Monday, January 04, 2010

Going higher

Here is an hourly bar chart of day session e-mini trading. Trading activity is subdued today but is much greater than it has been over the past two holiday weeks.

This morning I thought that the break that started last week from an overnight print of 1128.50 would continue after a brief rally to 1122. Instead the ES blew right past 1122, the level at which the rally from Thursday's late low would have equaled the length of the preceding rally. Moreover, Thursday's low was at the dotted green support line defined by the preceding short term high.

This price action means that the reaction from 1128.50 is over and that a breakout to new high ground is in progress. My upside target for the next week or so is the green oval, a tad above the 1140 level and at the confluence of the upper channel line and the estimated top of a trading box (solid blue rectangles). These boxes have a price range of 16 points or so.

Over the years I have observed that markets are often erratic during the first few trading days of a new year. With this in mind I suspect that we won't head straight for the target near 1143. Instead I expect the market to fluctuate in the box outlined by the dotted blue lines. The bottom of the box is at midpoint support near 1118 (purple dotted line) while the top of the dotted blue box is near 1133.

I continue to expect a bullish January and February. I think the ES will reach the 1170 level before there is any danger of a substantial reaction.


pimaCanyon said...

Great post, Carl!

Happy New Year!

septizoniom said...

i continue to believe you are just a momentum caller, and lately a quite tentative and unsure one. you offer no fundamental analysis.

khoekz said...

this post by septizonion actually made me laugh out loud. funny stuff.

Thanks for the chart carl. I averaged down to SPXU 34.60, and am expecting a 5-10 point pullback from here.

kcounty said...

is carl not posting his trades anymore??

PM said...

I also find the post by septizoniom highly comical. I'm reminded of the time when the composer Sergei Rachmaninoff performed his own composition, the Piano Concerto Number 2, in 1929 with Toscanini conducting the RCA Symphony Orchestra. By the way, Rachmaninoff married Toscanini's daughter. Anyhow, when Toscanini first heard Rachmaninoff play the piano, his response regarding the great pianist/composer was, "All he does is bang on the piano."

Have a good day.


mfm9800 said...

Love your charts Carl. Beginning to grasp the concept of box theory and your charting/analysis is superb! said...

Another repeat of Monday ritual: Bernanke greenshoot horror. Greenspan-Bernanke is American Horror.

Trading volumes are, as usual, very light which is a sign of very weak market condition. Of course, high trading volumes can be easily manipulated, however, low trading volume is never a good sign especially markets hyperventilating day like today.

$COMPX 2308.42 39.27 1.73% 1,929,195
$INDU 10583.96 155.91 1.50% 1,084,780
$INX 1132.99 17.89 1.60%

We have seen all kinds of technical reading manipulating, hence, I have forgone mentioning the technical readings as those can be very easily manipulated. The market condition is extremely unstable if anyone thinks that we are in the same market as a few years ago, because a few big funds and the Fed have literally wiped out all the wealth from small hands. At the current market level, most of big funds are sitting in the markets -- riding the upside momentum as Bernanke is manipulating markets to upside, for sure, for his confirmation hearing.

Markets are show extremely negative divergences for several weeks -- price and breadth N.D. -- nevertheless, market prices are continuing to dragging to upside without any pull back by the Bernanke and the Fed. Certainly, Greenspan and Bernanke is nightmares for Americans.

For very long term view, based on the 100s of global financial and economic analysis, it is evident that the Fed is continuing to use financial market manipulation putting millions of Americans into financial crisis and destruction. We find the Financial Terrorism for decades, but we are now seeing the results. The recent financial market manipulation using the US debt is another example of the massive financial terrorism which many are overlooking its reality while a few are taking billions and trillions.

Just same as Greenspan told Bush to run up US deficit, it would be likely that the Fed pushed Bush to attack Iraq to manipulation financial markets. The blood of +4,500 US soldiers and 30,000+ injured soldier.... now we have Afgan war because of Greed and Hate.

2009 Was One of Worst Years on Record for Bankruptcies


U.S. consumers and businesses are filing for bankruptcy at a pace that made 2009 the seventh-worst year on record, with more than 1.4 million petitions submitted, an Associated Press tally shows.
o US Financial Crisis Far From Over: Economists

Anonymous said...

Best "advice" I ever heard about the stock market:

Take advice from no one. Follow no one. Learn by yourself and do your own home work. Have fun trading and pay no attention to the "experts" arguing among themselves.

By my own experience, I was doing pretty good till I started reading some blogs by some perma-bears.

Carl's blog is fundamentally sound as it focuses on price movements within discrete ranges. Momentum is what pushes price through these discrete price ranges.

To cause a price movement, some folks, including the US government, have to put money, their own or stolen, where their mouth is. And that is worth a lot more than all the horses' mouths put together.

In other words, Carl's version of technical analysis watches where the money is going and not the horses' mouths.

Unknown said...

Momentum trading. Exactly.

Prices moving up show positive momentum.
Prices moving down show negative momentum.
Prices going sideways show indecisive momentum.

Price CANNOT move in either direction (for long) without momentum confirming...unlike volume...unlike "expert opinions"...unlike trendlines.

septizonion, you are right, but your post shows that you are a clown.

Rajeev Bharol said...

"By my own experience, I was doing pretty good till I started reading some blogs by some perma-bears. "

Exactly. I am repenting too. I did well when I traded on my own.. Read the permabear blogs and you are done!

Aarpenn said...

Mr Septizoniam,

I think your comments are pathetic. From all the other comments you must have realized there are a lot of us that do follow Carl on a daily basis, and have learned a few things, and also have made money following his analysis. When you disagree with something that you have not paid for, wise thing to do is, in this case, to not read his blog.

Good luck