Monday, March 30, 2009

Weekly Report on ES & TF - Mar 30th to Apr 3rd '09

NOTE: From now on, unless our indices should substantial decorrelation to warrant analyzing specifics, we shall write a single report for both.

We can clearly see that the retracement we anticipated started Thursday night, and carried on pretty steadily. Very easy to follow on the 60mins charts.

ES broke Fib PR1 and PR2 to now sit on the 76% retracement level which is generally regarded as weak (not to be discarded though). MTFS is oversold so a short term bounce is quite possible even if it is clear that the reversal is now too well engaged to the true support level has to be lower.
ER (TF): selling pressure seems more constrained.

Friday selling seems too sudden to justify a full on reversal now even if we believe it could happen this week. Hence we may see one or two up days as Entropy is still creeping higher (VERY HIGH LEVEL THOUGH) and MTFS has not yet finished its pattern. Reversal may therefore only come by mid-week with targets being 766, 750 and quite possibly 725
ER (TF): same situation with targets being 410, 392 and quite possibly the high 370s.

The early signs of recovery we detected last week are more visible, but at the same time, also show indications of the "early crossover" pattern, in other words a choppy recovery at best, and a pattern failure otherwise. We still gear towards a reversal over the longer run, so longer term players may want to look at favourable entry points if they are not long already. We still assume recent lows represent the absolute bottom.

The "possible bounce" will certainly not happen.
Moreover we are now looking at testing low 780s on ES now (stall level = 789, Support = 781)

( posted 7:50 AM UK )