Wednesday, February 29, 2012

will the ECB take away the punch bowl?



Today marked the second phase of the European Central Bank's cheap finance program designed to support the EU commercial banking system. The program is an open ended offer by the ECB of cheap, three year financing against bad collateral. According to reports EU commercial banks borrowed even more than expected today, probably because they are worried that the ECB will soon take away this punch bowl.

The effects of this program can easily be seen in the bottom two charts. The lower chart is a daily bar chart of the German stock stock market index, the DAX, while the middle chart is a daily chart of the S&P 500. The ECB announced its two phase financing program in early December of 2011. The initial market response was negative because it was feared that the program would not do enough to stave off a European banking crisis. But when the first round of financing was completed on December 20 the markets saw the effects of the program on the European bond markets - yields came down substantially on paper issued by governments with financial problems. The DAX and the S&P 500 then embarked on rally which has continued to this day.

But will the ECB take away the punch bowl? My guess is that they won't, especially if the stock markets start dropping from current levels. You can see on the charts what happened to the S&P and the DAX when the Fed ended its two quantitative easing programs. The first ended in April of 2010 and the second a year later. Both times the US and European stock markets dropped. My guess is that something similar will happen now but I don't think the drop will be nearly as bad as the ones in 2010 and 2011. Moreover, when the ECB and the Fed see what is happening I think both will step in with new financing programs which will ultimately boost the markets above today's highs.

The top chart is a chart of the euro priced in dollars. The most bullish thing that can happen to the euro from the perspective of US and European stock markets is a resumption of its drop to 1.200 and below. Such action would be a reflection of the ECB's willingness to do whatever is necessary to stave off a renewed financial crisis in Europe. Based on their behavior over the past three months I think they are willing to do this.

But first I think the markets will have to throw a scare into the Fed and the ECB. If so I expect the euro will rally some distance from current levels before resuming a longer term decline. I also think that the DAX and the S&P 500 are likely to break, perhaps back to their 200 day moving averages (red lines on the charts) before ultimately moving much higher.

Guesstimates on February 29, 2012

March S&P E-mini Futures: Today's day session range estimate is 1369-1381. The rally from the November 25 low has carried the market up to and a little above 1370 which has made that rally as big as the October 2011 rally. The May 2011 top was at 1373. So I think it is likely that the market's advance will pause near these resistance levels. A drop of 50-70 points is likely. But even so I expect the market to move well above the1400 level over the next few months.

QQQ: Resistance stands in the 63-65 zone and a break to 59.50 will probably be the next development.

TNX (ten year note yield): The 10 year yield has started a move to 2.50%.

Euro-US Dollar: On Friday the euro traded as high as 1.3485, just shy of my 1.3540 target. My best guess is that the rally from 1.2623 is nearly over.

Dollar-Yen: The yen has been trading a little above resistance at 80.00. If the market starts spending time above 81.00 I will conclude that it is headed for 90.00. Until then I am sticking with my 70.00 target.

March Crude: An extended upswing is underway. It will probably take crude to 114 or so.

GLD – April Gold: A move to 2100 is underway.

SLV - March Silver: I think silver is headed for 50.00.

Google: Google is now headed for its 2007 top near 750.

Apple: AAPL rallied to new bull market highs yesterday. Resistance above the market now is at 545.

Tuesday, February 28, 2012

Guesstimates on February 28, 2012

March S&P E-mini Futures: Today's day session range estimate is 1353-1368. The rally from the November 25 low has carried the market up to and a little above 1370 which has made that rally as big as the October 2011 rally. The May 2011 top was at 1373. So I think it is likely that the market's advance will pause near these resistance levels. A drop of 50-70 points is likely. But even so I expect the market to move well above the1400 level over the next few months.

QQQ: Resistance stands in the 63-65 zone and a break to 59.50 will probably be the next development.

TNX (ten year note yield): The 10 year yield has started a move to 2.50%.

Euro-US Dollar: On Friday the euro traded as high as 1.3485, just shy of my 1.3540 target. My best guess is that the rally from 1.2623 is nearly over.

Dollar-Yen: The yen has been trading a little above resistance at 80.00. If the market starts spending time above 81.00 I will conclude that it is headed for 90.00. Until then I am sticking with my 70.00 target.

March Crude: An extended upswing is underway. It will probably take crude to 114 or so.

GLD – April Gold: A move to 2100 is underway.

SLV - March Silver: I think silver is headed for 50.00.

Google: Google is now headed for its 2007 top near 750.

Apple: AAPL rallied to new bull market highs yesterday. Resistance above the market now is at 545.

Monday, February 27, 2012

Guesstimates on February 27, 2012

March S&P E-mini Futures: Today's day session range estimate is 1350-1360. A rally from the November 25 low at 1147.50 which matches the size of the October rally would bring the ES to 1370. The May 2011 top was at 1373. After that top is exceeded a drop of 50-70 points again becomes likely. But even so I expect the market to move well above the1400 level over the next few months.

QQQ: Resistance stands in the 63-65 zone and a break to 59.50 will probably be the next development.

TNX (ten year note yield): The 10 year yield has started a move to 2.50%.

Euro-US Dollar: On Friday the euro traded as high as 1.3485, jut shy of my 1.3540 target. My best guess is that the rally from 1.2623 is nearly over.

Dollar-Yen: The yen has been trading a little above resistance at 80.00. If the market starts spending time above 81.00 I will conclude that it is headed for 90.00. Until then I am sticking with my 70.00 target.

March Crude: An extended upswing is underway. It will probably take crude to 114 or so.

GLD – April Gold: A move to 2100 is underway.

SLV - March Silver: I think silver is headed for 50.00.

Google: Google is now headed for its 2007 top near 750.

Apple: A drop to 475 or so is likely. After that AAPL should head for the next resistance at 545.

Friday, February 24, 2012

Guesstimates on February 24, 2012

March S&P E-mini Futures: Today's day session range estimate is 1360-1373. A rally from the November 25 low at 1147.50 which matches the size of the October rally would bring the ES to 1370. The May 2011 top was at 1373. After that top is exceeded a drop of 50-70 points again becomes likely. But even so I expect the market to move well above the1400 level over the next few months.

QQQ: Resistance stands in the 63-65 zone and a break to 59.50 will probably be the next development.

TNX (ten year note yield): The 10 year yield has started a move to 2.50%.

Euro-US Dollar: The rally from 1.2623 should continue to 1.3540 before the market turns down once more. Meantime support is at 1.2940.

Dollar-Yen: The market is headed down to 70.00. Resistance above the market is at 80.00.

March Crude: An extended upswing is underway. It will probably take crude to 114 or so.

GLD – April Gold: A move to 2100 is underway.

SLV - March Silver: I think silver is headed for 50.00.

Google: Google is now headed for its 2007 top near 750.

Apple: A drop to 475 or so is likely. After that AAPL should head for the next resistance at 545.

Thursday, February 23, 2012

Guesstimates on February 23, 2012

March S&P E-mini Futures: Today's day session range estimate is 1352-1361. A rally from the November 25 low at 1147.50 which matches the size of the October rally would bring the ES to 1370. The May 2011 top was at 1373. I expect the market to move well above the1400 level over the next few months.

QQQ: Resistance stands in the 63-65 zone and a break to 59.50 will probably be the next development.

TNX (ten year note yield): The 10 year yield has started a move to 2.50%.

Euro-US Dollar: The rally from 1.2623 should continue to 1.3540 before the market turns down once more. Meantime support is at 1.2940.

Dollar-Yen: The market is headed down to 70.00. Resistance above the market is at 80.00.

March Crude: An extended upswing is underway. It will probably take crude to 114 or so.

GLD – April Gold: A move to 2100 is underway.

SLV - March Silver: I think silver is headed for 50.00.

Google: Google is now headed for its 2007 top near 750.

Apple: A drop to 475 or so is likely. After that AAPL should head for the next resistance at 545.

Wednesday, February 22, 2012

central banks, money, and the global economy


Here are two weekly forex bar charts. The top chart shows the price of the euro in US dollars, while the bottom chart shows the price of the US dollar in yen.

The past four years have seen three distinct episodes of world wide fears of possible bank panics in the US and in Europe in 2008, 2010 and 2011. In each case there were fundamental economic problems that lay underneath the banking problems - in 2008 bad real estate loans and associated derivative products and in 2010 and 2011 uncompetitive economies in Greece, Portugal, Spain, Italy, Ireland, .....

Monetary policy cannot solve economic problems, but it can buy time to solve such problems by allaying fears of a banking panic and bank collapses. During the past three years the Fed, the European Central Bank, the Bank of England, and the Bank of Japan have all attempted to provide markets with necessary liquidity through programs of quantitative easing.

This quantitative easing was necessary because economic uncertainties and risks had increased the demand for short term, safe and liquid assets. Absent central bank action this increased demand for liquidity would have led to the collapse in the value of longer term assets (loans and bonds) held by commercial banks. Indeed such a collapse occurred during the second half of 2008 before central banks even realized there was a problem. A collapse in asset prices is always associated with economic weakness and this makes it harder for governments to do something about underlying economic problems.

Quantitative easing by a country's central bank generally leads to a depreciation in that country's currency. Indeed, this is the single most important indication that the central bank's action has been effective.

You can see in the charts above that the Fed (and the Bank of England) took the lead in implementing quantitative easing programs. The first effort by the Fed lasted about a year from March 2009 to April 2010. The second phase started in October 2010 and ended in May 2011. Both phases were associated with significant depreciating of the US dollar against the euro and against the yen (green arrows on both charts).

Next up was the Bank of Japan which sold yen against foreign currencies to stop yen appreciation which is an effective tightening of monetary policy unless counteracted. On four separate occasions, starting in March 2011 around the time of the big earthquake in Japan, the Bank of Japan intervened dramatically in the currency markets (four purple arrows on upper chart).

Late last year the European Central Bank began a program of buying sovereign bonds from commercial banks. This program is scheduled to end on February 28 and has had a modest effect on the euro (blue arrow).

I personally think the central banks have not provided nearly enough liquidity to the markets but at least their hearts are in the right place as these charts show. They have warded off the imminent threat of a banking panic which would have done terrible economic damage above and beyond the damage we have already seen. Looking forward I think their efforts will be reflected in higher stock prices in the US, in Europe, and in Asia over at least the next year or so.

Guesstimates on February 22, 2012

March S&P E-mini Futures: Today's day session range estimate is 1348-1360. A rally from the November 25 low at 1147.50 which matches the size of the October rally would bring the ES to 1370. The May 2011 top was at 1373. I expect the market to move well above the1400 level over the next few months.

QQQ: Resistance stands in the 63-65 zone and a break to 59.50 will probably be the next development.

TNX (ten year note yield): The 10 year yield has started a move to 2.50%.

Euro-US Dollar: The rally from 1.2623 should continue to 1.3540 before the market turns down once more. Meantime support is at 1.2940.

Dollar-Yen: The market is headed down to 70.00. Resistance above the market is at 80.00.

March Crude: An extended upswing is underway. It will probably take crude to 114 or so.

GLD – April Gold: A move to 2100 is underway.

SLV - March Silver: I think silver is headed for 50.00.

Google: Google is now headed for its 2007 top near 750.

Apple: A drop to 475 or so is likely. After that AAPL should head for the next resistance at 545.

Tuesday, February 21, 2012

Guesstimates on February 21, 2012

March S&P E-mini Futures: Today's day session range estimate is 1360-1370. A rally from the November 25 low at 1147.50 which matches the size of the October rally would bring the ES to 1370. The May 2011 top was at 1373. I expect the market to move well above the1400 level over the next few months.

QQQ: Resistance stands in the 63-65 zone and a break to 59.50 will probably be the next development.

TNX (ten year note yield): The 10 year yield has started a move to 2.50%.

Euro-US Dollar: The rally from 1.2623 should continue to 1.3540 before the market turns down once more. Meantime support is at 1.2940.

Dollar-Yen: The market is headed down to 70.00. Resistance above the market is at 80.00.

March Crude: An extended upswing is underway. It will probably take crude to 114 or so.

GLD – April Gold: A move to 2100 is underway.

SLV - March Silver: I think silver is headed for 50.00.

Google: Google is now headed for its 2007 top near 750.

Apple: A drop to 475 or so is likely. After that AAPL should head for the next resistance at 545.

Friday, February 17, 2012

Guesstimates on February 17, 2012

March S&P E-mini Futures: Today's day session range estimate is 1350-1363. A rally from the November 25 low at 1147.50 which matches the size of the October rally would bring the ES to 1370. The May 2011 top was at 1373. I expect the market to move well above the1400 level over the next few months.

QQQ: Resistance stands in the 63-65 zone and a break to 59.50 will probably be the next development.

TNX (ten year note yield): The 10 year yield has started a move to 2.50%.

Euro-US Dollar: The rally from 1.2623 should continue to 1.3540 before the market turns down once more. Meantime support is at 1.2940.

Dollar-Yen: The market is headed down to 70.00. Resistance above the market is at 80.00.

March Crude: An extended upswing is underway. It will probably take crude to 114 or so.

GLD – April Gold: A move to 2100 is underway.

SLV - March Silver: I think silver is headed for 50.00.

Google: Google is now headed for its 2007 top near 750.

Apple: Next resistance is at 545. Support is at 487.

Thursday, February 16, 2012

Nearing a top

Here is the daily bar chart of the March '12 e-minis which I have been tracking in recent posts. As you can see the up trends from both the October 2011 low and the November 2011 low are still intact. The top of the second blue dash rectangle is around the 1370 level. It marks the spot where the rally from the late November low would equal the size of the October 2011 rally (first blue rectangle).

Notice too that the upper channel line of the green dash trend channel currently sits just above the market around that same 1370 level. For these reasons I think there is strong resistance just above the market in the area delineating by the green oval.

As you can see the entire advance since the December 19 low has been essentially uncorrected and has carried the market up about 14% during the past two months. Yesterday's break has been mostly retraced today, continuing this pattern. But I think things are about to change.

The market is preparing to drop back toward the green trend line. In the process I think the upcoming correction will be similar in size to the December break which carried the S&P down about 70 points. Support should be found in the purple oval.

I still think this is a bull market, normal corrections aside. The fact that the Dow industrials, the Nasdaq composite, and the QQQ's have all traded above their May 2011 highs just underlines this fact. But sentiment has grown quite bullish and a broad range of stocks has been trading essentially sideways for the past 10 days. This trading range has been hidden by the spectacular advance in Apple stock (AAPL). But the break yesterday in AAPL is I think a harbinger of things to come. An important prop has been knocked from beneath the market. A drop which will correct the December-February advance lies dead ahead.

Guesstimates on February 16, 2012

March S&P E-mini Futures: Today's day session range estimate is 1330-1342. It looks like of reaction of between 35 and 60 points is underway. Any reaction is only a reaction within a larger bullish trend. A rally from the November 25 low at 1147.50 which matches the size of the October rally would bring the ES to 1370. The May 2011 top was at 1373. I expect the market to move well above the1400 level over the next few months.

QQQ: Resistance stands in the 63-65 zone and a break to 59.50 will probably be the next development.

TNX (ten year note yield): The 10 year yield has started a move to 2.50%.

Euro-US Dollar: The rally from 1.2623 should continue to 1.3540 before the market turns down once more. Meantime support is at 1.2940.

Dollar-Yen: The market is headed down to 70.00. Resistance above the market is at 80.00.

March Crude: An extended upswing is underway. It will probably take crude to 114 or so.

GLD – April Gold: A move to 2100 is underway.

SLV - March Silver: I think silver is headed for 50.00.

Google: Google is now headed for its 2007 top near 750.

Apple: Next resistance is at 545. Support is at 487.

Wednesday, February 15, 2012

Guesstimates on February 15, 2012

March S&P E-mini Futures: Today's day session range estimate is 1349-1359. Any reaction would only be a reaction within a larger bullish trend. A rally from the November 25 low at 1147.50 which matches the size of the October rally would bring the ES to 1370. The May 2011 top was at 1373. I expect the market to move well above the1400 level over the next few months.

QQQ: Resistance stands in the 63-65 zone and a break to 59.50 will probably be the next development.

TNX (ten year note yield): The 10 year yield has started a move to 2.50%.

Euro-US Dollar: The rally from 1.2623 should continue to 1.3540 before the market turns down once more. Meantime support is at 1.2940.

Dollar-Yen: The market is headed down to 70.00. Resistance above the market is at 80.00.

March Crude: An extended upswing is underway. It will probably take crude to 114 or so.

GLD – April Gold: A move to 2100 is underway.

SLV - March Silver: I think silver is headed for 50.00.

Google: Google is now headed for its 2007 top near 750.

Apple: Next resistance is at 545.

Tuesday, February 14, 2012

Guesstimates on February 14, 2012

March S&P E-mini Futures: Today's day session range estimate is 1341-1350. I thought a reaction had begun Friday but the market has completely recovered Friday's drop so I am agnostic on this point now. But any reaction would only be a reaction within a larger bullish trend. A rally from the November 25 low at 1147.50 which matches the size of the October rally would bring the ES to 1370.

QQQ: Looks like the market is bouncing off of resistance at 63.

TNX (ten year note yield): The 10 year yield has started a move to 2.50%.

Euro-US Dollar: The rally from 1.2623 should continue to 1.3540 before the market turns down once more. Meantime support is at 1.2940.

Dollar-Yen: The market is headed down to 70.00. Resistance above the market is at 80.00.

March Crude: An extended upswing is underway. It will probably take crude to 114 or so.

GLD – April Gold: A move to 2100 is underway.

SLV - March Silver: I think silver is headed for 50.00.

Google: Google is now headed for its 2007 top near 750.

Apple: Next resistance is at 545.

Monday, February 13, 2012

Guesstimates on February 13, 2012

March S&P E-mini Futures: Today's day session range estimate is 1341-1352. I thought a reaction had begun Friday but the market has completely recovered Friday's drop so I am agnostic on this point now. But any reaction would only be a reaction within a larger bullish trend. A rally from the November 25 low at 1147.50 which matches the size of the October rally would bring the ES to 1370.

QQQ: Looks like the market is bouncing off of resistance at 63.

TNX (ten year note yield): The 10 year yield has started a move to 2.50%.

Euro-US Dollar: The rally from 1.2623 should continue to 1.3540 before the market turns down once more. Meantime support is at 1.2940.

Dollar-Yen: The market is headed down to 70.00. Resistance above the market is at 80.00.

March Crude: An extended upswing is underway. It will probably take crude to 114 or so.

GLD – April Gold: A move to 2100 is underway.

SLV - March Silver: I think silver is headed for 50.00.

Google: Google is now headed for its 2007 top near 750.

Apple: I expect AAPL to stall in the 475-490 range and then to drop to support which stands near 435. After that a move to 550 should begin.

Friday, February 10, 2012

Guesstimates on February 10, 2012

March S&P E-mini Futures: Today's day session range estimate is 1330-1340. The drop from yesterday's 1352.75 top should carry the market down at least to 1320 and may well go further than that. But it still is only a reaction in a bull market. The longer term trend is upward. A rally from the November 25 low at 1147.50 which matches the size of the October rally would bring the ES to 1370.

QQQ: Looks like the market is bouncing off of resistance at 63.

TNX (ten year note yield): The 10 year yield has started a move to 2.50%.

Euro-US Dollar: The rally from 1.2623 should continue to 1.3540 before the market turns down once more. Meantime support is at 1.2940.

Dollar-Yen: The market is headed down to 70.00. Resistance above the market is at 80.00.

March Crude: An extended upswing is underway. It will probably take crude to 114 or so.

GLD – April Gold: A move to 2100 is underway.

SLV - March Silver: I think silver is headed for 50.00.

Google: Google is now headed for its 2007 top near 750.

Apple: I expect AAPL to stall in the 475-490 range and then to drop to support which stands near 435. After that a move to 550 should begin.

Thursday, February 09, 2012

close to strong resistance

Here is a daily bar chart showing the past 4 months trading in the March '12 e-mini futures.

The market is getting close to a very important resistance level (purple oval). The May 2011 top was at 1373.50. A rally from the November 25 low which matches the size of the first leg up from the October 4 low would stop at 1363-68 depending on which contract you use for the low price on November 25. The market has rallied for nearly two months and is also getting close to the upper channel line for the narrower bullish trend channel i have drawn (green dash line).

I think this is a bull market, but even bull markets have reactions. I think a drop comparable in size to the early December 2011 drop of 70 points or so will start once the market enters this resistance zone.

I still see no sign of a potential top for the Lindsay domed house which I discussed in this post. When it develops it should look like a possibly misshapen head and shoulders formation. The reaction which I think is coming may well define the left shoulder, point 21, of the domed house.

Guesstimates on February 9, 2012

March S&P E-mini Futures: Today's day session range estimate is 1346-1358. The longer term trend is upward. A rally from the November 25 low at 1147.50 which matches the size of the October rally would bring the ES to 1370.

QQQ: Headed for 63.

TNX (ten year note yield): The 10 year yield has started a move to 2.50%.

Euro-US Dollar: The rally from 1.2623 should continue to 1.3540 before the market turns down once more. Meantime support is at 1.2940.

Dollar-Yen: The market is headed down to 70.00. Resistance above the market is at 80.00.

March Crude: An extended upswing is underway. It will probably take crude to 114 or so.

GLD – April Gold: A move to 2100 is underway.

SLV - March Silver: I think silver is headed for 50.00.

Google: Google is now headed for its 2007 top near 750.

Apple: Upside target is 475 is getting close. I expect AAPL to stall in the 475-490 range and then to drop to support which stands near 435. After that a move to 550 should begin.

Wednesday, February 08, 2012

Guesstimates on February 8, 2012

March S&P E-mini Futures: Today's day session range estimate is 1340-1350. The longer term trend is upward. A rally from the November 25 low at 1147.50 which matches the size of the October rally would bring the ES to 1370.

QQQ: Headed for 63.

TNX (ten year note yield): The 10 year yield has started a move to 2.50%.

Euro-US Dollar: The rally from 1.2623 should continue to 1.3540 before the market turns down once more. Meantime support is at 1.2940.

Dollar-Yen: The market is headed down to 70.00. Resistance above the market is at 80.00.

March Crude: An extended upswing is underway. It will probably take crude to 114 or so.

GLD – April Gold: A move to 2100 is underway.

SLV - March Silver: I think silver is headed for 50.00.

Google: Google is now headed for its 2007 top near 750.

Apple: Upside target is 475 is getting close. I expect AAPL to stall in the 475-490 range and then to drop to support which stands near 435. After that a move to 550 should begin.

Tuesday, February 07, 2012

Guesstimates on February 7, 2012

March S&P E-mini Futures: Today's day session range estimate is 1330-1340. The longer term trend is upward. A rally from the November 25 low at 1147.50 which matches the size of the October rally would bring the ES to 1370.

QQQ: Headed for 63.

TNX (ten year note yield): The 10 year yield has started a move to 2.50%.

Euro-US Dollar: The rally from 1.2623 should continue to 1.3540 before the market turns down once more. Meantime support is at 1.2940.

Dollar-Yen: The market is headed down to 70.00. Resistance above the market is at 80.00.

March Crude: An extended upswing is underway. It will probably take crude to 114 or so.

GLD – April Gold: A move to 2100 is underway.

SLV - March Silver: I think silver is headed for 50.00.

Google: Google is now headed for its 2007 top near 750.

Apple: Upside target is 475.

Monday, February 06, 2012

Guesstimates on February 6, 2012

March S&P E-mini Futures: Today's day session range estimate is 1329-1340. The longer term trend is upward. A rally from the November 25 low at 1147.50 which matches the size of the October rally would bring the ES to 1370.

QQQ: Headed for 63.

TNX (ten year note yield): The 10 year yield has started a move to 2.50%.

Euro-US Dollar: The rally from 1.2623 should continue to 1.3540 before the market turns down once more. Meantime support is at 1.2940.

Dollar-Yen: The market is headed down to 70.00. Resistance above the market is at 80.00.

March Crude: An extended upswing is underway. It will probably take crude to 114 or so.

GLD – April Gold: A move to 2100 is underway.

SLV - March Silver: I think silver is headed for 50.00.

Google: Google is now headed for its 2007 top near 750.

Apple: Upside target is 475.

Friday, February 03, 2012

Guesstimates on February 3, 2012

March S&P E-mini Futures: Today's day session range estimate is 1329-1343. The longer term trend is upward. A rally from the November 25 low at 1147.50 which matches the size of the October rally would bring the ES to 1370.

QQQ: Headed for 63.

TNX (ten year note yield): The 10 year yield has started a move to 2.50%.

Euro-US Dollar: The rally from 1.2623 should continue to 1.3540 before the market turns down once more. Meantime support is at 1.2940.

Dollar-Yen: The market is headed down to 70.00. Resistance above the market is at 80.00.

March Crude: An extended upswing is underway. It will probably take crude to 114 or so.

GLD – April Gold: I think gold will probably drop to 1510 or so and then begin a move to 2100.

SLV - March Silver: I think silver is headed for 50.00. Support is at 26.00.

Google: Google is now headed for its 2007 top near 750.

Apple: Upside target is now 475.

Thursday, February 02, 2012

trend is still up

Here is a daily bar chart of the March '12 e-mini futures.

As you can see the market was very calm in January, a big contrast to the wild volatility of the preceding 4 months. Yet it continued creeping higher all month while hugging the upper line of the purple trend channel I have drawn. There is room for a reaction to 1295-1300 without violating the lower channel line, and at this juncture I think such a reaction is more likely than not. One reason for thinking so is that 1320 the market equaled the size of it initial rally off of the November 25 low (blue dash rectangles), thus making 1320 a logical spot for extensive consolidation or a reaction to start.

Looking a bit further ahead you can see that the purple upper channel line is now at 1350 and within a couple of weeks will be at 1370. The e-mini high in May of 2011 was 1373. Moreover, a rally from the November 25 low which equals the 221 point rally off of the October 2011 low would put the ES at 1366 (red dash rectangles). So I think the next reaction which lasts more than a few days will start from roughly the 1370 level.

So far I don't see any sign of the "left shoulder" which would indicate the development of the top of the domed house as I discussed in this recent post. Until that happens I will maintain my bullish long term stance on the US stock market.

Guesstimates on February 2, 2012

March S&P E-mini Futures: Today's day session range estimate is 1310-13224. The longer term trend is upward. A rally from the November 25 low at 1147.50 which matches the size of the October rally would bring the ES to 1370.

QQQ: Headed for 63.

TNX (ten year note yield): The 10 year yield has started a move to 2.50%.

Euro-US Dollar: The rally from 1.2623 should continue to 1.3540 before the market turns down once more. Meantime support is at 1.2940.

Dollar-Yen: The market is headed down to 70.00. Resistance above the market is at 80.00.

March Crude: An extended upswing is underway. It will probably take crude to 114 or so.

GLD – April Gold: I think gold will probably drop to 1510 or so and then begin a move to 2100.

SLV - March Silver: I think silver is headed for 50.00. Support is at 26.00.

Google: Google is now headed for its 2007 top near 750.

Apple: Upside target is now 475.

Wednesday, February 01, 2012

Guesstimates on February 1, 2012

March S&P E-mini Futures: Today's day session range estimate is 1314-1328. A move to 1330 and higher is underway. The longer term trend is upward. A rally from the November 25 low at 1147.50 which matches the size of the October rally would bring the ES to 1370.

QQQ: Headed for 63.

TNX (ten year note yield): The 10 year yield has started a move to 2.50%.

Euro-US Dollar: The rally from 1.2623 should continue to 1.3540 before the market turns down once more. Meantime support is at 1.2940.

Dollar-Yen: The market is headed down to 70.00. Resistance above the market is at 80.00.

March Crude: An extended upswing is underway. It will probably take crude to 114 or so.

GLD – April Gold: I think gold will probably drop to 1510 or so and then begin a move to 2100.

SLV - March Silver: I think silver is headed for 50.00. Support is at 26.00.

Google: Google is now headed for its 2007 top near 750.

Apple: Upside target is now 475.