Sunday, December 14, 2008

Weekly Report on ES - Dec 15th to 19th '08

Last week's report may have sounded confusing in a way as i clearly indicated a breakout situation while a pullback was also expected. Volatility indeed exacerbated swings on 60mins and lower time frames, and the retracement actually reached PR2 to the 840s even if i thought 875 could have held (it was a strong MM /Fib level).

ES 60mins: despite a fantastic recovery on Friday, our indicators show a possible exhaustion hence the forthcoming high should be lower than most recent ones, at least until new energy is added. We therefore anticipate a pause on the way to low 900s, possibly gathering strength on 875. The swing gradient also looks way too steep to be stable.

ES Daily: we could be tempted to discard the last red bar as it closed near bar friday's high. MTFS line separation is also generally indicative of a lack of underlying forces to carry prices much higher. The bias is however still up and one could see ES hover or even rise a little still. Having said that, a retracement will be necessary at some point this week.

ES Weekly: Entropy has now bottomed so we know prices are likely to recover even though in the usual seemingly chaotic environment. MTFS shows an early crossover, a blue bar and a recovering entropy could all lead to a scenario where price would head to 1000 (Fib + MM) by early January. We however don't anticipate that key level to be passed unless MTFS evolves into a more bullish pattern by then.

Weekly Report on ER - Dec 15th to 19th '08

Dominant TF: 60mins with other time frames not far behind.
Swings: UP-UP-UP from UP-UP-DN (please note a slight modification in swing display)
Market Direction(daily): staying long.
Options (RUT): put spread.

While our outlook proved certainly right, we have to admit that volatility played tricks on us again last week, thus confirming the need for daily raport updates, and positions adjusted accordingly.

EURUSD: last week's reports could not have been moe accurate on €/$. We advanced the move cautiously as the daily range could have held longer for another cycle. We are now on a short term resistance level which could slow down the current rise to ou 1.37 target. Profit taking is indeed expected down to the low 1.30s this week before marching higher. Having said that, the bias is still up so we'll wait for a confirmed downturn on the 60mins chart.

ER 60mins: quite volatile indeed with a dramatic bounce on Fib/MM on friday as expected. ER is now heading towards Fib expansion target in the vicinity of the MM stall level (~490). This is also a range high where prices could certainly pause.

ER Daily: Energy levels seem to be weakening ahead of 500 resistance level, here indicating again some hesitation. However the channel is confirmed broken so we can assume Fib PR1 will be hit this week. We shall however remain cautious about volatility spurt on coming triple witching day.

ER Weekly: Entropy has finally bottomed which is good news, however the MTFS pattern seems to indicate a difficult bumpy recovery even though last week ended on a blue bar. 500 and Fib PR1 ~530 seem close enough but those levels are unlikely to be passed in the short term.