Market update - Mar 5th '09

I gave yesterday some information about price jumps (quantum leaps) and this current volatile provided a good example of such move in just one day. Prices indeed bounced from the support level in the high 680s (687) to the high 710s (719 to be exact), i.e. the 31 to 32 point range i mentioned previously (this value actually hasn't changed in the last 6 months at least).

So ES hit a strong resistance level to retrace sharply down. As said before, the conditions are not right for a recovery, and only contrarian traders on shorter time frames can have a bit of fun here. ES should however try and stay above 700 (Fib Ret + MM) and possibly try and test the resistance level again. This does not change our longer term scenario (see weekly report)

ER is on the same boat and tested the already discussed 375 level again.
Markets could be cooling down a bit, at least temporarily. On the longer term, there will be that indecision or debate about 375 being either broken opening the way to lower lows, or Monday's lows only momentarily penetrated (or strectched) under the effect of volatility.
I won't give an answer now, but to give credit to the latter scenario, prices must creep back above 375. Full stop.
If prices stay too long under that level, gravity will prevail...

( posted 3.50 AM UK )

Market update - Mar 4th '09

When we saw 375 being tested as a resistance, we all knew ER could only go down, and it did...

A fall like this one comes in waves, not Elliott and the like, but rather lines of defence being smashed one after the other. Prices indeed always try and find an equilibrium level in quantum leaps.

So now, in absence of clear Fib pattern, except for some possibility of a target ... near 330, we just estimated where the next wall will be, and it is around 31 points lower than the previous one (375). This means we could still see more bloodshed. Sellers however generally pull on brakes 7/8 of the course, so we could see another attempt to break the fall in the high 340s.

About ES now:
While dynamics are obviously similar, ES has reached its short term target given yesterday (687.5). Here also we have the same quantum jumps which could eventually take prices all the way down to 625, but let's first give this support level a chance. Again NO chance of recovery in the short term but stopping the pain would already be beginning of healing for some.

( posted 5 AM UK )

Market update - Mar 3rd '09

We anticipated that selling pressure would take prices lower, but we though 375 would be strong enough to hold. Was that an effect of volatility which as we all know can force prices to stretch a support level.

ER:
Today we'll certainly have to watch ER's behaviour on 375. Will prices try and rebound to stay above that danger line, or will we see on the contrary that level being tested to give short-sellers more reason to aim lower...

ES:
ES has been ahead of ER for a while, and has now reached stall level (703) where a short term bounce is possible. It is difficult to assess how high it can go but should give little credit for now even if prices are VERY oversold. Our target remains in the high 680s (longer time frames are more bearish)

It seems we haven't quite reached the floor yet, so those looking for an entry/exit point here should switch to shorter time frames. Others can stay short and count their pennies, as bargain time is coming (don't get me wrong: it can take a few weeks to a couple of months or more). It's going to be a very bumpy recovery, but markets are really really cheap these days.

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

After ES broke 750 to then test as a resistance level, we know things would look a little dire. We're now on our target around 730, but is there anything to lift our spirits now... ?

60 mins:
Heavy selling late in the day does not bode well for a recovery early monday and while we may see some support here, ES may well reach high 710s now...

Daily:
Same picture here. Obviously we may hope that ER being a little behind, the fall will stop when/if 375 holds (that would equate to the high 710s here). All we can say that ES is immensely oversold and a bounce is always possible, without hardly any chance of reversing the trend in the short term though.

Weekly:
Same sinister outlook. Are we really aiming at 625 now ... !?!? Oh well, there is still a support on 680 on the way.

( posted Sunday 8 PM UK )

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

Our scenario last week proved right. We are now indeed about to test lows again and... no indication of a double bottom in sight.
Let's look at our charts more closely.


60 mins:
We don't have a tremendous selling pressure here at this time frame. Not to say that we're not bearish but we could see some support near or on the 375 level. No recovery in the near term, but we'll watch for a bounce as we get close to our anticipated support level.

Daily:
Same picture here. However the support level provided by MM stall level, Fib target and the strong 375 level may prove solid enough to exhaust sellers this week. Having said that, MTFS and Entropy do not show any indication of a forthcoming reversal.
Being so oversold, a short term bounce may occur. Prices should remain however constrained in this trading range until ready to break 437 again. Obviously, this is assuming that the [367-275] floor area does hold...

Weekly:
Almost depressing in a way... While we may still see some kind of a double bottom, it will at least take a few weeks to reverse the current bearish pattern. Selling pressure is no way as strong as the first bottom though.
Subconsciously one maybe does not want to imagine what would happen if 375 would break...

( posted Sunday 8 PM UK )

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 )