Sunday, September 21, 2008

Weekly Outlook ES for Sep 22nd to 26th '08

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

ER has just been delisted from the CME
We need to sort out access to ICE to keep our charts up. Sorry for the inconvenience.
Note: despite being hit by vega, our October options position remains unchanged.

I've already commented this crazy week on a day by day basis. This was certainly the only way to sail through the storm. You'll notice that it is also in line with our significance level, favouring either the weekly chart or the 60mins one. Now let's see what's in store for monday. I shall comment the market on a daily basis on this blog until volatility settles a bit.

EURUSD: Last week's report was quite correct overall. Obviously we've had a few interesting swings on the 60mins chart, but since this weekly report focuses on the daily chart over the next few days, we here see a resistance level around 1.453 then 1.464. We have no indication of further gains even if there are concerns that the Fed & Treasury emergency plan will cost so much that it should ultimately weigh on the US currency.

ES 60mins: still a strong resistance level ahead...
Let's not come back on this wild rally and just focus on volatility which will remain VERY high for at 2 days. Prices should technically also settle on the first Fib retracement level and tease the 1250 level, but it is not possible to fully anticipate the effects of the 10-day ban on short-selling. From a pure dynamics point of view, 1250 remains a crucial pivot level. ES could retrace 1 or 2 segments (i.e. to 1234 or 1219), and will need to pass and test 1250 as support to engage into a bullish trend.

Daily: ? ? ?
What happened last week is clearly a spike at this level. Last week's caution warning is still valid as the model must digest the spike over a few days. We'll revert to the 60 mins chart, which displays a higher significance level anyway.

Weekly: Congestion to lower for now
Here again, i warned of lower lows, and the advice was certainly 'spot-on'. Despite the formidable recovery on Friday, the current trend remains still down technically, and again the 1250 level is key to forthcoming market direction. Obviously new market regulations on short-selling could allow ES to pass 1250 etc, yet if one just reads the chart as it is, more time and effort will be necessary to dissipate a lot of negative pressure still accumulated overt time.

We shall follow shorter time frames carefully until MTFS and Entropy both look healthier. We're certainly not out of the woods yet...