Market update - Apr 30th '09

Again, it is clear that one must always guard against reading between the bars (pardon the pun). We knew there was a possibility of reaching strong resistance level first, which often acts as a (strange) attractor.

ES has therefore clearly hit 875 (at least this is done now), and... we might have to wait a little longer to finally exhaust buyers enthusiasm. ES should indeed hover in this price area for a while, unless market participants decide to massively take profits ahead of the long weekend (unlikely though).

Once selling has started, we'll follow Fib/MM for targets (unchanged from previous reports).

ER (aka TF) is slightly out of sync as it is still running to catch up with its own 500 target. The pattern formation is however exactly the same.

( posted 7:10 AM UK )

Market update - Apr 28th '09

ES remains quite resilient at these levels, even though a "air hole" could perturb this configuration anytime. On the 60mins chart, ES bounced on a first Fib target on 850 which is usually fairly weak. Again, we would favour a drifting or profit-taking scenario but in order to avoid putting the ox before the cart (common mistake i also do) one should wait for the daily chart to show a least a red bar (the weekly chart is also indicating a peak).
Should selling start picking up speed, we see the next target in the 840 to 843 area.

The situation on ER (TF) is similar, and maybe clearer too. We are in a trading range made of price segments which are more or less 7 or 8 points wide. ER needs to break 468 (range mid point) then 461 etc.
The daily chart is also quite resilient, to the point that we can't discard a scenario whereby ER would manage to pass this stall level to give a go at the almighty 500 level. Here again, the "air hole" episode is quite probable so we are waiting for a red bar, and a breaking of the trading range on the 60mins chart first.

( poste 6:50 AM UK )

Market update - Apr 28th '09

ES stalled on ... MM Stall level (867.25). Quite prdeictable of course. ES then spent the day drifting to the 850 price level which is the 1st Fib target.

We know that while quite resilient, gravity should prevail so ES should test prices near MM Pivot and the next Fib target i.e. around 840 to 845.

Buyers will then have to be 'exhausted' on the 830-835 area to possibly permit a clearer picture. I however believe there will be barriers near 820 and 812, which if/when broken will open the way to our Fib target (797 then 766).


Same picture on ER (TF). In the short term, we need to see 460 broken. One might first see 468 being passed then tested as a resistance level. ER is just as resilient but maybe just need a bit of a shove to retrace more clearly.

Note however that reversal potential decreases over time, so there is very little chance to see more than a retracement for a Fib target around 410 to 414.

( posted 6:40 AM UK )

Weekly Report on ES & TF - Apr 27th to May 1st '09

Last week has been a little frustrating with pivot indications announcing the end of the bull run (since early March). The too obvious 875 resistance level has been almost hit twice and buyers may just give up anytime.

ES 60mins
This MM Stall level on 867 coincided exactly with a Fib pattern which justifies profit taking. Having said that, the ESM09 tick chart (1597T) shows a 2% FALL, hence we have to be VERY CAUTIOUS here. Check Fib retracement levels (851, 845, 840) for reversal.

ES Daily
The 2% early morning morning fall (Mon 27th) is in fact in line with our scenario even if spikes and high frequency moves in general are difficult to capture.
We here see a confirmation of our former outlook (last week's reports) for a return to the high 790s. We cannot however discard prices to remain first constrained in a range for a while with a lower boundary in the [820-830] area.
While this is way too early, one can already see a target on 766 (2 Fib patterns).

Weekly
A provisional pivot is now showing, thus giving more credit to our scenario on lower time frames. We've been repeating over and over that the bounce from early March lows would be subject at the very least to some profit taking.
We'll now wait for this pivot to be confirmed first to validate our targets (797, then 766).

ER (TF) follows the exact same configuration.
468 is a short term test level. Reversal will be confirmedn if it is broken then tested as a resistance level. Profit taking has been long overdue, but again we don't anticipate recent lows (early March) to be tested again.

Market update - Apr 24th '09

Not much to say about ES today really...
Intraday traders can have some fun on tick charts, but the 60mins chart is congested in a trading range, and the Daily chart is holding well although the 'air hole' could happen anytime. Check 843 as an intermediate support, which if broken would make the market move to the price segment below (828 - 843).

Same picture on ER (TF), which again looks quite resilient still.

We'll review our scenario quietly over the weekend as we don't anticipate the markets to collapse today.

( posted 7 AM UK )

Market update - Apr 23rd '09

ES retraced up more or less to Fib PR2 (mid 850s) to then resume south. We certainly have to accept some resilience in the market, hence we have to be cautious around a pivot as always, even if this obviously looks like a classic head & shoulder.
The market should continue drifting rather than falling and we'll check for levels on the way to the high 790s. We have to pass 828 then a strong support in the low 810s.

ER (TF) is certainly significantly more resilient than ES (is it trying to hit 500 first???) so we have to remain cautious still about this profit taking period being possibly short lived. Hesitation at this level is quite normal and we however still believe ER will retrace if only to the 427 to 438 range.

( posted 7:40 AM UK )

Market update - Apr 22nd '09

ES bounced as expected, even if we have to realize that high volatility always increases S/R levels' elasticity. The fall was therefore stopped 3 points lower than the 828 level followed by a bounce to 848.5 i.e. 5 points higher than our resistance target yesterday.

On the daily chart, we cannot be suprised by this up day. This indecision is quite normal, however selling should resume if only to the Fib PR1 level. We notice that MTFS does not point towards a return to a bear trend at this point in time. We still believe that in the medium term, the retracement target is 766 or 750 where another bull run should start.
We'll update this scenario in due course.


Note on ER (TF): While 468 is a strong resistance level, selling pressure is not as marked as for ES.

( posted 7 AM UK )

Market update - Apr 21st '09

Nice fall, wasn't it ? We've been expected it, and even the most conservative of us went short on 858. The slide stopped close to the 82825 MM resistance level to bounce in post market trading.

Tick charts do confirm the bounce to 836 and possibly 843 later on, although it is unlikely to reverse this new retracement direction. ES should normally be on it way to the high 790s as mentioned in previous reports.

The situation on ER (TF) is similar, however 453 seems to be a stronger support level. We here also believe the new target is 427 but we might have a bit of fighting in the short term.

( posted 7 AM UK )

Weekly Report on ES & TF - Apr 20th to 24th '09

Last week Monday, the report was maybe unclear for some as ES was already so overbought on stall level that we anticipated day after day a reversal which never quite materialized.

Some would have tried going aggressively short for minimal gains or losses, but most would follow our on-going advice to only "go with the flow" and we have to remember that we've never had any red bar on the daily chart.

Let's try and analyze our charts:

ES 60mins
A lot of hesitation, a lot of anticipation and maybe some frustration too. ES is now more overbought than ever before so that much awaited pivot may just be around the corner so to say. 875 (which is a price attractor we mentioned last week already) is now so close (only 3 points away from Friday's high) that one almost can't imagine it not being hit. One should however be cautious of overly obvious targets though.
Anyway... as always, we'll go with the flow and study ES behaviour as we approach our target.

Daily
Here again, the MTFS white line shows no sign of abating just yet. It is clear however that reversal will be soon coming so we can prepare in anticipation for a retracement to the the high 790s or maybe lower.
Let's first wait for the MTFS white line to peak and a red bar to go short though. Shouldn't take too long...

Weekly
No change in our scenario since last week. We first have to wait for the slowdown we forecast

Note on ER (TF)
Same patterns, but difficult to say whether ES will hit 500 before retracing.

Again one should wait for a clear pivot confirmation and monitor (and possibly also trade) shorter time frames (e.g. tick charts like 32000V bars or lower). We'll check for a key 858 level on ES for such confirmation (change of price segment).

( posted Sunday 9:20 PM UK )

Market update - Apr 16th '09

ES is swinging around pivot level from stall level to stall level. One should not ignore that ES is still quite resilient even if it is peaking now on the daily chart.
It may be a little early for most to go short on that time frame still, but the risk is relatively limited.

Note that going short on the 60mins chart is considered technically as a contrarian trade since swings are still UP on the daily and weekly charts. We generally go with the flow, i.e. only take aggressive contrarian trades if pivots start showing even if unconfirmed. There is nothing wrong with being more cautious and wait for a clearer pivot on the daily chart.

ER (aka TF): similar picture, however may be slightly leading ES.

NB: a commented chart is posted on the technical blog:
http://ts-trading-technique.blogspot.com/2009/04/es-chart-with-commentaries-apr-16th-09.html

( posted 7:50 AM UK)

Market update - Apr 15th '09

Pivot point was well spotted, wasn't it...
ES indeed hesitated for a while on 844 then broke it, tested it as a resistance to finally go south.
Very classic pattern indeed.

In the very short term, stall level is on 832, and the new strong support is 828.25 which should be hit even if the 60mins chart is in bounce territory now.

The daily chart has not yet quite confirmed a reversal. A pivot is now showing and MTFS is quite overbought, but ES is still holding well. The most aggrssive traders will be short while the more conservative can wait a little. Once confirmed, the target will be 781.

ER (TF) provides us with a somewhat clearer picture.
In the short term, it may shed a few more points but is waiting to bounce if only a little. The Daily chart is now showing a red bar so a short signal is there if it stays red by today's close. It will be up to each and everyone to try and pick a good limit price since the 60mins chart shows some bounce potential.

( posted 5:45 AM UK )

Market update - Apr 14th '09

Virtually no trading yesterday, so we should "a priori" not take the current drift too seriously. Yet, having said that, we've reached pivot territory now, so a reversal is very likely today or tomorrow.

Check 844 on ES for support, or confirmation of reversal.

Weekly Report on ES & TF - Apr 13th to 17th '09

High volatility again last week, or is it high really ? we've done a simple exercise on ES. We've listed the log returns since Jan 1st 2004 and calculated the top and bottom 1/30 (i.e. 3.33%) and came up with some really amazing.
The first occurrence of a highly volatile day came only in Feb 07, then Aug that same year, but has become almost "normal" since Sep 08 : 43% so nearly every second trading day!

If we now restrict our study even further to the top 1% moves in either direction, the first occurrence only came in Mar 08 and most happened during 4th quarter 08. Those supposedly rare events (1%) actually reached a 17% probability since Sep 08 so 1 in 6 trading days. Again, such high volatility is now virtually normal (see images below)

Now back to ES, after again a bumpy week.
ES has reached stall level (~844) with a blue bar still so one could assume that the 875 target remains realistic. One realizes however that the MTFS white line is very overbought, calling for the much anticipated retracement to the 750-765 area. We shall therefore tighten our stops or take profits to prepare for the next slide.

In the short term (60mins chart), ES is also overbought but does not show any sign of retracement just yet. Easter Monday is probably not the right time for this but a return to 820s range later on this week is quite possible indeed.

Weekly outlook: no change from last week.

Lastly, let's take a look at ER (aka TF) for any peculiarity: ER has already reached stall level on the Daily chart, equivalent to pivot on the 60mins chart, so retracement potential is strong even if limited at first. This could be an indication of a head & shoulder pattern forming. Here again, detecting it is only the first part of the equation. We'll have to wait for a confirmation in the next couple of days.

( posted Mon 13th 9:30 AM UK )

Appendix:

High Volatility Moves since Jan 1st 2004: top 1% moves and then top 3.33% moves

Market update - Apr 10th '09

ES is still certainly incredibly resilient, as if if wants to hit 875 before starting its awaited retracement. It is however extremely overbought on the 1H chart, so will be a good candidate to halt its rise on stall level just short of 870. Until then, as always, we'll go with the flow...

Note however that thinner trading may affect this outlook.

The situation on ER (aka TF) is quite similar however it has already reached resistance level on 468 so would be prone to retrace, if only slightly at first.


More details on the weekly report tomorrow.


( posted 8:40 AM UK )

Market update - Apr 9th '09

ES bounced here than we thought yesterday. We only post one report per day, and this is a clear case where an update would be needed. ES passed the 812 test level decisively in pre-market trading to warrant an update which users of this toolset will have obviously done.

ES also bounced without quite completing its pattern and we'll check for the formation of a downward Fib pattern later on today. For now, we believe a resistance around 828-830 would confirm that scenario. We'll remain cautious as there is still some residual momentum.

Our weekly report mentioned that the daily chart looked resilient with a MTFS pattern that does not seem completed yet, so the sizable retracement i announced has probably not started yet.

ER follows a similar path, and here again, it is difficult to figure out whether resistance has been reached or whether it can hit 447. As always we go with the flow and the 60mins bar is still blue after all.
At daily level, the situation is the same. i.e. waiting for our anticipated reversal.
Maybe early next week...

( posted 5:30 AM UK - Update/Info:email )

Market update - Apr 8th '09

ES reached our target on 812, yet at the same time, the 60mins MTFS pattern turned bearish, hence we're not quite surprised to now see a continuation of that much anticipated retracement.

Difficult to say how far it will go as ES is quite oversold (MTFS) and this generally leads to the former support level to be tested as a resistance.
A bounce to the low 810s is therefore anticipated.

This may be surprising but there is no indication of any return to a bear trend even if the current retracement could eventually pull prices back down to the 750s level. We'll confirm this later on.

ER also gives us that same indication of a potential scenario of a return to the pivot level around 437 (way too early to confirm though). On the daily chart, retracement to the low to mid 410s seems quite clear. ER could actually retrace lower to the 380s.

Again, no need to depress... it's only a healthy retracement cycle.

( posted 6:30 AM UK )

NOTE: Friday 10th report will be posted late, just before the opening bell.

Market update - Apr 7th '09

Retracement on ES has now started, even if, as we said yesterday, it is still showing good resilience on the daily chart.

On the 60mins chart, a bounce occurred on Fib PR2 around noon, so we may see a bit of range trading or a last attempt to go north again. The trend is slowly reversing though.

Same story on ER (aka TF), i.e. could certainly still creep higher (stall level ~461 and resistance level ~468), which would tally with daily chart trying to complete its current pattern in overbought territory.

Again, we do not foresee any major reversal but only a healthy retracement to gather strength and go higher later on (2nd quarter 2009).

( posted 6:30 AM UK )

Weekly Report on ES & TF - Apr 6th to 10th '09

Interesting week wasn't it? Some limited profit taking mid week followed by news that dollar printing machine shall soon reach melting point helped boost the markets. Is that a healthy situation ? Of course not, so volatility based models should do fine for quite a while still...

60Mins:
ES has been very resilient on strong resistance level. While we don't see it breaking right now, it is an eventuality to consider still. In such a case, prices would just move to the segment or range above with 843 being a new support and 875 being a new resistance. Again, our favourite scenario is rather a pullback to pivot level (~812) once buying pressure abates a bit.
Looking at ER (aka TF) now, it seems that there is still some fuel here to aim a little higher. ER is now only inches away from stall level around 460 and even strong resistance level on 468. Energy levels are low, but probably sufficient to creep higher on momentum residual.

Daily:
ES still going strong, and MTFS pattern not even complete yet, so shall we see prices reach 875 before any substantial profit taking happens? All we can say is that the market is certainly not ready yet for some retracement. Energy levels are coming down a bit but bars are still blue, so again, we'll go with the flow...
ER: same situation, but we'll watch 468 carefully as a trigger for a potential reversal point.
NOTE: in both cases, MTFS is clear on the necessity to have a retracement coming soon, so going long now is risky at these levels.


Weekly:
Same situation as last week
"The early signs of recovery we detected last week are more visible, but at the same time, also show indications of the "early crossover" pattern, in other words a choppy recovery at best, and a pattern failure otherwise. We still gear towards a reversal over the longer run, so longer term players may want to look at favourable entry points if they are not long already. We still assume recent lows represent the absolute bottom."

Current recovery is still underway, and one wonders if the current momentum can take prices all the way to Fib PR1. Would be surprising though, but that scenario is enticing as we have MM/Fib level almost matching perfectly (1000 for ES, 500 for ER)... Looks too obvious, and energy isn't quite there, so the pullback mentioned above on lower time frames is probably required to gather further strength.


NOTE: this report is based is based on these time frames to be consistent with a daily market update. This TradeStation toolset can be applied to any symbol and any time frame.

( posted Saturday 4th 7:45 AM UK )

Market update - Apr 3rd '09

ES reached Strong Resistance level on the 60mins chart, so could pause at this level. While overbought, there is no sign of retracement just yet. At best, prices should drift a little.
On the daily chart, although one also sees some weakening of the current momentum, one does not see any major profit taking in the short term even if we stick to our scenario of a healthy pullback to the mid 770s at some point.
828 is a short term support right now, then the mid to high 810s.

ER: same situation. While it could still creep a little higher, it is likely to then find support in high 430s later on.

( posted 8 AM UK )

Market update - Apr 2nd '09

ES bounced on 781 which was indeed a possibility we had seen, yet to be honest we could not quite anticipate ES passing the 812 pivot level so easily. We obviously can't get it right all the time, but our patterns while hesitant still give is us a 50-50 chance of retracement (as mentioned in previous reports) after this 'spike'. Is this due to anticipation on the G20 meeting in London? Are punters aiming at 832 first before taking profits ? It is now a matter of when going long at what price for those who are not long yet.

ER: similar picture. If it can still reach range high around 430 or even hit 437 again, retracement is VERY likely (same pattern formation on daily chart).

Advice: lower time frames are recommended to take advantage of the current situation.

( posted 6:45 AM UK )

Market update - Apr 1st '09

Nothing surprising in the last 24 hours.

ES pullback has been stopped on the 781 strong support level yesterday. While it could certainly bounce, we still believe ES needs to go lower still and test 766 or 750 again.

ER (TF) may find some relief on 415 (equivalent to the 781 level for ES), but is also likely to aim at the low toward 405 and could even retrace all the way to 380. This is unlikely though. Buying should resume within a couple of days.


( sorry for the late post because of an Internet problem... DNS was down )