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.