Weeky Outlook on ES 14th to 18th July '08

Dominant TF: Daily, Weekly, with 60mins lagging somewhat behind
Swings: DN-DN-DN (from DN-DN-DN)
Market Direction(daily): profit taking from shorts

Please read the ER2 post also.

60mins: 1250 seems to hold
We have seen ES test the 2nd Fib target during the course of the day, thanks to jitters on FANNIE MAE and FREDDIE MAC. The market would have otherwise settled on the 1st target close to MM support. One can see that 1250 is actually holding, but we have no assistance from our indicators (significance level is low at this time frame). We shall therefore like for ER2 either follow pure price patterns or switch to lower time frames for entry/exit points. The Swing indicator could toggle up during the course of the day, but we shall first focus on the current channel and a possible breakout on the upside.

Daily: Congestion. No rejoicing just yet.
MTFS lines are diverging indicating an attempt to break the fall. The early line crossover indicates a recovery attempt which has only one chance of materialising: the green line must start going up before the white line gives up. We shall therefore be careful still. Some will take profits on their shorts or portions thereof, but it is way too early to go long now. ES must now stay above 1250 for a while, and even test the level for support again to have any hope for a recovery.

Weekly: Caution must be exercised.
We have a Fib target level here similar to the one on the 60mins chart. We can anticipate further fighting on this level but the overall mood remains bearish. Obviously the next Fib target down is around 1100 which would be a disaster to an already battered market.
Looking at other symbols, it looks like market participants will try and keep ES above water for now. We will however remain very cautious as we have NO indication of any sort recovery just yet.