Guesstimates on June 4, 2010

June S&P E-mini Futures: Today's range estimate is 1070-1090. I think the low at 1036.75 ended the drop from 1216. I had thought that the base building process was complete but the employment number this morning knocked the market back to the low end of its recent 1068-1105 trading range. A move to 1300 is underway

QQQ: A move up to 54.00 will be the next big swing.

TYX (thirty year bond yield): I think this market is headed for 5.40%.

TNX (ten year note yield): I think that the market has begun a swing up to 4.50%.

Euro-US Dollar: The market is starting to stabilize. The 131 level is resistance. Support is at 122. I think a move to 140 will begin from current levels.

Dollar-Yen: A rally to 100.00 is underway. Support is at 90.00.

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

GLD – August Gold: The odds are that the market will continue upward to 1320. I still expect to see 875 before 1400. Support stands in the 1160-70 range.

SLV - July Silver: I think silver will rally to 21.50 and then begin a move to 10.oo.

Google: The 450 level is support. A move that should take GOOG above 700 will begin soon.

Apple: Should reach 350 (at least) before the bull market ends. Support is at 240.

Base building

Here is a 10 point box, one box reversal chart showing 24 hour e-mini trading since the low in February 2010. The important thing to notice is that the trading area which has developed near last week's 1036.75 low is wider than the one which appeared at the start of the decline in April (dashed blue ovals). This means that the technical position of the market is potentially strong enough to reverse the drop from April's 1216 top.

There are two point and figure counts which allow us to estimate the potential of any rally from current levels. The more conservative one counts across the recent base area and shows a rally potential to 1220. The more optimistic one counts across the entire base beginning with the May 6 low at 1056. It shows rally potential to 1380. The latter number is not as outlandish as it may sound today. There have been three sustained up trends within the current bull market thus far, up trends which ended at 957 in June 2009, at 1148 in January 2010, and at 1216 in April 2010. These three trends carried the S&P up an average of 31%. A 31% gain from the 1037 low of May 25 would put the ES at 1358.

The start of a move to 1300 and higher will be confirmed by a penetration of the declining red trend line which currently stands near 1125.

Guesstimates on June 3, 2010

June S&P E-mini Futures: Today's range estimate is 1090-1110. I think the low at 1036.75 ended the drop from 1216. The base building process is pretty much complete. Reactions should now be about 10-20 points instead of the 30-40 points we saw during base building. Initial upside target is 1125. A move to 1300 is underway

QQQ: A move up to 54.00 will be the next big swing.

TYX (thirty year bond yield): I think this market is headed for 5.40%.

TNX (ten year note yield): I think that the market has begun a swing up to 4.50%.

Euro-US Dollar: The market is starting to stabilize. The 131 level is resistance. Support is at 122. I think a move to 140 will begin from current levels.

Dollar-Yen: A rally to 100.00 is underway. Support is at 90.00.

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

GLD – August Gold: The odds are that the market will continue upward to 1320. I still expect to see 875 before 1400. Support stands in the 1160-70 range.

SLV - July Silver: I think silver will rally to 21.50 and then begin a move to 10.oo.

Google: The 450 level is support. A move that should take GOOG above 700 will begin soon.

Apple: Should reach 350 (at least) before the bull market ends. Support is at 240.

Update

The ES remains in a trading range extending from 1068 to 1095. At the moment the market is trading at the high of today's range estimate - 1085. I still think it likely that we shall see the 1060 level before a sustained rally begins. But tomorrow I will interpret any strength above today's high (which, so far, is 1086) as a sign that the move to 1300 is underway.

Guesstimates on June 2, 2010

June S&P E-mini Futures: Today's range estimate is 1060-1085. I think the low at 1036.75 ended the drop from 1216. I had thought that the "base building" process was over, but instead we have seen another break of more than thirty points. I believe the drop from Friday's early high at 1107 will end above the low at 1055.50 made late on May 26. Once the market stabilizes a move to 1300 will start.

QQQ: A move up to 54.00 will be the next big swing.

TYX (thirty year bond yield): I think this market is headed for 5.40%.

TNX (ten year note yield): I think that the market has begun a swing up to 4.50%.

Euro-US Dollar: The market is starting to stabilize. The 131 level is resistance. Support is at 122. I think a move to 140 will begin from current levels.

Dollar-Yen: A rally to 100.00 is underway. Support is at 90.00.

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

GLD – August Gold: The odds are that the market will continue upward to 1320. I still expect to see 875 before 1400. Support stands in the 1160-70 range.

SLV - July Silver: I think silver will rally to 21.50 and then begin a move to 10.oo.

Google: The 450 level is support. A move that should take GOOG above 700 will begin soon.

Apple: Should reach 350 (at least) before the bull market ends. Support is at 240.

Late update

I thought this morning's rally was the kickoff for a move to 1125. Instead this afternoon the ES has dropped nearly all the way back to its early morning low at 1069. I think this means that the market is headed for 1060 at which point I think it will begin an extended rally.

Blood in the water ?

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

UPdate

Here is a 30 minute bar chart showing 24 hour e-mini trading since the 1036.75 low.

I thought the market would continue its overnight weakness after the open but instead it rallied strongly. The rally carried it above the top of the last reaction (dash green line) prior to its low at 1069. The drop from 1106.75 was nearly 38 points in length as compared with 34 points on the previous reaction (purple rectangles). A strong rally after a drop about as big as the last drop is an indication that the latest drop is over and that the trend has turned upward once more.

I thought today's day session range would be about 20 points. The low thus far has been 1076.75 so I now think the day session high will be 1097 or so.

The ES has established a second higher low. This is very bullish action. I think it means that the market is now headed for the upper channel line and the 1125 level (green oval). We are in the early stages of a move to 1300.

Guesstimates on June 1, 2010

June S&P E-mini Futures: Today's range estimate is 1065-1085. I think the low at 1036.75 ended the drop from 1216. I had thought that the "base building" process was over, but instead we have seen another break of more than thirty points. I believe the drop from Friday's early high at 1107 will end above the low at 1055.50 made late on May 26. Once the market stabilizes a move to 1300 will start.

QQQ: A move up to 54.00 will be the next big swing.

TYX (thirty year bond yield): I think this market is headed for 5.40%.

TNX (ten year note yield): I think that the market has begun a swing up to 4.50%.

Euro-US Dollar: The market is starting to stabilize. The 131 level is resistance. Support is at 122. I think a move to 140 will begin from current levels.

Dollar-Yen: A rally to 100.00 is underway. Support is at 90.00.

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

GLD – June Gold: The odds are that the market will continue upward to 1320. I still expect to see 875 before 1400. Support stands in the 1160-70 range.

SLV - July Silver: I think silver will rally to 21.50 and then begin a move to 10.oo.

Google: The 450 level is support. A move that should take GOOG above 700 will begin soon.

Apple: Should reach 350 (at least) before the bull market ends. Support is at 240.

sold one unit at 1091.75

Long one unit at 1096.50

Guesstimates on May 28, 2010

June S&P E-mini Futures: Today's range estimate is 1093-1110. I think the low at 1036.75 ended the drop from 1216. The market has broken above the 1089 high of its recent trading range and this means that a move to 1300 is underway.

QQQ: A move up to 54.00 will be the next big swing.

TYX (thirty year bond yield): I think this market is headed for 5.40%.

TNX (ten year note yield): I think that the market has begun a swing up to 4.50%.

Euro-US Dollar: The market is starting to stabilize. The 131 level is resistance. Support is at 122. I think a move to 140 will begin from current levels.

Dollar-Yen: A rally to 100.00 is underway. Support is at 90.00.

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

GLD – June Gold: The odds are that the market will continue upward to 1320. I still expect to see 875 before 1400. Support stands in the 1160-70 range.

SLV - July Silver: I think silver will rally to 21.50 and then begin a move to 10.oo.

Google: The 450 level is support. A move that should take GOOG above 700 will begin soon.

Apple: Should reach 350 (at least) before the bull market ends. Support is at 240.

A bullish picture

Here is a 30 minute bar chart showing day session e-mini trading since the April 26 top. I think this chart presents us with a bullish picture. Here's why.

Note that the low at 1037 on Tuesday occurred at the bottom of a trend channel. I might also note that 1041 was the midpoint between the 866 low in July 2009 and the 1216 top on April 26. Since that low the market has produced two consecutive higher trading areas (last two blue ovals). This broke the string low steadily lower trading areas that had developed during the drop from 1216. More significantly, the last of these trading areas (the one developing today) is entirely above the steeper declining red trend line I have drawn. This is added confirmation that the pace of the drop has changed, presumably the early warning of a new swing upward. A similar inference can be drawn from the fact that the market today has spent most of its time trading above yesterday's high.

I think the ES is in the process of breaking out above the upper boundary of the past week's trading range (dash green line). The first part of the breakout swing is likely to carry to the top of the green trend channel near 1110. A reaction down to 1090, the breakout level, would be normal then. A more significant reaction will probably develop once the ES reaches the confluence of the declining red trend line and the rising green line (green oval).

I think a very big move upward is about to start. It should carry the ES to 1300 by the end of the summer.

Green light from Jay

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

Guesstimates on May 27, 2010

June S&P E-mini Futures: Today's range estimate is 1075-1100. I think the low at 1036.75 ended the drop from 1216. I expect to see a series of 20-30 point swings up and down within the 1060-1100 range over the next few days. Once the market stabilizes a move to 1300 will begin.

QQQ: A move up to 54.00 will be the next big swing.

TYX (thirty year bond yield): I think this market is headed for 5.40%.

TNX (ten year note yield): I think that the market has begun a swing up to 4.50%.

Euro-US Dollar: The market is starting to stabilize. The 131 level is resistance. Support is at 122. I think a move to 140 will begin from current levels.

Dollar-Yen: A rally to 100.00 is underway. Support is at 90.00.

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

GLD – June Gold: The odds are that the market will continue upward to 1320. I still expect to see 875 before 1400. Support stands in the 1160-70 range.

SLV - July Silver: I think silver will rally to 21.50 and then begin a move to 10.oo.

Google: The 450 level is now support. A move that should take GOOG above 700 will begin soon.

Apple: Should reach 350 (at least) before the bull market ends. Support is at 240.

Terminal shakeout

Here is a five point box, three box reversal chart showing 24 hour e-mini trading since the April 26 top at 1216.

I think the rally from yesterday's low at 1037 is sending a very bullish message. It is the bullish half of a classic terminal shakeout. Friday and Monday the market spent most of its time trading in a 1070-1090 range (first part of blue rectangle). Then late Monday and early Tuesday the market put in an uncorrected break below that trading range and below the previous lows at 1051 and 1056 (red arrow). But then, after only a little sideways action yesterday morning, the ES took off in an uncorrected rally (green arrow) that carried all the way to the top of the previous two days' trading ranges.

This sort of action says that the market thinks prices below 1050 are too low. The implication is that a substantial rally lies ahead. A point and figure count across the base area offers a target at the old high, 1215. And I think this will be only part of a bigger rally that will carry to 1300.

Guesstimates on May 26, 2010

June S&P E-mini Futures: Today's range estimate is 1065-95. I think yesterday's low at 1036.75 ended the drop from 1216. I expect to see a series of 20-30 point swings up and down within the 106--1100 range over the next few days. Once the market stabilizes a move to 1300 will begin.

QQQ: A move up to 54.00 will be the next big swing.

TYX (thirty year bond yield): I think this market is headed for 5.40%.

TNX (ten year note yield): I think that the market has begun a swing up to 4.50%.

Euro-US Dollar: The market is starting to stabilize. The 131 level is resistance. Support is at 122. I think a move to 140 will begin from current levels.

Dollar-Yen: A rally to 100.00 is underway. Support is at 90.00.

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

GLD – June Gold: The odds are that the market will continue upward to 1320. I still expect to see 875 before 1400. Support stands in the 1160-70 range.

SLV - July Silver: I think silver will rally to 21.50 and then begin a move to 10.oo.

Google: The 450 level is now support. A move that should take GOOG above 700 will begin soon.

Apple: Should reach 350 (at least) before the bull market ends. Support is at 240.

Late update

The strong afternoon rally makes it likely that the early morning low at 1036.75 ended the drop from the April 26 top of 1216.75. I expect to see a fair amount of essentially sideways action over the next few days with several 20 point swings both up and down. Once the market stabilizes a move to 1300 should get underway.

Update

Here is a five point box, three box reversal point and figure chart. It shows 24 hour e-mini trading since the April 26 top at 1216.

The initial drop from the 1174 high of May 13 carried the market down 60 points (first blue rectangle). Then we had a 35 point rally (first purple rectangle). The next low occurred this past Friday at 1051 and was followed by a 37 point rally (second purple rectangle). I am guessing that the drop from yesterday's high at 1088 will match the initial drop from 1174 (second blue rectangle). If it does the low would be about 1028 (hence the 1030 low of today's range forecast).

I still think we shall see a print pretty close to or a little below the 1030 level before the market stabilizes and begins an extended rally (green oval). At this juncture the start of this rally would be indicated by a move above yesterday's high (green dash line) which would also imply an upside penetration of the steeper descending red trend line.

Guesstimates on May 25, 2010

June S&P E-mini Futures: Today's range estimate is 1030-65. I expect a long lasting low to develop today or tomorrow. Once the low has been established I think the ES will begin a rally that will take it to 1300 and higher.

QQQ: Support stands at 42.40. A move up to 54.00 will be the next big swing.

TYX (thirty year bond yield): I think this market is headed for 5.40%.

TNX (ten year note yield): I think that the market has begun a swing up to 4.50%.

Euro-US Dollar: The market is starting to stabilize. The 131 level is resistance. Support is at 122. I think a move to 140 will begin from current levels.

Dollar-Yen: A rally to 100.00 is underway. Support is at 90.00.

July Crude: I still think the next big move will take crude oil to 50.00.

GLD – June Gold: The odds are that the market will continue upward to 1320. I still expect to see 875 before 1400. Support stands in the 1160-70 range.

SLV - July Silver: I think silver will rally to 21.50 and then begin a move to 10.oo.

Google: The 450 level is now support. A move that should take GOOG above 700 will begin soon.

Apple: Should reach 350 (at least) before the bull market ends. Support is at 240.