Thursday, December 01, 2011

headed higher

Here is a daily bar chart of the December e-minis going back to early July. I now think the market's low at 1147.50 last week was the first higher low in an extended up trend. If the move up from that level matches the size of the October rally it will carry the ES to 1370 (blue dotted rectangles). The upper line of the dash green trend channel as well as the purple dotted trend line will be in that neighborhood late this month. So the target zone for the move is 1370 plus or minus 10 points (green oval).

The last 6 months or so have been the strangest period I've seen in the markets over the past 40 years. The market is concerned about only one thing - the possibility of a banking panic in Europe. Every piece of news, every policy action (or lack of same) by the central banks involved has generated a big swing in one direction or another which is quickly reversed by a swing in the opposite direction.

This up swing may turn out to be just one more page in this chapter of aimless volatility. But I am betting that it is not. Instead I think the market will interpret yesterday's central bank actions as a commitment to rescue the European banking system no matter what else happens. If I am right about his then the market is now headed well above the 1400 level.


ARJ said...

Short term, if Euro zone could start to join USA/Brit to pump in more EURO, then market will move high.

But if they fail to join, ES likely stuck in the mud. By the way, what's your long term view on this money pump scheme? A real solution, or just kick the can or even make the problem more grave down the road? Thx!

pliberati said...

"the strangest period I've seen in the markets over the past 40 years"

That's a bold statement coming from a seasoned pro like yourself. I am impressed. I wonder whether you expect things to get less strange, and more predictable, over the next months.

Graph1159 said...

A few years ago you discussed the James Alphier Phase Theory on your blog. It looks to me like Phase 3 is underway now! I wonder if the Phase 4 crash will be caused by a default in Europe.

BullandBearWise said...

There's no such thing as aimless volatility. Volatility always foreshadows further weakness.

MaverickLondon said...

Carl, I think the markets are going to wipe out all of Wednesday's gains tomorrow and then some over the coming 2 weeks to take out the lows.

kcounty said...

how can you perform technical analysis when you state future human decisions will have an effect on the market?

shouldn't you be analyzing the possible european bank outcomes/decisions and the probable market reactions?

i used to like when you read the paper and posted articles you thought were interesting.