Wednesday, March 25, 2009

40 point break underway

Here is a 30 minute bar chart of e-mini day sessions over the past two weeks. The market has dropped below the low of my range estimate and below yesterday's low on increasing volume - high volume for the time of day. These two facts are good reasons to believe that a reaction about as big as the last one - 40 points or so (blue rectangles) - is underway.

The low should develop in in the 780-85 range, pretty close to midpoint support (lower dotted purple line) which stands at 781. In the meantime the market should not go above midpoint resistance ( formerly a support level) at 811.


Anonymous said...

Nice revisions, it's always good to face the reality of the market and do so quickly.

Anonymous said...

With rampant discussions on the legitimacy of this rally (since March 10), we decided to tap the massive UBS network to gauge who is doing the buying. Our data is based on the 450 million shares per day ($7bn notional value) that we execute for our wealth management network and all of Charles Schwab's order flow. Here is what we have seen:

1 - Retail flow turned better-to-buy on March 9th and has not wavered in it's conviction since then

2- Institutional investors joined the rally for the first 2 days of the rally, then spent the next 5 selling into strength.

3 - The last five days have seen PM's, money managers, and institutional traders dipping their toes into the market, unsure of the dangers. This is evidenced by the light volumes and broad market participation.

CONCLUSION: Surprising as it may be, this rally has been initiated by retail investors and the follow through has come form institutional investors. Typically it is the other way around.

Source UBS Securities

PM said...

Hi Carl,

My buy signal was a close above 787.20 on Monday, as posted here on your blog. Today's low made in this afternoon sell off was 787.00, so I suspect the market only came back to test the breakout point before moving higher.


Kindest regards,