Sunday, January 18, 2009

Weekly Report on ES - Jan 19th to Jan 23rd '09

It is almost pointless commenting ES this week as patterns are VERY similar if not identical to ER's (see report and snapshot below). We shall therefore only mention specific key levels here.

NB: it is again recommended to swap the 60mins chart for a 32000V chart.

ES 60mins: ES is looking overbought yet is resilient and will probably aim at hitting recent highs again, and maybe the 875 area again later on. There is little energy left however so it is likely to be a bumpy ride and prices must hold above 844 to validate this scenario. This long is still a contrarian retracement trade (higher time frames) so there is no guarantee ES will not retrace at some point. For the time being we keep our long target on the high 850s.

ES Daily: Our indicators are still relatively bearish, but we certainly heed this key retracement level in the low to mid 810s which could develop to a Fib pattern back to the former highs around 940 later on. We don't see it happening straightaway though, and prices could well remain range bound for a while (60mins chart).

ES Weekly: Same weak or 'failed' recovery pattern as explained on previous reports. Those who chose to go long on an aggressive limit order must have been filled and a stop near or below last year's lows is in order. At the same time there may be no rush to enter long as ES may find it hard to take off in the short term.