Market Update - Sep 2nd '09

Didn't i see it coming... ? We had that typical "air hole" configuration which translated in a sudden fall which i thought would be limited to 16 points.
Es instead shed the full size of the current trading range.
It is not an error of the model per se, but simply the same difficulty to gauge to which extent volatility will compress time. ES had to come back to 1000. It could have been anytime this week.

Now the trouble is that indicators have obviously been fairly bearish all day on the 60mins chart, only mitigated slightly by very very light trading after hours. ES should therefore remain low until all bearish pressure is dissipated. The 1000 level will probably hold (intraday levels show a support [996-1000] range) although it has now been traversed several times hence has lost some of its strength, and we cannot discard the equiprobable chance of a breakout ( for another 32 points ??).

1000 is obvously a key level, and the bottomline is that there is still some bearishness to evacuate either through a price drop or passage of time.

We have to note however that again TF is considerably more bearish than ES and could settle below 550 if ES doesn't hold its current 1000 support level.

Longer term outlook remains unchanged. This is at this point only normal profit taking after the "irrational exuberance" since March.

( posted 7 AM UK )