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

Similar picture here (see ES below), and clearer picture too.

ER 60 mins:
Swing quality is higher here, making chart reading a lot easier. The retracement now hit Fib PR2 in the mid to high 390s where it could bounce first. However, support on 390 and even 381 would be our natural target level.

Daily:
Same mild retracement, same pattern, so while some buying interest is now visible, we shall here as well look for a lower support level (Fib and/or MM). It is however not clear whether we will see 375 again. A number of market participants will now try and enter limit somewhere below 400.
Having said that, we have to keep the same caveat in mind that here as well, the Cup&Handle formation could fail, leading to a downward Fib pattern with a target near lows. We can't discard that scenario even if we are aiming long. A stop level near lows makes it a relatively low risk/reward trade.

Weekly:
Early signs of some weak recovery in the coming weeks. Having said that, too early to rejoice as one could also just as well hit lows again, and even lower (MM stall level is around the corner at 312). It is quite unlikely though, or at least not predictable at this juncture. Like for ES, long term risk adverse players should maybe wait a few more weeks to see selling pressure abate. Any long trade below 500 is a bargain anyway if we have a long term horizon.

( posted 6:15 AM UK )

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

We finally got the much anticipated pause on our indices. It is never the most exact science, but it occured more or less on stall level on the 60mins chart, concomitant to salient Fib levels as well.


ES 60 mins:
Healthy profit taking with a test of pivot level was bound to take prices to the low to mid 760s. While we're hitting support here, we could see a probable continuation to stall level in the high 750s or Fib level around 755. Obviously 750 is the ultimate test, but we cannot see at this point whether it will go that low.
Looking at price segments, 781 is a test pivot level for a trading range 16 or 32 points wide. At the moment, we are below that key level, so we could well stay in this trading range. If/when passed, ES would in absence of exogenous factors return and stay in the equivalent price segment above.

Daily:
This 2% retracement on Friday remains modest compared to the run we've had in the last 2 weeks, and justifies a yellow bar only. Momentum is still up so we can only anticipate a limited pullback to the 750s level. While we are still in "early crossover" mode (aka failed recovery mode), this is likely to turn into a cup & handle formation still. Should selling pressure increase, we already see strong Fib retracement levels on 750 and 715 and targets just below 700 (unlikely scenario).

Weekly:
Early signs of some weak recovery in the coming weeks. Having said that, too early to rejoice as one could also just as well hit lows again, and even lower (MM stall level is around the corner at 625). It is quite unlikely though, or at least not predictable at this juncture.
Passage of time and a possible bounce could just as well help dissipate the strong selling pressure we've had in the last few months.

( posted 7:30 AAM UK )