Thursday, July 01, 2010

Counting the ways

Here is an hourly bar chart showing day session e-mini trading in the September contract from the beginning of May.

I think the 1000-1010 zone is very strong support and I expect a low here which will end the drop from 1216 on April 26.

The drop from the May 13 high to the May 25 low was 138 points in length. A drop from the 1129 top on June 21 of the same length would end at 991 (blue rectangles). The lower channel line connecting the flash crash low and the May 25 low currently stands near 991 also. The purple dash line at 1006 represents the .382 Fibonacci retracement of the advance from 666 to 1216. The lower green dash line at 1007 is the midpoint between the January 2010 top at 1148 and The July 2009 low at 866. The upper green dash line was the midpoint between 866 and the 1216 top.

For Elliott fans I would point out that the entire drop from 1216 now counts very simply as a flat correction: three waves down to the May 25 low (1032 in the September contract) - three waves up to the June 21 top at 1129 - then a fast "C" wave down to today's low (or maybe a bit lower tomorrow). The market has dropped 11% during the last 9 trading sessions, certainly characteristic of a "C" wave decline. At 1018 the "C=.618 A " target was met. The .382 retracement of the advance from 666 to 1216 (which exhibits a clear five wave structure) offers 1006 as support and the logical end to intermediate degree wave 2 from 666.

My advancing issues oscillators are showing bullish divergences at oversold levels here. Everything is in place for a low that will begin a sustained move up to 1300 and above over the next 9 months.


Path said...

I wonder what will be the explanation when we will see the next big drop... Rendez-vous at 600!

pimaCanyon said...

Great post, Carl.

Many thanks!

Narayana said...

Everything is in place except for the fact that virtually every blogger I'm reading is going bullish with you. Good luck.

Unknown said...

the best scenario for a bull would be a hammer pattern reversal today.. i am long in crude oil

Teich said...

Nice channel!

Pete55818 said...

Every blogger I've been reading has been spreading the doom and gloom senerio!

Carl has been right on the money in the past while others (a lot of them high paid advisors) were completely wrong.

I'll put my money with Carl Futia

sandy allred said...

No blogger here. Just waiting for the washouts like today to accumulate. See the dollar back near the December 2009 lows by November 30 and the S$P hitting 1299-1365 before another bear market can start (not necessarily by November 30). That take is from the observation of market activity since 1968.

Unknown said...


We might see a little bit of bounce Friday morning, but that is all in the best case.

Now we have strong Economic, Pilitical and Technical reasons to drop much lover.

Just mention some technicals and important economic data:

The MA50 will cross downward the MA200 within 1 - 3 days, and both of them above the currrent
market levels. That is considered by many market players as the definitive sell signal.
MA200 will be strong resistance even if hte market gets up to that level somehow.

The H&S pattern already in place, and target levels below 900.

The LEI Leading economic indicators for world markets suggest weak second half for 2010.

Yes, a bounce up till 1010 possible, but not probable in the next 1 - 2 weeks and after that
the profit reporting will drive the market for a few weeks.


SVS said...

I am newbie here, so forgive me if my questions are naive.

In the oscillators, what do the charts "Advancing Issues" and "Advancing Declining Issues" mean? How to interpret them to forecast future market movement?

Thanks in Advance,

Wags94101 said...

The 50 day/ 200 day "Death Cross" is literally useless as a predictive indicator. In fact, of the last two dozen signals over the past 50 years, the "cross" has generated a 50/50 chance of a further decline. Moreover, 6 months AFTER THE SIGNAL the market has been on average, +3.5% higher.

If you need any further insight into this over-hyped "indicator" feel free to stop by Planet Yelnick.

Nav said...

This morning, I started to note a slight change in tone, as the heavy selling pressure abated a bit. There haven’t been a lot of shorts in the last 36 hrs and in fact people are looking to cover heading into the long weekend (the coming week will be void of any major news other than retailer same-store-sales on Thurs Jul 8 and the calendar won’t pick back up until Mon Jul 12 when AA kicks off earnings season). While the selling pressure may be abating temporarily, there hasn’t been a lot of buy interest other than short covering and some quicker trader-types looking to gain exposure for the very near-term. Some interesting trends that received attention today: 1) the massive 2%+ spike in the euro (breaking to multi-week highs and ahead of its 50day MA); 2) the steep slide in gold (off >3% and under both its 50ady and the $1200 level); keep in mind that the gold markets were impacted some by Canada not being open today; 3) the fact that the VIX dipped into the red earlier in the day (before 12pmET) was taken as a bullish sign); 4) the tape reached very oversold levels earlier in the day (something highlighted in a Reuters article) as the RSI fell under 30 (although on the flip side, the SP500 50day MA is close to breaking under the 200day MA, forming a “death cross”); 5) US corp credit held in great all session and was flattish for most of the day despite stocks being in the red; 6) retail stocks, some of the most volatile and vulnerable to a potential double dip, jumped ~1% and traded higher for most of the session (a positive sign). The Bottom Line on this market – there were positive indicators earlier in the day that suggested this tape could eke out a green close, although the strength didn’t come thanks to any “real” or “long- only” buying but rather was due to seller exhaustion and short-covering into the long weekend.
Thanks Dr.Carl with so helpful guess
estimates though i'm off the market till july12.
PLEASE Keep helping us,great teaching Sir!

q said...

There is a lot going on in the markets right now. Watching the bond market closely to see if this was a false breakout! MK