Monday, October 27, 2008

Weekly Report on ES - Oct 27th to Oct 31st '08

Last week's upper bias quickly evaporated, but we followed it day by day so didn't fall for it.
The 1000 level is now remote and we are now more wondering wheter 875 will hold.... probably not...

This report is short: all markets are tuned the same way. Please also read the ER report below.

ES 60mins:
Lows will be tested and then... lower again probably. There is some support level around there (~843), but buyers are certainly not coming back just yet. MM levels give us a support level below 820, and then... is there an end to it...?

Daily: Same as ER
oh well, should i repeat myself... if current lows fail to hold, support is probably to be found somewhat lower... the markets could slide to the low 700s... I shall update targets during the course of the week. Let's give current lows a chance still..

Weekly: bottomless
Fib and MM converge to the low 700s, and we'll see whether there is a slight chance of a support level along the way. Please check daily updates this week.

Weeky Outlook on ER for Oct 27th to 31st '08

Dominant TF: Daily, 60mins with the weekly chart obviously a little lost in this environment.
Swings: DN-DN-DN from DN-DN-DN (no change)
Market Direction(daily): down yet again...
Options (RUT): directional if current lows break (likely)

Last week monday, we indeed reported a short term recovery attempt which failed as expected, we could therefore make a few points on the way up and then make a lot more on the way down...
More worrying maybe is to see 500 barely holding on a string, as we know that volatility has the annoying effect of stretching support levels without breaking sometimes. Hence while we penetrated it quite deep (to below 440 correctly anticipated during the course of the week), there is still a bounce potential. Do we really believe it will? I'm afraid not. Current deleveraging on many many many billion US$ worth of positions is a very very very painful adjustments. I would recommend to sit tight for now. We may however have a much better looking 2009 ahead of us.

Now, let's have a look at our charts:

EURUSD: When 1.36 broke, we knew it had to go further south and while current levels offer modest support, we will probably hit ~1.22 later on this coming week. We have an extraordinarily strong tension to release offering an amazing bounce potential but it's just not there yet. 1.22 is a MM stall level, so could be the ideal point for it. One must however always be wary of any "reading between the bars". In the short term, 1.255 could hold for a while.

ER 60mins: one way only...
Drifting should continue, probably towards friday's lows. The market resisted to the bout of panic selling on the futures markets prior to the open on friday, and this may indicate a bottom for many market participants. I should still remain cautiously short and check lower time frames where we have a target in the low 450s.

ER Daily: waiting for some support level
Same story again and again... down down and looking for a potential support... While 500 is not 'officially' broken, we have little hope and the market could well fall further to the low 400s. Technically, it can only go down but we'll give lower time frames a chance to provide clearer support informaion hence again. At this level, no hope yet, i'm afraid...

ER Weekly: again this has been a market crash.
Significance level is lower so we will not pay too much attention to MTFS and Entropy. Going down anyway... We'll therefore only look at MM and Fib levels and we certainly have convergence in the low 400s... I hesitate again about the 500 level which could be stretched to the limit and still be valid. Again, we'll have to keep this time frame as background info and follow the 60mins charts rather.