today's day session range estimate is 1085-1100. The market is now on its way to 1120.

QQQ: Support is at 42.30. Next upside target is 45.00.

TYX (thirty year bond yield): I think this market has begun a move to 5.00%.

TNX (ten year note yield): I think that the market has begun a swing up to 4.30%.

Euro-US Dollar: I think a sustained drop to below 120 is about to start.

Dollar-Yen: I think the 87.13 low will hold and that the yen will soon begin a move to 105.00.

December Crude: I think that crude is headed down to 50.00. Resistance is now at 81.00.

GLD – December Gold: The market will probably keep going until it reaches 1120. Support is at 1000.

SLV - December Silver: Continuation up to 1900 is likely.

Google: Upside target is 550 has been reached. Support is now at 490. Next step upward will carry to 610.

Headed for 1120

Moment of truth

Here is a 30 minute bar chart of day session e-mini trading. The market has rallied more than would be normal after a supply shock like yesterday's last hour break. Even so, I want to give the bearish case a little leeway. I am leaning on the midpoint of yesterday's range at 1085.50 (purple dotted line) and on the upper channel line of the bearish trend channel I have drawn. Any strength above the red resistance oval I have drawn will mean that the market is headed for 1120, not 1050.

covered second unit at 1080.00

covered one unit at 1079.75

Short second unit at 1075.50

Supply shock

Here is an hourly chart showing day session e-mini trading. After yesterday's close I had a chance to reevaluate the market's action. The last hour break now looks like a clearly defined supply shock (blue oval and arrow). As such it should not be significantly retraced, and I think the 1080 level will act as resistance for the rest of the move down.

How low will we go? During the move up from the early July low at 866 there have been three significant breaks of 40, 47, and 63 points. The average is 50 points. A break of this size from the 1099 electronic high would carry the market down to 1049 (purple rectangle). I expect this down move to last a week or so. By the time the low develops I think the rising lower channel line (green dashes) will have moved up to also provide support near 1050.

I think this initial break will find initial support in the 1060-65 range from which zone a rally to 1080 or so should develop. After that the final break to 1050 or so becomes likely. (purple arrows).

Short one unit at 1079.00

Guesstimates on October 22, 2009

December S&P E-mini Futures: Today's day session range estimate is 1065-1080. I now think the drop from yesterday's high will carry the e-minis down to 1050 or so over the next few days. I am still expecting a rally to 1120 or higher after this break ends.

QQQ: Support is at 42.30. Next upside target is 45.00.

TYX (thirty year bond yield): I think this market has begun a move to 5.00%.

TNX (ten year note yield): I think that the market has begun a swing up to 4.30%.

Euro-US Dollar: I think a sustained drop to below 120 is about to start.

Dollar-Yen: I think the 87.13 low will hold and that the yen will soon begin a move to 105.00.

December Crude: I think that crude is headed down to 50.00. Resistance is now at 81.00.

GLD – December Gold: The market will probably keep going until it reaches 1120. Support is at 1000.

SLV - December Silver: Continuation up to 1900 is likely.

Google: Upside target is 550 has been reached. Support is now at 490. Next step upward will carry to 610.

Late Break

The e-minis dropped more than 20 points during the last hour of trading. The market dropped a couple of points past support defined by the last top at 1075.75. However, I think we are not far from the low of this reaction. My best guess is that it will develop near 1066 sometime tomorrow.

sold other unit at 1092.50

sold one unit at 1092.00

Long second unit at 1094.00

Long one unit at 1093.00

Guesstimates on October 21, 2009

December S&P E-mini Futures: Today's day session range estimate is 1075-1090. The market should reach 1120 by the end of the month.

QQQ: Next upside target is 45.00.

TYX (thirty year bond yield): I think this market has begun a move to 5.00%.

TNX (ten year note yield): I think that the market has begun a swing up to 4.30%.

Euro-US Dollar: I think a sustained drop to below 120 is about to start.

Dollar-Yen: I think the 87.13 low will hold and that the yen will soon begin a move to 105.00.

December Crude: I think that crude is headed down to 50.00. Resistance is now at 81.00.

GLD – December Gold: Almost at 1070 but market will probably keep going until it reaches 1120. Support is at 1000.

SLV - December Silver: Continuation up to 1900 is likely.

Google: Upside target is 550 has been reached. Support is now at 490. Next step upward will carry to 610.

Update

Here is an hourly chart of day session e-mini trading. This morning I thought that the market would hold support at 1087 and rally into the 1100-05 range. Instead it has dropped to within few points of the low of the trading range of the past 5 days.

The September top at 1076 (horizontal dash green line) should prove to be strong support. It coincides with the low of the recent trading range. So far the e-minis have dropped from yesterday's day session high by an amount just about equal to the size of the last reaction on the way up from the October 2 low (purple rectangles). I expect to see a reaction low in the 1075-80 range (green oval) which should be followed by a rally to roughly the 1110 level.

sold both units at 1086.00

Repurchased one unit at 1090.00

sold one unit at 1089.25

Long second unit at 1091.75

Long one unit at 1092.00

Guesstimates on October 20, 2009

December S&P E-mini Futures: Today's day session range estimate is 1087-1103. The market should reach 1120 by the end of the month.

QQQ: Next upside target is 45.00.

TYX (thirty year bond yield): I think this market has begun a move to 5.00%.

TNX (ten year note yield): I think that the market has begun a swing up to 4.30%.

Euro-US Dollar: I think a sustained drop to below 120 is about to start.

Dollar-Yen: I think the 87.13 low will hold and that the yen will soon begin a move to 105.00.

December Crude: I think that crude is headed down to 50.00. Resistance at 76.00 has been broken but not by much.

GLD – December Gold: Almost at 1070 but market will probably keep going until it reaches 1120. Support is at 1000.

SLV - December Silver: Continuation up to 1900 is likely.

Google: Upside target is 550 has been reached. Support is now at 490. Next step upward will carry to 610.

Why I got out

I sold my long position at 1095.25 a few minutes ago because the market has traded sideways in a narrow range right at its previous high of 1095.50 (electronic early last Friday). This was too much hesitation at a key level for my taste, so I got out. Better safe than sorry.

sold both units at 1095.25

Update

Here is an hourly chart showing day session e-mini trading. When the market broke out above Friday's day session high of 1088.25 after today's pit open I decided that the early morning low of 1076.75 ended the drop from Friday's electronic high of 1095.50.

My upside target (purple oval) sits between two upper channel lines (green dash lines) in the 1100-05 zone.

I think it likely that the next several trading sessions will see a lot of up and down activity without a lot of net progress past 1105. For the moment support beneath the market stands at the midpoint of the last reaction, near 1086 (purple dotted line).

I expect the e-minis to reach the 1120 level by the end of the month.

Reporting your own trades

Some of my loyal readers want to report their trades in the comments section of this blog.

I have decided to adopt a policy of not publishing such trade reports. My main reason is that such trade reporting just obscures my own message about market direction as it appears in my real time trade posts and analyses on this blog.

I still want to encourage you to tell us of your market views in the comments section. Just not your trades.

Bought second unit at 1090.00

Long one unit at 1089.00 - headed for 1105

Guesstimates on October 19, 2009

December S&P E-mini Futures: A drop into the 1065-75 range is underway. Today's day session range estimate is again 1075-1090. The market should reach 1120 by the end of the month.

QQQ: Next upside target is 45.00.

TYX (thirty year bond yield): I think this market has begun a move to 5.00%.

TNX (ten year note yield): I think that the market has begun a swing up to 4.30%.

Euro-US Dollar: I think a sustained drop to below 120 is about to start.

Dollar-Yen: I think the 87.13 low will hold and that the yen will soon begin a move to 105.00.

December Crude: I think that crude is headed down to 50.00. Resistance at 76.00 has been broken but not by much.

GLD – December Gold: Almost at 1070 but market will probably keep going until it reaches 1120. Support is at 1000.

SLV - December Silver: Continuation up to 1900 is likely.

Google: Upside target is 550 has been reached. Support is now at 490. Next step upward will carry to 610.

Update

Here is an hourly chart of day session e-mini trading. The market has rallied off its morning lows but I am guessing that it will halt near 1087-88 and then put in another leg down to a low early next week (declining red channel). Midpoint support stands near 1070 (purple dotted line).

One this reaction is complete I think the e-minis will move above the 1100 level, reaching 1120 by the end of the month.

Guesstimates on October 16, 2009

December S&P E-mini Futures: A drop into the 1065-75 range is underway. [Today's day session range estimate is again 1075-1090. The market should reach 1120 by the end of the month.

QQQ: Next upside target is 45.00.

TYX (thirty year bond yield): Yields have dropped more than I expected. Still I think this market has a good chance of holding the 3.90 yield zone and then starting a move to 5.00%.

TNX (ten year note yield): The 10 year yield has dropped more than I expected. Still, I think that the 3.10% level will provide support and that the market will soon begin a swing up to 4.30%.

Euro-US Dollar: I think a sustained drop to below 120 is about to start.

Dollar-Yen: I think the 87.13 low will hold and that the yen will soon begin a move to 105.00.

November Crude: I think that crude is headed down to 50.00. Resistance at 76.00 has been broken but not by much.

GLD – December Gold: Almost at 1070 but market will probably keep going until it reaches 1120. Support is at 1000.

SLV - December Silver: Continuation up to 1900 is likely.

Google: Next upside target is 550 has nearly been reached. Support is now at 490.

A new bull market in NYX - the New York Stock Exchange

Here is my latest post on "The Art of Contrarian Trading".

Some observations

Trading in the e-minis has been quite subdued today. I am guessing that the market is waiting for Google's earnings announcement after today's close. If so, once the number comes out I think the market will sell off. Even if Google's earnings are better than expected a fair number of traders will think the good news is a chance to take profits.

I think the day session low at 1083 will hold for the rest of the session. I am guessing that the market will rally into the 1090-95 range by the close. But I still think a 20-30 point break lies just ahead.

Guesstimates on October 15, 2009

December S&P E-mini Futures: Today's day session range estimate is again 1075-1090. A move to 1120 is underway.

QQQ: Next upside target is 45.00.

TYX (thirty year bond yield): Yields have dropped more than I expected. Still I think this market has a good chance of holding the 3.90 yield zone and then starting a move to 5.00%.

TNX (ten year note yield): The 10 year yield has dropped more than I expected. Still, I think that the 3.10% level will provide support and that the market will soon begin a swing up to 4.30%.

Euro-US Dollar: I think a sustained drop to below 120 is about to start.

Dollar-Yen: I think the 87.13 low will hold and that the yen will soon begin a move to 105.00.

November Crude: I now think that crude is headed down to 50.00. Resistance is at 76.00.

GLD – December Gold: Almost at 1070 but market will probably keep going until it reaches 1120. Support is at 1000.

SLV - December Silver: Continuation up to 1900 is likely.

Google: Support is at 450. Next upside target is 550.

At resistance

Here is an hourly bar chart of day session e-mini trading. The market has rallied to a level just below midpoint resistance at 1091 and to within just a few points of the top of its bullish trend channel. Since the e-minis have rallied for nearly two weeks without much of an interruption I think a break of 20-30 points is likely to start soon. I do think that midpoint support near 1070 (purple dotted line) is likely to stop any such reaction. I also believe that the e-minis have a good chance of reaching 1120 by the end of the month.

sold all longs at 1083.25

Dollar is scraping bottom

Check out my latest post on "The Art of Contrarian Trading".

Long second unit at 1080.25

Long one unit at 1079.50

Guesstimates on October 14, 2009

December S&P E-mini Futures: Today's day session range estimate is 1075-1090. A move to 1120 is underway.

QQQ: Next upside target is 45.00.

TYX (thirty year bond yield): Yields have dropped more than I expected. Still I think this market has a good chance of holding the 3.90 yield zone and then starting a move to 5.00%.

TNX (ten year note yield): The 10 year yield has dropped more than I expected. Still, I think that the 3.10% level will provide support and that the market will soon begin a swing up to 4.30%.

Euro-US Dollar: I think a sustained drop to below 120 is about to start.

Dollar-Yen: I think the 87.13 low will hold and that the yen will soon begin a move to 105.00.

November Crude: I now think that crude is headed down to 50.00. Resistance is at 76.00.

GLD – December Gold: Almost at 1070 but market will probably keep going until it reaches 1120. Support is at 1000.

SLV - December Silver: Continuation up to 1900 is likely.

Google: Support is at 450. Next upside target is 550.

sold second unit at 1069.50 - now flat

sold one unit at 1068.50

Long second unit at 1070.00

At support

Here is a 60 minute chart of day session e-mini trading. This morning the market has dropped to midpoint support (purple dotted line) while putting in a reaction just as big as the biggest preceding reaction within the rally from the October 2 low (purple rectangles). I think the e-minis will stabilize here and later today or tomorrow begin a rally. This next swing upward should carry the market to the top of the bullish trend channel and midpoint resistance near 1092.

Long one unit at 1069.50

Guesstimates on October 13, 2009

December S&P E-mini Futures: Today's day session range estimate is again 1065-1080. A move to 1120 is underway.

QQQ: Next upside target is 45.00.

TYX (thirty year bond yield): Yields have dropped more than I expected. Still I think this market has a good chance of holding the 3.90 yield zone and then starting a move to 5.00%.

TNX (ten year note yield): The 10 year yield has dropped more than I expected. Still, I think that the 3.10% level will provide support and that the market will soon begin a swing up to 4.30%.

Euro-US Dollar: I think a sustained drop to below 120 is about to start.

Dollar-Yen: I think the 87.13 low will hold and that the yen will soon begin a move to 105.00.

November Crude: I now think that crude is headed down to 50.00. Resistance is at 76.00.

GLD – December Gold: Almost at 1070 but market will probably keep going until it reaches 1120. Support is at 1000.

SLV - December Silver: Continuation up to 1900 is likely.

Google: Support is at 450. Next upside target is 550.

Shanghai Update

I just posted an update on the Chinese stock market on "The Art of Contrarian Trading".

Climbing the Wall of Worry

Check out my latest post on "The Art of Contrarian Trading".

Guesstimates on October 12, 2009

December S&P E-mini Futures: Today's day session range estimate is 1065-1080. A move to 1120 is underway.

QQQ: Next upside target is 45.00.

TYX (thirty year bond yield): Yields have dropped more than I expected. Still I think this market has a good chance of holding the 3.90 yield zone and then starting a move to 5.00%.

TNX (ten year note yield): The 10 year yield has dropped more than I expected. Still, I think that the 3.10% level will provide support and that the market will soon begin a swing up to 4.30%.

Euro-US Dollar: I think a sustained drop to below 120 is about to start.

Dollar-Yen: I think the 87.13 low will hold and that the yen will soon begin a move to 105.00.

November Crude: I now think that crude is headed down to 50.00. Resistance is at 76.00.

GLD – December Gold: Still expecting 1070. Support is at 970.

SLV - December Silver: Continuation up to 1900 is likely.

Google: Support is at 450. Next upside target is 550.

sold long unit at 1066.00

Long one unit at 1063.00

Guesstimates on October 9, 2009

December S&P E-mini Futures: Today's day session range estimate is 1053-1070. A move to 1120 is underway.

QQQ: Next upside target is 45.00.

TYX (thirty year bond yield): Yields have dropped more than I expected. Still I think this market has a good chance of holding the 3.90 yield zone and then starting a move to 5.00%.

TNX (ten year note yield): The 10 year yield has dropped more than I expected. Still, I think that the 3.10% level will provide support and that the market will soon begin a swing up to 4.30%.

Euro-US Dollar: I think a sustained drop to below 120 is about to start.

Dollar-Yen: I think the 87.13 low will hold and that the yen will soon begin a move to 105.00.

November Crude: I now think that crude is headed down to 50.00. Resistance is at 76.00.

GLD – December Gold: Still expecting 1070. Support is at 970.

SLV - December Silver: Continuation up to 1900 is likely.

Google: Support is at 450. Next upside target is 550.

sold both units at 1062.25

Update

Here is an hourly chart of day session e-mini trading. A move up to 1120 is underway. I think the first significant reaction (20-30 points) will start from the confluence of midpoint resistance at 1092 (red dash line) and the upper bullish channel line.

Meantime there is midpoint support at 1050 (purple dotted line). The biggest reaction on the way up from Friday's low has been about 14 points. If a drop from today's high of that size were to develop it would take the market down to 1052. Obviously, the fact that I am currently long a full position means that I do not expect a reaction of that size today, but I do think a 13-15 point break from the 1075-80 zone is more likely than not.

Long second unit at 1059.00

Long one unit at 1059.50

Guesstimates on October 8, 2009

December S&P E-mini Futures: Today's day session range estimate is 1056-1075. A move to 1120 is underway.

QQQ: Next upside target is 45.00.

TYX (thirty year bond yield): Yields have dropped more than I expected. Still I think this market has a good chance of holding the 3.90 yield zone and then starting a move to 5.00%.

TNX (ten year note yield): The 10 year yield has dropped more than I expected. Still, I think that the 3.10% level will provide support and that the market will soon begin a swing up to 4.30%.

Euro-US Dollar: I think a sustained drop to below 120 is about to start.

Dollar-Yen: I think the 87.13 low will hold and that the yen will soon begin a move to 105.00.

November Crude: I now think that crude is headed down to 50.00. Resistance is at 76.00.

GLD – December Gold: Still expecting 1070. Support is at 970.

SLV - December Silver: Continuation up to 1900 is likely.

Google: Upside target at 500 has been reached. Support is at 450. Next upside target is 550.

sold second unit at 1053.00 - now flat

Update

Here is an hourly chart of day session e-mini trading. The market has been stuck in a 14 point range for the past two days and right now is trading right in the middle of that range. My best guess is that the next move from here will be upward to 1060 and higher. But if I am wrong about that the worst I see on the downside is a break to 1035 or so (lower horizontal dash line) which is support from a previous low and would also be near the lower boundary of the small, bearish trend channel I have drawn.

In either case I think that the market will soon rally to the top of the bullish channel on this chart and reach midpoint resistance at 1092. I am still looking for a move to 1120 during the next few weeks.

sold one unit at 1048.00

Long second unit at 1052.50

Long one unit at 1049.25

Guesstimates on October 7, 2009

December S&P E-mini Futures: Today's day session range estimate is 1042-1060. A move to 1120 is underway.

QQQ: Next upside target is 45.00.

TYX (thirty year bond yield): Yields have dropped more than I expected. Still I think this market has a good chance of holding the 3.90 yield zone and then starting a move to 5.00%.

TNX (ten year note yield): The 10 year yield has dropped more than I expected. Still, I think that the 3.10% level will provide support and that the market will soon begin a swing up to 4.30%.

Euro-US Dollar: I think a sustained drop to below 120 is about to start.

Dollar-Yen: I think the 87.13 low will hold and that the yen will soon begin a move to 105.00.

November Crude: I now think that crude is headed down to 50.00. Resistance is at 76.00.

GLD – December Gold: Still expecting a move to 1070. Support is at 970.

SLV - December Silver: Continuation up to 1900 is likely.

Google: Upside target at 500 has been reached. Support is at 450. Next upside target is 550.

I plan to reestablish longs in 1040-45 zone

sold long unit at 1049.25

Long one unit at 1049.25

Update

Here is an hourly chart of day session e-mini trading. The market has moved substantially higher today from the pit open. The rally which started from yesterday's low at 1021 has been 35 points with only a few 3 or 4 point reactions. Volume has not been substantial, but the uncorrected up swing is in my opinion definitive. This is a decisive rejection of prices below the low at 1035 (horizontal green dotted line). The implication is that a strong up swing has begun and that the market is headed for 1120. Meantime the 1035 level will now act as support.

I think that a reaction of 8-12 points is likely to develop from today's high (so far) at 1056.75. But I don't think we'll see a break of as much as 20 points until the e-minis reach the top of the bullish trend channel I have drawn. The 1092 level is midpoint resistance and is a good point from which to expect a drop of 20-25 points.

Guesstimates on October 6, 2009

December S&P E-mini Futures: Today's day session range estimate is 1035-1050. A move to 1120 is underway.

QQQ: Next upside target is 45.00.

TYX (thirty year bond yield): Yields have dropped more than I expected. Still I think this market has a good chance of holding the 3.90 yield zone and then starting a move to 5.00%.

TNX (ten year note yield): The 10 year yield has dropped more than I expected. Still, I think that the 3.10% level will provide support and that the market will soon begin a swing up to 4.30%.

Euro-US Dollar: I think a sustained drop to below 120 is about to start.

Dollar-Yen: I think the 87.13 low will hold and that the yen will soon begin a move to 105.00.

November Crude: I now think that crude is headed down to 50.00. Resistance is at 76.00.

GLD – December Gold: Still expecting a move to 1070. Support is at 970.

SLV - December Silver: Continuation up to 1900 is likely.

Google: Upside target at 500 has been reached. Support is at 450. Next upside target is 550.

Afternoon update

Here is a five minute bar chart of day session e-mini trading. The market has broken out above resistance at 1035 (horizontal red dash line) and did so on a pretty good volume burst (green oval). This is a bullish sign and means that reactions are likely to be limited to 10 points or so as the market rallies toward the September 23 top at 1075.

I expect to see hesitation and a reaction from the 1042 level (purple solid line) at which point the rally will equal the size of the biggest previous rally on the way down from 1075. But a reaction from 1042 will probably only match today's early reaction in size (purple rectangles), bringing the market down to support at a reaction midpoint and a previous top (purple dotted line).

Update

Here is an hourly bar chart of day session e-mini trading. I think that Friday's early morning low at 1012 (not shown on this chart of day session trading) ended the drop from the 1075 top on September 23. I think the market has started an up swing that will take it to 1120 over the next few weeks.

Even so, the price and volume action today has not yet shown either a demand shock or a fast rejection of the day's low. Consequently I think that the market will probably bounce off of the 1035 level and drop back down into the original target zone of 1015-20. The 1035 level is resistance defined by the last significant low (horizontal red dash line) and the upper line of the rising blue dotted trend channel of the past two days.

Should we instead see strength on good volume above the 1035 level I would conclude that the market will continue upward with reactions amounting only to 8-10 points.

sold both units at 1029.00

Bought second unit at 1028.00

Long one unit at 1024.25

Guesstimates on October 5, 2009

December S&P E-mini Futures: Today's day session range estimate is 1020-1033. The e-minis dropped into the 1015-20 target zone Friday. The next significant move should be upward to 1120.

QQQ: Next upside target is 45.00.

TYX (thirty year bond yield): Yields have dropped more than I expected. Still I think this market has a good chance of holding the 3.90 yield zone and then starting a move to 5.00%.

TNX (ten year note yield): The 10 year yield has dropped more than I expected. Still, I think that the 3.10% level will provide support and that the market will soon begin a swing up to 4.30%.

Euro-US Dollar: I think a sustained drop to below 120 is about to start.

Dollar-Yen: I think the 87.13 low will hold and that the yen will soon begin a move to 105.00.

November Crude: I now think that crude is headed down to 50.00. Resistance is at 76.00.

GLD – December Gold: Still expecting a move to 1070. Support is at 970.

SLV - December Silver: Continuation up to 1900 is likely.

Google: Upside target at 500 has been reached. Support is at 450. Next upside target is 550.

sold long unit at 1023.25

Update

Here is a hourly chart of day session e-mini trading. The market dropped into the target zone (green oval) on the employment numbers this morning. It found support at the confluence of the lower bearish channel line (dash red lines) and midpoint support at 1015 (horizontal green dash line).

I think the drop from 1075 is over, but I also think it will take another day or two for the market to establish a base that can support a move to 1120. In the meantime the first rally will probably run 30 points or so, the extent of the last big rally (purple rectangles) before it encounters significant resistance.

Repurchased on unit at 1020.75

sold long unit at 1025.75

long one unit at 1017.50

Guesstimates on October 2, 2009

December S&P E-mini Futures: Today's day session range estimate is 1015-1030. The e-minis have dropped into the 1015-20 target zoned after this morning's employment number. The next significant move should be upward to 1120.

QQQ: Next upside target is 45.00.

TYX (thirty year bond yield): Yields have dropped more than I expected. Still I think this market has a good chance of holding the 3.90 yield zone and then starting a move to 5.00%.

TNX (ten year note yield): The 10 year yield has dropped more than I expected. Still, I think that the 3.10% level will provide support and that the market will soon begin a swing up to 4.30%.

Euro-US Dollar: I think a sustained drop to below 120 is about to start.

Dollar-Yen: I think the 87.13 low will hold and that the yen will soon begin a move to 105.00.

November Crude: I now think that crude is headed down to 50.00. Resistance is at 76.00.

GLD – December Gold: Still expecting a move to 1070. Support is at 970.

SLV - December Silver: Continuation up to 1900 is likely.

Google: Upside target at 500 has been reached. Support is at 450. Next upside target is 550.

What now ??

Here is an hourly chart of day session e-mini trading. I had thought that yesterday's low at 1041.50 would hold, but it didn't. Now what?

Whenever I confront a market that seems to be trendless I always remind myself of the bigger picture. In this case I am still convinced that the move up from the July low at 866 is not yet complete - certainly there is no technical evidence that would suggest such a completion. Moreover, I think a new bull market started at the March low of 666 and that it will continue through most or all of next year. So I have a strong bullish bias at the moment. The worst thing I can do is miss an up move because I let short term bearish evidence influence my market positions too much.

When I look at the chart above I conclude that the most likely move from current levels will be down to the 1015-1020 zone (green oval), near midpoint support at 1015 and the lower boundary of the bearish trend channel I have drawn. This conclusion follows naturally from the fact that yesterday the market established a lower top and lower tops are usually followed by lower lows.

But there is a fly in this short term bearish ointment. I have drawn red ovals and red arrows to highlight three instances of high volume selling during the past week. Each ended in the vicinity of the 1040 level and there was little follow through selling in each case. This is unusual behavior. Normally one selling squall, let alone three, is followed by substantially lower prices. Since this didn't happen I infer that the market is being supported near 1040 by longer time frame buyers. This is bullish looking ahead over the next month, but doesn't by itself preclude a drop to 1020 over the next couple of days. Nonetheless, If the market should show strength above the 1050 level I would conclude that a move to 1120 has begun.

Tomorrow the employment number comes out at 8:30 am. The market often establishes short term extremes on this news. So if we are to see a low near 1020 I think it will come tomorrow or Monday. For the rest of today I think we are going to see the e-minis trade essentially sideways. I think most of today's range has been established already and that traders are going to sit on their hands until the news comes out tomorrow morning.

Out at 1039.50

Long one unit at 1045.50

Guesstimates on October 1, 2009

December S&P E-mini Futures: Today's day session range estimate is 1045-1060. I think yesterday's low at 1041.50 will hold and that a move to 1120 is underway.

QQQ: Next upside target is 45.00.

TYX (thirty year bond yield): Support is at 4.05%. I think a swing to above the 5.00% level is underway.

TNX (ten year note yield): Support is at 3.25%. I think a swing up to 4.30% is underway.

Euro-US Dollar: The market nearly hit the 148.50 target. I think a sustained drop to below 120 is about to start.

Dollar-Yen: I think the 87.13 low will hold and that the yen will soon begin a move to 105.00.

November Crude: I now think that crude is headed down to 50.00. Resistance is at 76.00.

GLD – December Gold: Still expecting a move to 1070. Support is at 970.

SLV - December Silver: Continuation up to 1900 is likely.

Google: Upside target at 500 has been reached. Support is at 450. Next upside target is 550.

I expect this morning's low at 1041.50 to hold

Never mind!

Here is an updated hourly bar chart of day session e-mini trading. A couple of hours ago I said that the high volume, down side break from the trading range of the past two days meant that the e-minis were headed for 1020. But the picture has changed dramatically since then.

The e-minis have rallied past the breakout point (dotted horizontal red line) and above the midpoint of the day's range so far (at 1051). This should never happen if the break earlier today represented selling by longer time frame traders. Instead I now conclude that that selling was done by weak longs and by aggressive bears. And the buying this morning (on bad news) was done by longer time frame traders. The implication is that this mornings shake out strengthened the technical condition of the market. A move to 1091 (the top of the green dash trend channel and the dash red line at the next significant midpoint resistance) is now underway.

Headed for 1020

Here is an hourly chart of day session e-mini trading. The Chicago purchasing managers number came out at 9:40 am this morning and triggered a high volume, downside breakout from the trading range of the past two days (blue rectangle and red arrows). I think this means that the drop from the September 23 top at 1075.75 has further to go.

I have drawn a descending trend channel on this chart. Over the next couple of days it reaches down roughly to 1020. There is midpoint support at 1015. I now believe that this correction will end late this week or early next in the 1015-1020 range (green oval).