Mid week market commentary (Wed Sep 17th)

There are many many sites, many trading gurus out there giving you market advices. Most are wrong or evasive, most have inflated egos. Without being overly cynical about it, a market for worthless information exists only because there is demand for it...

Anyway, let's come back to yesterday's post a minute: I gave the 687.5 support level on ER admittedly penetrated to 680 without breaking. I'm not going to explain MM lines again, but it was clear only minutes after the open that the level would hold. The braves even bought ER below the technical support level. After the 1st run, 687 had to be tested again for support etc. ER climbed 2 segments in a day. All in all, a very classic, very very profitable day.

ER: now testing the high end of its price segment with remain upward pressure, yet some profit taking is inevitable today. Again, one can take short term profits and swing play short time frames. It is far too early to confirm we're out of the woods and a return to 703 remains possible if not necessary to climb again later on.

ES: Who could tell you ahead of time prices would reach 1165 and bounce from there. Yesterday's low was 1163 to be exact. Anyway, enough boasting... Similar scenario as for ER maybe only a little more hesitant until lunch time. Same story of a 2 segment price jump, and same caution now as we should not expect a second day runaway. ES needs to consolidate a bit now.

EURUSD: Yesterday's post: "bears will be coming back and play the Euro down to the pivot level again (~1.416). Euro could also get back to recent lows below 1.41" EURUSD indeed hovered above pivot line until lunch time then reached a low of below 1.408. Easy 40 to 50 pips....
Today, we'll stay on short tick charts. Pivot level is indeed losing significance a little, and we may see a bit of congestion or erratic moves on higher time frames until a clear Fib/MM pattern emerges. The underlying downward pressure (daily chart) could make it drift a little more within the next few days but again, shorter time frames will be needed as we can't discard an up move at first.

Quick update after Monday's "bloodshed"

Well, yesterday's "exciting" price action warrants an update on the public blog.

The update published just before lunch time yesterday was clear: prices were at the bottom of a segment, like on a thin string waiting to break. We however can't talk of a free fall, and yesterday's large %change also came from the friday afternoon's recovery wiped out over the weekend.

Anyway, let's look at possible support levels:

ER: 687.5 right now, otherwise down to 656, broken into 2 or 4 segments. Technically, same again to 625. This is quite unlikely though. We have to give this 687.5 level a chance first. A return to 656 would only be another round in cycles (as mentioned in previous posts) we've seen January. So let's just go with the flow again.

ES: levels are not as clearly depicted on our charts, and this may add some confusion for some. We have a support at 1165 which could hold today. There are other possible levels below, but i anticipate markets calming down.

EURUSD: The situation may be a little more confusing because the last upward retracement was a little too sudden to find an equilibrium price etc. Anyway, bears will be coming back and play the Euro down to the pivot level again (~1.416). Euro could also get back to recent lows below 1.41.

Quick Update - Monday 15th

ER: After the initial shock, ER is now staying in the 705-719 segment, yet, while energy is subsiding, there is still substantial downward pressure. We'll have to watch whether 705 holds. The segment below (support around 690) is a safer bet.

ES: Same story, here with a 1219-1250 segment, and also some remaining downward pressure. Not much of a safety below though, so lows have to hold otherwise...

EURUSD: a retracement to above 1.44 was expected, almost awaited, but it certainly came extremely suddenly. There is still some retracement potential but things are likely to calm down first just above pivot level.

Weekly Outlook ES for Sep 15th to 19th '08

Dominant TF: weekly, with 60mins coming back
Swings: UP-DN-DN (from UP-DN-DN)
Market Direction(daily): short or flat

Please also always read ER2 post below for guidance.

Another week of a fall then a recovery, hard to follow on a daily chart, but OK on a 60mins chart or below.
Again we look at the market in clear segments (see last week's posts) to better understand price jumps.
We're now trying to pass the 1250 level again, a level which has lost its significance now, at least until it is again firmly tested as support. This remains to be seen.

60mins: watch pivot level
Again, maybe repeating myself, we have to wait for a confirmation of prices staying above pivot level. MTFS is relatively bullish, even if Entropy seems to be losing steam already. One may want to study shorter time frames, as well as correlation to bonds and forex. We should know within the first few bars of the day if ES stays above 1250 i.e. evolves within the 1250-1281 segment.

Daily: high volatility, but no major change overall...
significance level has dropped for a while at this TF, so the more conservative will have switched to a higher or sometimes lower TF, or stay on the sideline for a while.
Current recovery still looks quite unconvicing, so its potential may be limited at first. Congestion and a clearer testing of the 1250 level would be needed to take prices higher. We'll remain very cautious in the short term.

Weekly: Congestion to lower for now
Summer recovery is over and failure to pass 1300 will force the market to find a reliable support level. The MTFS crossover right now comes with line gradients indicating that support may be lower than 1250, maybe near recent lows. We'll therefore watch shorter time frames carefully until MTFS and Entropy both look healthier.

Weekly Outlook for ER2 Sep 15th to Sep 19th

Dominant TF: Daily, then Weekly and 60mins
Swings: UP-DN-DN (from DN-DN-DN)
Market Direction(daily): long for some, flat to reenter long for most
Options (RUT): September positions will die gracefully now. For October, no change: call options are placed above 875 for 100% safety otherwise 810 is very safe. I personally think 790 is more than safe enough. Puts below 680 to me are technically safe but could cost too mush if market falls further, so should safely stay below the 625 line.

Last week post tried to show the dynamics of price jumps with possible expectations around salient resistance levels. It's like watching pole vault at the olympics. Again the 750 level proved too high, the good thing being that we realised it immediately monday morning. The mid week update was more that necessary in these times of high short term uncertainty.

EURUSD: The US$ hit our target almost spot on (we have a [1.393-1.391] target range) as mentioned in our daily market report and I also gave indication of the following bounce with a first target to above 1.404 which was then passed. We're probably now on our way to the much awaited Fib retracement (see chart). We have a target now just above Friday's highs (1.4235), or possibly a little higher (just above 1.435). The possibility of a full retracement to ~1.47 is very remote at this stage. Energy is not conducive to thinking this is more than a short term technical retracement at this stage.

60mins: congestion, hesitation
We've seen 705 acting as a strong support to the high end of that price segment around 719, but it is still difficult to say whether it is ready to jump to the higher segment to 735, and 750 looks even more remote. We are therefore more likely to see a congestion period with prices possibly drifting again. Shall we see ER test the pivot level to go higher or go lower, test it as as resistance to then reach lows again...? That's what a pivot level is all about so we'll eventually follow a lower time frame for that purpose.

Daily: much ado about not much
Last week's post expressed how unconvincingly ER was approaching 750, so the rest of the week was almost no surprise. Now despite seeing good looking bounces on 705, it seems drifting could continue, at least to 705 again (also a Fib level) or even around 690 (MM+Fib). Obviously we'll watch the 60mins chart first in case we stay above the 719 line, to me unlikely to hold.

Weekly: very weak upper bias so still same trading range for now...
Again, one could almost just paste last week's post. 750 proved too strong and sellers are now trying to push the market into another cycle it seems. Yet, one should not fall into bearish thinking too quickly. There is a high volatility at the moment, but it is a matter of a little patience until we see energy aligning itself i.e. chaos settling a bit. Again we'll watch lower time frames carefully to determine market direction maybe next week or the week after.
We could indeed still see ER testing range boundary to that difficult breakout to the 780s... or of course, buyers giving up until we hit this year's lows again. Fortunately that scenario still looks less likely to happen.

ER / ES / EURUSD for Sep 11th '08

You will have noticed the mid week update posted on the public blog yesterday.

Now for today:
ER2: bounce on 705 as expected (see yesterday's post on MarketSnapshot) but we are now in the segment below 719, and we could test 705 again or even 688 later on. We're however not in bear mode and a recovery is still very much possible at the end on this congestion period.

ES: looks pretty bearish right now, but we'll still give July lows a chance to hold. ES should try and stay above 1222,and even pass 1250 again to reassure the markets.

EURUSD: We just reached our target at 1.393, so this is certainly the easiest market of all at the moment. We're looking at a next target at 1.384 then 1.374 eventually. EURUSD is obviously very very oversold right now so we'll tighten our stops just in case.


(SORRY... POSTED ON THE PUBLIC BLOG INSTEAD OF THE PRIVATE ONE)

Mid week update

EURUSD: we now see some stabilisation above 1.41 in the short term, but 1.391 to 1.393 remains our target over the next few days. Obviously we have a well defined channel on the 60 mins chart, and prices could test the upper boundary too, without affecting our mid term scenario.

Indices: I warned of high volatility, congestion with a very limited recovery potential. Prices will have to test lows as a support level now on ES. We also do clearly notice that prices jumped to the exact lower segment [1219-1250] with the lower boundary holding for now. Such level is also a Fib target level.
Certainly not out of the woods yet, but we'll keep an eye on this potential support level. ER2 follows the same route with a potential support level around 705.
Conclusion, intraday traders are short, tightening their stops. I would stay flat waiting for a confirmation of recovery over the next few days. If current support level around lows breaks, another strong support level is around 690 so no panic either...

Quick Market Update (and Important Info...)

EURUSD: we reacted quick to the change in dynamics mid July, and we've been going with the flow since. Now, it is important not to fall into contrarian tendencies and anticipate a correction every second day. We are as surprised as you are about the relentless of the US$ probably due to unacceptable low levels seen on long times frames. We therefore only give targets as potential support levels to take profits or tighten stops.
The next daily targets is in between 1.381 and 1.383.


ER2: no change in outlook until we finally pass 750
ES: same, i.e. no change in outlook.
We here notice clearly how prices jump from level to level and then evolve in price segments. ES is clearly in the [1250-1281] segment (cf. yesterday's post below).


Nota Bene: Due to budget constraints, this free service is VERY likely to be closed at the end of this month. Please contact me if interested in keeping this Market Snapshot going.

Weekly Outlook on ES for Sep 8th to 12th '08

Dominant TF: 60mins, weekly
Swings: UP-DN-DN (from DN-UP-DN)
Market Direction(daily): flat, re-entering long on shorter time frames

Please also always read ER2 post below for guidance.

Another roller-coaster week yet again which can have been costly to some as one should either trade on the dominant time frame or just hang on until volatility settles now.
You will have noticed that the price segment analysis will have helped with abandonding the 1281 level to try 1250 then 1220 in clear 30 to 31 points gaps. 1281 remains an important level going forward.

60mins: recovery in place
In times of high volatility, following movements on this shorter time frame looks easier at first, but in fact, moving to even lower TFs is recommended keeping this 60mins as the context TF. We'll watch resistance levels (Fib/MM) and where prices now settle. There may be a number of adjustments and arbitrages in the next couple of days (we'll keep a close eye on EURUSD and bonds this week).

Daily: high volatility, but no major change overall...
significance level has dropped for a while at this TF, so the more conservative will have switched to a higher or sometimes lower TF, or stay on the sideline for a while.
We see a recovery to the 1270-1281 area, but we certainly need volatility to subside a bit to determine a clearer direction. ES may therefore congest for a while in this price segment or the one above.

Weekly: Congestion to very limited upper bias for now
Despite last week's volatility, virtually no change in our outlook:
Now that we've seen support holding, we have been looking for a recovery potential, but it appears it will start on a very slow note. Ou MTFS crossover does not point to any convincing recovery. A congestion or limited upper bias remains our favourite scenario for the time being.

Weekly Outlook on ER2 from Sep 8th to 12th '08

Dominant TF: Daily, 60mins with Weekly close behind
Swings: DN-DN-DN (from DN-UP-DN) Weekly direction is hesitant still
Market Direction(daily): long
Options (RUT): September/October call options are placed above 875 for 100% safety otherwise 810 is very safe. I personally think 790 is more than safe enough (strong res at 782) for Sep expiry (less than 10 days).

Last week post indicated a pause, and the mid week update clearly announced the effect of an "air pocket" which is certainly an adequate picture for the turbulences we've seen late in the week. Having said that, looking at our charts, no reason to worry... those things happen and we just have to tighten our seat belts for a while.

EURUSD: we reached our 1.435 target, even a little quicker than anticipated. The $ even hit just below 1.42 but 1.435 is really a strong test level for now. A retracement would certainly make some sense, but in the meantime we'll again go with the flow. The next target is in the 1.367 to 1.383 area still looks some distance away.

60mins: high volatility but fairly clear swings
Ready to pick up again after a sizeable retracement on major 750 level in the form of a quick Fib pattern prices right down to the 700s. Traders should now preferably switch to another set of time frames either lower or higher to take advantage of the current market conditions.

Daily: much ado about not much
We might now see prices hover around the same area and probably pass the 750 level. We have a Fib target around 773 now in sight. Yet, the market may again also calm down on a salient level until the latest news are fully digested and priced in. In all probability, we have 2 price segments: one is [719-750] and [750-782] both being possibly also cut into 2 equal halves. We'll therefore watch price jumps and settlements in such or such area according to energy now coming to the market. At this time i.e. prior to the open on Monday, we have no visibility of a jump above the 750 level just yet.

Weekly: upper bias yet still same trading range for now...
Again, no change (simple copy&paste) from last week.
We're now again testing range boundary to a possible yet difficult breakout to the 780s. Again, we've no or little support from Entropy or MTFS to suggest more than a summer recovery with no underlying strength to take prices higher for now. There's even some 'frustration' not to have seen a clear MTFS pattern completion, but the adaptive indicator may still evolve later on. We therefore have to wait a bit still for a clearer scenario for 4th quarter.
Note: we do have a MTFS crossover to monitor, even if not in ideal situation.

Mid-week quick update

ER2: behaving as expected, testing of strong resistance came early after long weekend. Same outlook now with possible congestion/volatility in the upper part of the [734-750] range. Ultimately ER2 will try and hit the resistance again, but we are seeing now a "air pocket" formation hence a stall with prices to a stronger support level. Again, prices generally stay in clear "altitude levels" where an equilibrium is found. In this case, we'll keep in mind that there is a stronger base at the bottom of the [688-734] range. This is however only background info for the time being, which we will review in more details next week.

ES: Same "air pocket" interpretation, with here again a stronger base or support much needed. No worry over the long term but profits can certainly be locked in the meantime.

EURUSD: Now that 1.46484 is broken, we are looking at 1.44043 then 1.43587 as our next targets. Our calculated stall level came only 2 ticks away from yesterday's low! It can still slow down the fall today. Yet, it seems we won't see a significant bounce before we hit our first or 2nd target. Although charts have been very easy to read so far, i am certainly personally amazed by the resilience of the US$, which we can attribute to fall in commodities prices. Net creditors of US debt are smiling again after a period of uncertainty.

Good trading to all and see you on the weekend for the weekly update...

Weeky Outlook on ES 1st to 5th Sep '08

Dominant TF: 60mins, weekly
Swings: DN-UP-DN (from UP-UP-DN)
Market Direction(daily): long, with tighter stops

Please also read ER2 post below for guidance.

Another roller-coaster week, down and then up again, with only some weakness ahead of the weekend. A good week to trade shorter time frames, or to wait quietly that uncertainty finally settles to open way to the anticipated yet difficult recovery. We'll see below that 1281 is key to the continuation of this ES recovery.
As usual, we'll follow the general macro-economic context.

60mins: looking for support
ES will be looking at testing the 1281 level for support. The [1250-1313] range is split into 4 equal segments, and prices may remain in current [1281-1297] segment or fall into the next one below. While it should hold, we'll have to wait a few bars for confirmation, and eventually update our game plan.

Daily: same weaker trend - 1281 level is crucial to this recovery
Despite 2 blue bars, ES is still relatively congested overall. A slow difficult rise is probably emerging, but we'll remain very cautious here. As for the 60mins chart, we have to wait for prices to move to an upper segment, and breaking the 1281 level would definitely indicate continuation of this congestion period... to a possible new test of the 1250 level!

Weekly: Again, worst is over but...
Virtually no change from last week.
Now that we've seen support holding, we have been looking for a recovery potential, but it appears it will start on a slow note.
Compared to last week, only the MTFS crossover looks a bit more positive. This does not change our outlook in the least as such crossovers generally provide little recovery potential. A congestion or limited upper bias remains our favourite scenario for the time being even if Entropy is weakening too fast for our liking.