Monday, March 16, 2009

Weekly Report on ER - Mar 16th to 20th '09

This report adds to the ES report below, to which ER (TF) is largely correlated.

ER reached Fib target in the low 390s and has little energy left here as well although it may try and reach stall level just short of 400 or even the strong resistance level on 406. ER has recently been lagging ES a bit, and both symbols should try and settle on their respective targets, hence we could see creep a little higher still before retracing. It would however make sense to see ER gather strength later on near 375.

Same "early recovery" mode on MTFS here indicates some likely instability while comforting a turnaround even if it is bumpy. After all ER reached the 346 Fib target to then bounce to Fib retracement level on low 390s. As bars are blue (like on the 60mins chart) we have to assume that ER will try and aim higher before retracing, and here again, 375 would be a good support for a change in trend later on.

This chart tones down any undue optimism here again. We need time to dissipate the accumulated selling pressure and we also need to see a strong support level level holding, otherwise ER will resume its course to 312. or even lower.

We shall assume a change in trend is slowly taking place, so the same recommendation is valid to either wait a little longer to pick a good entry level. Obviously shorter term players would be long already with stops a little lower than recent lows as mentioned in previous reports (2 weeks ago already). More conservative investors are likely to first wait for 500 (salient Fib/MM level) to be passed and tested for support.

( posted 7:50 UK )

Weekly Report on ES - Mar 16th to 20th '09

We've had a good looking week last week, with a bounce on the 680s taking ES all the way up to 750 by Friday. This is a strong resistance level, so let's see what our charts tell us for the forthcoming days. As a reminder though, our charts are based on daily charts, and generally have a 2 to 3 day visibility with the 60mins chart providing us with more accurate entry/exit points and the weekly chart providing context. In addition, we all know that volatility tends to act as a "time compressor" hence requiring us to update our scenario more frequently.

ES is now sitting on the 750 level, quite overbought with little energy to take prices much higher. One could therefore anticipate some retracement even if it is not quite visible yet. Since we always try to avoid reading more than our charts tell us, we will assume that ES will try and breakout on the upside after testing 750 for support. Energy levels being low now, We would probably need some exogenous factor to leave this area. Should this not happen within a day or two, ES will see some profit taking to the low to mid 720s.

We seem to be in recovery mode and ES could even reach a Fib retracement level into the high 760s or even close to 800. We must however realize that MTFS is in "early recovery" mode, which is highly unstable, hence a retracement down is necessary to then provide energy to take ES higher.
We must also take into consideration triple witching this coming week.

Weekly outlook is still very bearish and this should remind us to avoid excessive optimism still. While the fall may stop ahead of the expected 625 stall level, we are likely to see prices below 700 again.

Long term players shall therefore refrain from turning bullish too quickly. It is recommended to trade lower time frames or stay on the side line for the time being until all time frames are in synch. Having said that, it is clear that we start seeing bullish signs and there is a LOT of cash out there waiting to move back into equities, so it is more a matter of timing to pick to best entry levels now.

( posted Monday 7:30 AM UK )