Friday, November 14, 2008

Oops... wrong button...

I don't what some top traders at big financial institutions had for lunch yesterday, but they certainly had some appetite left in the early afternoon !! Some massive program buying was indeed triggered on key levels. We indeed saw yesterday some substantial selling in the morning as anticipated and key levels hit on major indices. On ES thet key level was close to previous lows, and as said before would open the way to a sell-off to the low 700s. That scenario is temporarily rejected.
Again, it would take quite a few more days like yesterday to see sunny skies again.
This short term recovery may stop the hemorrhage for now, but we shall remain a little cautious at our time frames.
Today again, shorter time frames (<30mins) will be recommended.

EURUSD: A bounce on 1.245 came back to the level as a springboard to trigger the afternoon rally very close to the stall target level at 1.87. Short term trader should now take some profits, and try and test the 1.269 pivot level for support. Long term trend hasn't changed yet, but some upper bias remains for this end of the week.

ER: ER hit a rock solid 437 support level then went on a nice afternoon rally, probably exacerbated by some short squeezing. Bears have to learn to give back sometimes... This retracement has a target level around day close (~489) but could well test 500 again on momentum trading. Indicators are actually short term bullish even if there is no change yet on the daily chart. We'll wait at least a few more days to confirm a double bottom. We recommend staying quite cautious.

ES: Exact same scenario except maybe the stall level was deeply penetrated and buying actually occured inches before the strong level around 813. Market correlations and program trading do explain the slight discrepancy to calculated level and confirm that ES is not a 'driver' at the moment. Today, we can see momentum fading a little on Fib target but one could maybe still see more buying to 920. A pullback to [875-880] levels (Fib,MM) is however more likely to test how solid is this short term recovery.