Monday, December 01, 2008

Weekly Report on ES - Dec 1st to 5th '08

ES 60mins: stretching resistance level
Same dynamics as for ER although a little more contained. It is difficult to say whether one should take volumes too seriously for the 2nd part of last week as it seems ES has been gliding a little too high and may fly through a air pocket now. Despite being overbought, we foresee no change in the overall bullish sentiment. We just have to check where support will be tested, possibly in the 875 area, or a 1st Fib level below.

Daily: not looking too bad now at last
Obviously the MTFS recovery is a big question mark but a channel breakout could trigger some buying to the 1st Fib level (~960). We do not anticipate it just yet and some consolidation is more likely. Again, even if the worst is probably over, we shouldn't too bullish too quickly at this time frame at least.

Weekly: inches away from Fib target.
Here as well, one should certainly NOT aim at a quick turnaround and start buying frantically already. The situation is similar to the daily chart i.e. bearish and at the same time very oversold. Like for ER, we shall wait a couple of weeks and maybe until January to confirm a reversal even if we do not anticipate more than a crawling back to former higher over at least one year.


Weekly Report on ER - Dec 1st to 5th '08

Dominant TF: 60mins with other time frames not far behind.
Swings: UP-DN-DN from UP-DN-DN (is the worst behind us ??)
Market Direction(daily): staying long.
Options (RUT): put spread.

Last week was short but bullish nonetheless, and we are definitely seeing a possible change in mindset, at least justifying trying going long. ER is now aiming at 484, last step before attacking 500. Let's see whether we have a good plan of attack, with a first look at €/$.

EURUSD: €/$ reached a target we gave last week, and could have then tested further levels, ~1.33 etc. It instead stayed in the same channel, hovering near a support level around 1.27. Indicators are not showing much energy just yet, even we reiterate that the $ must weaken eventually (weekly chart). We will therefore watch the daily channel as well as the price segments. €/$ can indeed crawl back to last week's highs or break current 1.27 to test October lows again. At the moment, a first bounce is likely, until energy picks up to weaken the $ over current resistance levels.

ER 60mins: aiming at 484 (stall level)
At this point in time, and maybe due to the short week, energy seems to be lacking to take ER much higher. We do notice the ~380 lows have turned to very strong MM support level. Pivot level (~440) held for a while before the long weekend, but weaker volumes may indicate that that same pivot level could be tested again for support later on. For the time being we still give the upper bias a chance to hit 484 before retracing.

ER Daily: looking better
we had our entry point last week with a controlled risk as we placed our stops below recent lows. Our indicators do show a definite change in market sentiment so while volatility is remaining high, we are slowly turning bullish (Entropy bottomed up and MTFS show positive gradients in oversold territory). We are here also aiming at 484 then 500 as test levels going forward. Again, we do not anticipate a smooth ride and a return to the 440s or at the very leat the lows 460s is quite possible.

ER Weekly: bottom ?
Entropy could bottom soon if we project current trend (1 week or 2). However we don't have a MTFS conducive to a decisive recovery yet. For the time being, we'll follow the scenario of a weak bounce. We may have some XMas buying or a January bargain hunt once 2008 books are closed out. Conservative long term players should at least wait for a blue bar at this time frame.


(posted Monday 1AM Eastern)