Market update - Feb 27th '09

Markets are desperately trying to hold on key levels and they might indeed. When we see so much selling pressure, there is only 2 ways to dissipate such energy, either the market does not resist and waits for prices to reach a new equilibrium level, or tries to absorb it to evacuate in another form. At the moment, the market is indeed "both feet on the brakes" trying to stop the fall, thus generating a lot of heat...

Now, obviously nobody knows whether the brake pads are worn out or not, but our visibility is limited anyway.

ES:
In the short term, we might see yet another bounce attempt, and again with no chance to hold, so whoever wants to go long should switch to lower times frames. Our tick chart does pretty well in such environment.
Mid to long term, those who have been short can stay short, eventually cashing in some profit. Some may want to sell on breakout.

ER:
Similar story as we can expect. ER reached stall level and is should now aim to targets given previously i.e. close on on 375.

Since ER and ES are slightly out of synch, ES could settle around 730 to follow ER... We shall see...

Note on EURUSD: 1.27 is STILL key level...

( posted 6 AM UK )

Market update - Feb 26th '09

Sorry for yesterday... A LOT of work unfortunately distracted me from my daily report.
Despite the fact we are on key levels, nothing major happened yesterday, so let's review the day ahead now.

ER:
Trading range below key 406 level ahead of anticipated target as mentioned on previous report. While selling pressure could abate slightly with a likely slowdown near stall level (~390), we are still aiming at that target range made of stall level, Fib expansion target (384) and strong MM support (375). Indicators show some potential bounce to the high 410s before we get there even if such inflexion is not visible yet.

ES:
As discussed in previous reports, ES is slightly ahead of ES as it already is on its 750 target. The pattern is however similar and the bounce is already visible. While leading a bit, the outlook remains the same: no recovery right now and ES test lows again. On the longer term, we can still believe in a double bottom scenario but we certainly have to see selling pressure dissipate.

Note on EURUSD: 1.27 is KEY level (still short...)

( posted 6:20 AM UK )

Market update - Feb 24th '09

As mentioned yesterday when the Euro was somewhat higher, the real key level is 1.2695 indeed, in the short term anyway. EURUSD may fall to target but we have serious contenders waiting to jump around last week's lows.

As far as ER and ES are concerned, no surprise either, except maybe that support level have been penetrated a little firmer than anticipated, shrugging off lower time frames to go and test targets on longer time frames.

ER is now aiming at stall level around 390 and possibly even a Fib target on 383. A strong bounce is to expect at some point though (like end November '08).

ES is following the same dynamics except it is closer or on target already, so will it follow and take the entire market to 728, or will it resist here and contribute to the bounce.

There is however still a LOT of negative energy to dissipate, and we don't quite see the end of it right now. Shall we see a lot of fighting at this key level ? Well, if not, the picture could be quite ugly with a 100-point fall ...

( posted 5 AM UK )

Weekly Report on ES - Feb 23rd to 27th '09

Oh well, when i said "ES could really sink deep" last week, i somehow didn't quite anticipate we would have such heavy selling, but it was witching day on Friday, thus adding to the high volatility environment.

I added a commented chart on the technical blog, and we still have a strong correlation to our other Russell index (see article below), so we'll just glance at ES peculiarities here.

60mins:
Inches away from it's 750 target, so immensely anticipated that buyers came back to avoid options being exercised and maybe triggering a more dramatic bloodshed. The following bounce has been here more convincing than for ER, with MTFS looking like it could take prices a little higher. ~780 will be key and we have to be careful as options and futures expiry can certainly spike the market. Longer time frames certainly do not provide any support for optimism just yet...

Daily:
MTFS here confirms a bounce potential in oversold territory, possibly to a Fib retracement level, on mid 780s or close to 800. Having said that, i wish to reiterate that we have no reason to go long right now, as there is no recovery potential right now.
However 750 is quite strong, and we may just see prices hover for a while in the bottom half of the same range we've had for the last 2 months, i.e. [750-812]

Weekly:
Same as ER, and as mentioned on the commented chart, the picture at this level is just as bearish. Without any change in dynamics and assuming 750 will hold (even if possibly breifly penetrated) the above scenario of prices being restrained in the lower half of our trading range is our best bet. We'll therefore check the key 812 level later on in case of a sudden bounce.

( posted 6 AM UK )

Weekly Report on ER - Feb 23rd to 27th '09

Good call last week with our target just above 400. ER indeed is now sitting on a strong support level on the 60mins chart. Yet, we'll see that this may be a short lived reprieve only.

60 mins:
Sometimes the timing is not ideal to assess what comes next. Indeed ER fell to 406 and almost broke it late in the day to only see a very mild bounce on traders squaring their positions ahead of the weekend.
Technically a bounce to Fib PR1 is possible, but isn't likely at this vantage point. Should selling pressure abate (probable scenario), ER could stay for a while in this [406=437] price segment.

Daily:
To maybe help us draw an overall picture, ER at this level is very oversold with MTFS indicating a likely bounce (however limited in amplitude) at this level. This could confirm a return to Fib retracement level or even a test of the 437 level by mid week if volatility keeps on playing tricks on us.
However, there is NO change in scenario, and the fall should then resume to the bigger Fib pattern expansion target. We therefore still aim at 380s if the 60mins support level breaks.

Weekly:
Again, the bigger picture here supports the overall scenario here. MTFS and Entropy are still quite bearish. Last bar is just as red as the last five daily bars, so let's just try and see where this whole thing might stop.
We've got a Fib retracement level just above 400, confirming Friday's support level, yet it is difficult to see what could stop ER from testing previous lows. Obviously, we'll watch lower time frames carefully to separate the cup & handle scenarios from its double bottom counterpart, the latter looking more probable.



Note on EURUSD after reactions to my Friday's comments: short term players will certainly have jumped in the bandwagon (i.e. long) to Fib target. Longer term positions are still unchanged. The level 1.2695 is key level now.

( posted 5:30 AM UK )

Market update - Feb 20th '09

Markets are sometimes particularly easy to read.

ES broke the 781 level to fall to the 770 area. There is one last stop at 767 before 750. We'll then see whether we are going for a double bottom on the weekly chart or whether it's all gloom and doom. We might see a sudden bounce followed for a while by the same trading range we've seen for a few months.

ER has a Fib target on 414, but should aim straight at around 405-406.

More details in the forthcoming weekly report.

A quick note on EURUSD: likely to hit lows again also.
I personally have a target of 1.245

Market update - Feb 19th '09

Needless to say i was about spot on yesterday.
Selling is not over yet, even if it should abate soon.

ES is going to its [766-770] target while Entropy is now slowing. Only a volatility spike could take prices to target as we are already on stall level (781) at daily level. We have to see how the situation develops over the next few days to assess if ES will fall to 750 or lower. In the short term, behaviour around key 781 will be watched carefully.

ER: while being just as oversold, ER is going to stall level at 414 and may well reach support level on 406. Selling pressure is still quite strong, but one cannot discard a possible bounce or even a short-squeeze on forthcoming levels.

( posted 3 AM UK )

Market update - Feb 18th '09

Most would have gone happily short yesterday, as indicated in yesterday's report. Let's now assess where support levels are likely to be found.

ES: Fib target and stall level are now around 770, but we are obviously so oversold on our 60mins chart that a timid bounce to high 790s is possible at first. Some could take profits here and play shorter time frames.
Possible support level at 781 also.

ER: while the situation looks similar, levels are not quite the same and there is some (limited) bounce potential around current lows. Prices should however settle lower (high 410s or maybe even lower).

At this point, we're not too far from thinking we'll have to test November lows to get out of this...

( posted 7:30 AM UK )

Market update - Feb 17th '09

Confirming yesterday's bleak picture, ES is aiming south and 812 is only inches away from being history.
We shall see today whether that level is tested again as a resistance now, or whether buyers have just given up. We do have some support just below 800 now, just to mitigate the otherwise bearish outlook of a much lower target on the daily chart.

Same story for ER which technically is still on its 437 support level (more a [433-437] support range actually).
We may see prices fall a full price segment (about 16 points apart) to reach the next Fib target around 418 to 420.

In the very short term, we have to observe index behaviour on their support level right now. Although very unlikely, we may see a last minute attempt to bounce on those levels.

( posted 6:45 AM UK )

Weekly Report on ES - Feb 16th to 20th '09

Last week, i forewarned that ES was certainly not out of the woods and could sink further. We're now back to the crucial 812 test level and the picture has not improved a bit. We'll certainly give this support level a chance to hold even the outlook certainly looks a little bleak...

ES 60mins: Aiming at support level (also Fib target), it is difficult to assess whether buyers will come back to the party at this level. The next stronger level is otherwise ~796. Even if current level holds, nothing indicates a possible bounce at this stage, so the most likely scenario is a continuation of this messy trading range.

ES Daily: Not looking too good here either. ES could really sink deep... down to the mid 720s i.e. close to November lows! Having said that, should 812 break, there should be substantial fighting in the 780 area.

ES Weekly: Longer term context is somewhat bearish too. However, despite bars being decidedly red, there is some support around bar lows, so we may avoid the all gloom and doom scenario still. For the time being, staying on the side line is probably the safest bet here until we see a MTFS line crossover, blue bars and a better looking Entropy.

( posted 7:10 AM UK )

Weekly Report on ER - Feb 16th to 20th '09

Going back to last week's report, we had a chance to go long and short to end up lower than last week. As I said, the picture did not look too rosy and we're still in that same messy congestive situation, fixating on our key 437 level to determine which scenario will prevail in the end.

ER 60mins: Failed to pass the pivot level around 453 so we're stuck in the lower part of our trading range for now. Again i insist that the [433-437] support range will be key. Should it break, ER will be in serious trouble. The lower parts of the trading range should be tested again so let's give it a chance so long...

ER Daily: Same messy picture. Here too, 437 looks strong enough to hold even if we don't anticipate any change in dynamics, hence no substantial buying to support any form of recovery. Selling pressure or lack of buying could send ER down to the next support levels just above 400 or even around high 380s again.

ER Weekly: Not looking too good here either. We certainly don't want to look at what would happen if our support levels collapsed. Let's not all think grim though. As mentioned above at daily level, we'll go with the flow until next support level is reached.

( posted 6:30 AM UK )

Market update - Feb 13th '09

We anticipated that the market needed a (last) bout of selling to clean out a few punters. Will it be enough now to turn the page over and look at a new cycle though ?
ES indeed had to test 812 pretty much head on and even reached 805 for a short while. We've seen equivalent levels in the past 4 weeks, so this was clearly a volatility effect.

What's in store for today ?

ES has a stall level at 840 (also a 50% fib retracement level) and a strong resistance at 844.
One should not expect fireworks just now, but any move away from danger zone is positive. Today, one should see some continuation of momentum trading. It is not clear yet whether ES will retrace on the low to mid 840s or whether it will pass it, test it as support to then move to the upper half of the trading range (to the mid 870s). That's for next week anyway.

ER follows a correlated path. It bounced on 437 (hit a low around 433) then reached MM pivot already. It now has to either retrace or move to the upper part of the trading range as well (from 453 to 468). Longer term 468 will be hard to break and we may just stay in that messy trading range for a while still.

( posted 6 AM UK )

Market update - Feb 12th '09

Markets are still quite hesitant. Not really fun to trade on these long time frames, not really fun to report either. One can obviously sit tight and wait for a while, keeping some crucial support levels in check.

ER: Fall stopped on stall level (~442) ahead the 437 level which could have been of concern. Some recovery late in the day does not guarantee that ER will not try and test lows again. The market certainly is a little messy. Having said that, the weekly chart could sustain a drop to 423 before taking off again. Once we leave this danger zone, we'll look at levels around low to mid 450s as our first target.

ES: Same story, same feeling of an unfinished business on the selling side, so maybe one should get over and done with it, exhaust sellers and start seeing some healthy buying. The only difference maybe with ER is that there is less room and the low to mid 810s are the last line of defense for a anticipated recovery.

So, let's be a little cautious again. Short term (tick charts), we would like to stay above 828, or at least in the low to mide 820s. 836 will be our test level to get out of this messy trading range.

( posted 6:30 AM UK )

Market update - Feb 11th '09

Oh well, retracement was a little stronger than anticipated. The fall stopped on the 2nd (stronger) Fib expansion level for both ER and ES.

So, what's is in store for today now:

ER: Oversold and in hangover mode, ER should stay in the same price range. Selling pressure should keep it low within the low to mid 440s. Technically as we said in previous reports, we are not 'worried' as long as ER stays above 437.

ES: Same story, just different prices. ES will be of concern if 812 is broken.

Longer term, we're still in a congestion mode with a likely recovery point down the line. According to each and everyone's risk profile, i recommended going for short times frames, take an aggressive long limit order and hang in there, or stay on the sideline for a bit. No change in strategy just yet.


( posted 4 AM UK )

Market update - Feb 10th '09

ER: We warned of a possible stall, and this is confirmed now. ER resistance level in the high 460s has turned from pivot to strong, so one could see a retracement to 1st Fib level. On higher time frames (daily, weekly), the outlook is a mildly bearish congestion.

ES: Same story, and as we've said in previous reports, ES has easier to read lately. ES should now first reach Fib Expansion and possibly pivot level in the mid 840s. We however do not anticipate any change in our longer term outlook.

Note: FX is no longer part of our free reports.
( posted 4:30 AM UK )

Weekly Report on ES - Feb 09th to 13th '09

Again, markets are very much correlated and we'll here only emphacize on specific prices and possible pattern differences.

ES 60mins: Somewhat overbought ahead of key resistance at 875. This is typical of stall level (867) after a good run end of last week. We'll therefore watch for a first Fib retracement level. One should theoretically be too concerned if there weren't a number of clouds in the sky of higher time frames...

ES Daily: The uncertainty unraveled last week is still around, so we may have some more congestion until a Fib pattern comes out clearly. We remain cautiously bullish even if trading range lows can always be tested again (unlikely though).

ES Weekly: Here again, we have to be particularly careful as Entropy is stalling, Swing is turning south again and MTFS is decidedly quite bearish still. Only that yellow bar gives us a glimpse of hope. Having said that, no gloom and doom here... Let's just watch how we break our trading range at daily level first. All we can say is that the trading environment on longer time frames should remain messy for a while.

( posted 8:30 AM UK )

Weekly Report on ER - Feb 09th to 13th '09

Due to an exclusitivity agreement, there will no longer be forex reports on this blog, so we'll jump in straight away with ER (RUT).

I advised to go for an aggressive long limit order to prepare for a nice up move or go market. I gave an indication of a pivot point (438) so i assume everybody got it more or less at the right time.

Let's now have a look at the week ahead:

ER 60mins: while being understandbly stopped at MM pivot line + Fib Exp target, there is still substantial buying pressure in overbought territory so in absence of major news, one should only see moderate profit taking.

ER Daily: The picture is not so rosy here and it appears that we'll have to wait for Fib Exp 1 level (low to mid 480ss) to be reached to relax a bit. We can have some messy congestion hanging on for a while even if lows will probably be soon confirmed as passed as time goes by.
Til then, caution is required.

ER Weekly: While we still follow our favoured "cup & handle" type of scenario we have to acknowledge that last week's bar only turned yellow from red, and both MTFS and Entropy do not look too good yet. At the moment, we just have to watch that lows do hold on until buyer start coming back to the party. Test levels would then be in the [500-520] range.

( posted 8:05 AM UK )

Market update - Feb 6th '09

Sorry for this late report, but no email available yet at 39000 feet a.s.l.

EURUSD: Hanging on our short, and happy to see 1.282 being broken, even if we didn't see the acceleration we anticipated. We now aim at 1.275 short term but will remain cautious as selling pressure is not that strong any more.

ER: didn't i say the market was looking for a pivot around 444 ... ? On the other hand, no rejoicing just yet, as ER remains range bound, so better trade shorter time frames for the time being. On the way up, we have to see recent highs (~460) then pivot level ~468 to gain some upward momentum. Until then it can be messy, choppy, and even drop to test support levels again.

ES: Again, markets are highly correlated and we might have a glimpse of an answer here. ES is trying to pass MM pivot level around 844. This could lead to upward breakout, if anything to the 875+ levels. Having said that, evetything indicates continuation of this messy situation for at least a week or two.

More details on our weekly report this week-end.

Market update - Feb 5th '09

EURUSD has been hovering above 1.282 and selling pressure seems to be dissipating a little now. This is typical of a congestion on such a strong support level. There could be some acceleration once support is broken. We still have the same target as per previous reports.

ER:
If we look at a good pivot point where prices could rise again, it could certainly be around yesterday's close (~444). Should it be lower, (and we have to acknowledge we're still in 'failed recovery' mode which could resume into full bearish mode) the ultimate test level remains 437 which was tested a few days ago.
We'll therefore watch current levels carefully. Our favoured scenario is still cautiously bullish.

ES: Same story at first sight, although the picture is slighly bleaker.
The ultimate test level here is 812. Here again caution must be exercised.


( posted 8:30 AM UK )
NOTE: tomorrow's post will be delayed until 1PM UK)

Market update - Feb 4th '09

An error slipped in yesterday on EURUSD. Those lines were attached to a short term tick chart... sorry about that.

Back to our longer term outlook:
EUR is still aiming at a soft landing somewhere around the 1.20s. If one has gone long on this upward retracement, our immediate targets are 1.306, then 1.312 and 1.318. There is likely to be uncertainty around this range, until EURUSD breaks 1.294 again. Our scenario would on the contrary possibly fail is EURUSD passed 1.318

ER:
Same upward bias, yet a little range bound now. It is unclear whether there is enough energy left to pass Fib PR1 now, so congestion could prevail a little longer. It is recommended to either hang on and wait for clarity, or trade tick charts.

ES:
Nothing new really... Fib Exp Target1 (~836) has been hit, and ES is still creeping up higher, albeit unconvincingly. Should it find energy to reach 843, a retracement seems inevitable at some point, without however affecting long term outlook as long as prices stay above 812.

( posted 7:30 AM UK )

Market update - Feb 3rd '09

My crystal ball did a good job again on EURUSD... and this will be the last week for FX posts in terms of an exclusivity agreement. We shall gradually return to 2 posts a week on US indices as the financial crisis slowly comes to an end.

So EURUSD bounced as anticipated and should now resume its course south. Selling pressure should however decrease so one may want to follow shorter intraday time frames. Once/if 1.282 is passed, we'll check 1.277 and then 1.2695 again.
Our longer term outlook remains unchanged still.

ER:
Here again, ER behaved as expected, bouncing a little below 437 (physicists will understand that support levels always contain a degree of elasticity on account of volatility).
ER reached Fib PR1 and could higher, but not without a bit of range trading first. 437 could even be tested again.

ES:
ES is also a little undecisive with a willingness to take off, but no real energy to do so right now. We should however eventually leave this trading range on the up side. Resistance levels are placed a few points apart from 828 to 844, so could be as many stumbling blocks indicating the way to recovery is bound to be a little bumpy.

( posted 7:30 AM UK )

Weekly Report on ES - Feb 2nd to Feb 6th '09

Again, markets are very nuch correlated and we'll here only emphacize on specific prices and possible pattern differences.

ES 60mins: We are here a little more bearish than ER (Swing is still down) and definitely aiming at 813, which again is so much anticipated that we may see some 'tug of war' behaviour ahead of target. We then do see some potential for recovery to 843 which will become the next key level, crucial to a longer term recovery. One thing at a time though, as 813 could also break...

ES Daily: Same uncertainty here, forcing us to evaluate the 813 key level on the 60mins chart very carefully. We here also have 2 conflicting Fib patterns whih could send prices either way, i.e. down to 782 then... 725! or otherwise up to 924.

ES Weekly: Here again, we have to be particularly careful as while we have seen Entropy recovering and Swing toggling up, the MTFS pattern is still quite bearish and bars are 'bright' red. We however favour a positive scenario for ES, despite showing a few roadblocks along the way.
We'll come back to those key levels later on (by end 1st quarter '09) but we do already see that on pivot confirmation, recovery could well stumble again near 1000 and 1250, both being strong Fib and MM levels.

( posted &:28 AM UK )

Weekly Report on ER - Feb 2nd to Feb 6th '09

EURUSD:
While being considerably oversold, EURUSD is now aiming straight towards 1.2695 Obviously this level is largely anticipated, so a bit of volatility ahead of (or on) target is likely. Our scenario then is a bounce to 1.295 which would be a test level going forward. Let's first wait for our target to be hit. Our target over the next few weeks is still in the 1.24 area, which we shall confirm upon €/$ behaviour on test level.

ER:
Swings are all UP and yet all bars are red or yellow at best thus indicating a willingness and unsuccessful attempt attempt so far to find support in this area.

ER 60mins: As mentioned above, we do have early signs of a bottom indicated by Entropy recovery, MTFS white line trying to pick up in oversold territory, Swing toggling up etc. Yet, it seems almost inevitable that the market will try and hit its target around 438. That MM support level looks quite strong though, so we'll watch ER's behaviour carefully.

ER Daily: Our configuration despite uncertainty in the last couple of weeks still sustains our scenario of a market recovery on a support to be confirmed still. At this juncture, the pivot point could well be the 438 area already mentioned. As a reminder, i've been giving a "aggressive limit long" notice for long term players, with the additional caveat that this is a early warning only (bars are still red). Most traders will wait for pivot confirmation with blue bars.
Furthermore, we have to remain cautious that we still have two potential opposite Fib patterns forming.

ER Weekly: In agreement with our daily outlook, the weekly chart is also hesitant with Entropy failing to confirm it's recovery. We still favour a 'cup&handle' formation but we certainly have to wait for a confirmation of the forthcoming pivot (~438), blue bars, and at this time frame, see 500 clearly passed and tested for support. Again, one can try an aggressive limit long order with a stop near last year's lows, or wait and hop on the bandwagon a little later.

( posted 7:25 AM UK )