Wednesday, May 31, 2006


Here is a 15 minute bar chart showing regular hours trading in the June S&P e-mini futures. I last commented on this chart here.

I have been thinking that the market would compete the second phase of a three phase rally at 1256 and then begin the third phase up to 1295. Early this morning the S&P's dropped to 1256 in electronic trading (not shown on the chart) and have since rallied nearly to 1272.

So far, so good. But I am bothered by the fact that the drop from 1284 to 1256 does not have a clear three phase structure. So in this morning's guessimate I said that the market should bounce off of resistance near 1269 and then drop to 1250 or so. This would give the move down from 1284 to 1250 a clear three phase shape.

As you can see the S&P's have moved visibly above the 1269 level so I think they will continue a bit further to 1275 or so. But I still think another break to 1250 or so is likely before the market can begin its move to 1295.

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