Market update - Mar 12th '09

Prices behaved as expected yesterday with some momentum left for ES to reach reach 730 and ER (TF) 374.50 close to our target 375 for the day.
If stops have been moved up as we always do in such case, this last run must have been pretty good.

Now ES is slightly retracing, with a moderate retracement potential to PR1 (703) first. The market is actually stalling right now but we'll have to watch price behaviour closely as energy comes back in. Although not visible yet, retracement could take prices all the way down to the bottom of the price segment (high 680s) which is a salient Fib + MM level. It must be noted however that on the Daily chart, signs of an early, bumpy recovery stat showing.

ER displays similar patterns, and we'll watch for Fib levels there. The 1st Fib retracement pattern is already hit in the low 360s. ER (TF) could settle for a lower support level (357? 352?) but more interesting maybe is that here too, signs of a possible turnaround on the daily chart start showing. One may wait for a better entry point, but one should start thinking of trying a long soon with a stop just before lows (the more conservative ones should wait for confirmation early next week though).

( posted 2 AM UK )

Market update - Mar 11th '09

A good day yesterday... the bounce was anticipated in last reports and once 687 was broken on ES, we realized that ES would then evolve in the price segment above. Such price behaviour has also been discussed in previous reports.
ES is now at the top of the new range (high 710s) and while it is likely to peak here (it is also a 50% Fib retracement level), it could reach 735 (Fib PR2) and eventually 750.
That would be the rosy scenario without looking at longer term time frames. The truth is while the daily chart looks better (MTFS crossover + Entropy bottoming), it is likely to be quite bumpy and 687 could (and probably will) be tested again at some point.

The situation on ER is similar. We'll just notice that ER reached Fib PR1 (~370) and 375 is now in sight. It would be safe to trade shorter time frames until recovery is confirmed. Can take a while though...

( posted 4:40 AM UK )

Market update - Mar 10th '09

Even if the pace of selling may be abating a little, there is no reason to believe in a recovery in the short term. We might have an Up day today, but this contrarian trading should be restricted to lower time frames, and we'll watch 687-690 which a strong resistance area.

ER:
On the 60mins front, we do have some mild support on current levels and the daily chart also shows a MTFS crossover indicating a possible short term bounce, but again, no chance of a change in trend any time soon.

ES:
Here too, we seem to see some slowing down in selling, yet support is lower in the 656-661 area.

Weekly Report on ES - Mar 9th to 13th '09

Obviously, ES is correlated to ER and other markets, and therefore is also going south.
Let's have a look at specific levels for this symbol.

60mins:
As mentioned on previous reports, prices try and stay in a given price segment, oscillating from volatility and noise, and only a change of referential, like news about rates etc tend to make prices shift.
We are now in the [656-687] price segment and it is quite common to see the upper boundary being tested as a resistance.
If so, ES will be sent down, which is the most likely scenario in the short term. Again, news can make the scenario quickly obsolete also.
Target on the way down is in the [656-661] area, and should this fail to hold, we can already see much stronger support in the 620s.

Daily:
It is preferable to have all time frames in perfect sync, but while 625 is also a likely target here, the next "stop" seems to be just below 650. Again in times of high volatility, levels can be penetrated without breaking.

Weekly:
Same story, and to be honest, we can't see what could stop ES from hitting 625 now.

( posted 7 AM UK )

Weekly Report on TF (aka ER) - Mar 9th to 13th '09

Markets have lost more ground last week, and to comfort the prevailing gloom and doom scenario, the Fib expansion pattern on the weekly chart has ... a negative XOP target price ! Short sellers obviously do enjoy causing a bit of panic, but let's try and be rational here.

60 mins:
The fall has at least temporarily stopped on a MM level where we saw some bounce late in the day with a few short sellers buying back positions (very low volume though).
Entropy also shows a potential bit of a reprieve even if stall level (~328) is now in sight and could be hit this coming week. In any case, there is no reason to change our scenario as long as prices stay below 375 (now strong Fib + MM resistance).

Daily:
Here too, MTFS is so oversold that one can only imagine a limited bounce for now. The same 375 level is key to any change in market mood and selling pressure remains so strong that even if some buying lifts prices momentarily, the Fib expansion target (high 320s) is likely to be reached within a week or so.
While volume is good, one should probably see a high volume bar near Entropy bottom (not quite there yet) to announce a potential reversal.

Weekly:
The comment above is a bit of a joke, even if mathematically possible. Having said that, one can't see what would stop ER from touching stall level on low 310s within a few weeks.

( posted 7AM UK )

Market update - Mar 6th '09

Only a quick late short report today... sorry about that.

One can actually refer to previous posts below as we are still in the same configuration. In the short term, we'll watch the 687 resistance on ES which is un der pressure even though we should see more selling down the line.

ER is on a Fib expansion target no1, so could retrace upward a bit, again with no chance of a change in overall trend for the time being.
Stopping the bloodshed is already a relief.
ES is leading the way though, and over the longer term, the same feeling is that the bottom is still lower (339 on ER ? 645 on ES ?). More details on the next weekly report.

( posted 8 AM UK )

Market update - Mar 5th '09

I gave yesterday some information about price jumps (quantum leaps) and this current volatile provided a good example of such move in just one day. Prices indeed bounced from the support level in the high 680s (687) to the high 710s (719 to be exact), i.e. the 31 to 32 point range i mentioned previously (this value actually hasn't changed in the last 6 months at least).

So ES hit a strong resistance level to retrace sharply down. As said before, the conditions are not right for a recovery, and only contrarian traders on shorter time frames can have a bit of fun here. ES should however try and stay above 700 (Fib Ret + MM) and possibly try and test the resistance level again. This does not change our longer term scenario (see weekly report)

ER is on the same boat and tested the already discussed 375 level again.
Markets could be cooling down a bit, at least temporarily. On the longer term, there will be that indecision or debate about 375 being either broken opening the way to lower lows, or Monday's lows only momentarily penetrated (or strectched) under the effect of volatility.
I won't give an answer now, but to give credit to the latter scenario, prices must creep back above 375. Full stop.
If prices stay too long under that level, gravity will prevail...

( posted 3.50 AM UK )

Market update - Mar 4th '09

When we saw 375 being tested as a resistance, we all knew ER could only go down, and it did...

A fall like this one comes in waves, not Elliott and the like, but rather lines of defence being smashed one after the other. Prices indeed always try and find an equilibrium level in quantum leaps.

So now, in absence of clear Fib pattern, except for some possibility of a target ... near 330, we just estimated where the next wall will be, and it is around 31 points lower than the previous one (375). This means we could still see more bloodshed. Sellers however generally pull on brakes 7/8 of the course, so we could see another attempt to break the fall in the high 340s.

About ES now:
While dynamics are obviously similar, ES has reached its short term target given yesterday (687.5). Here also we have the same quantum jumps which could eventually take prices all the way down to 625, but let's first give this support level a chance. Again NO chance of recovery in the short term but stopping the pain would already be beginning of healing for some.

( posted 5 AM UK )

Market update - Mar 3rd '09

We anticipated that selling pressure would take prices lower, but we though 375 would be strong enough to hold. Was that an effect of volatility which as we all know can force prices to stretch a support level.

ER:
Today we'll certainly have to watch ER's behaviour on 375. Will prices try and rebound to stay above that danger line, or will we see on the contrary that level being tested to give short-sellers more reason to aim lower...

ES:
ES has been ahead of ER for a while, and has now reached stall level (703) where a short term bounce is possible. It is difficult to assess how high it can go but should give little credit for now even if prices are VERY oversold. Our target remains in the high 680s (longer time frames are more bearish)

It seems we haven't quite reached the floor yet, so those looking for an entry/exit point here should switch to shorter time frames. Others can stay short and count their pennies, as bargain time is coming (don't get me wrong: it can take a few weeks to a couple of months or more). It's going to be a very bumpy recovery, but markets are really really cheap these days.

Weekly Report on ES - Mar 2nd to 6th '09

After ES broke 750 to then test as a resistance level, we know things would look a little dire. We're now on our target around 730, but is there anything to lift our spirits now... ?

60 mins:
Heavy selling late in the day does not bode well for a recovery early monday and while we may see some support here, ES may well reach high 710s now...

Daily:
Same picture here. Obviously we may hope that ER being a little behind, the fall will stop when/if 375 holds (that would equate to the high 710s here). All we can say that ES is immensely oversold and a bounce is always possible, without hardly any chance of reversing the trend in the short term though.

Weekly:
Same sinister outlook. Are we really aiming at 625 now ... !?!? Oh well, there is still a support on 680 on the way.

( posted Sunday 8 PM UK )

Weekly Report on ER - Mar 2nd to 6th '09

Our scenario last week proved right. We are now indeed about to test lows again and... no indication of a double bottom in sight.
Let's look at our charts more closely.


60 mins:
We don't have a tremendous selling pressure here at this time frame. Not to say that we're not bearish but we could see some support near or on the 375 level. No recovery in the near term, but we'll watch for a bounce as we get close to our anticipated support level.

Daily:
Same picture here. However the support level provided by MM stall level, Fib target and the strong 375 level may prove solid enough to exhaust sellers this week. Having said that, MTFS and Entropy do not show any indication of a forthcoming reversal.
Being so oversold, a short term bounce may occur. Prices should remain however constrained in this trading range until ready to break 437 again. Obviously, this is assuming that the [367-275] floor area does hold...

Weekly:
Almost depressing in a way... While we may still see some kind of a double bottom, it will at least take a few weeks to reverse the current bearish pattern. Selling pressure is no way as strong as the first bottom though.
Subconsciously one maybe does not want to imagine what would happen if 375 would break...

( posted Sunday 8 PM UK )

Market update - Feb 27th '09

Markets are desperately trying to hold on key levels and they might indeed. When we see so much selling pressure, there is only 2 ways to dissipate such energy, either the market does not resist and waits for prices to reach a new equilibrium level, or tries to absorb it to evacuate in another form. At the moment, the market is indeed "both feet on the brakes" trying to stop the fall, thus generating a lot of heat...

Now, obviously nobody knows whether the brake pads are worn out or not, but our visibility is limited anyway.

ES:
In the short term, we might see yet another bounce attempt, and again with no chance to hold, so whoever wants to go long should switch to lower times frames. Our tick chart does pretty well in such environment.
Mid to long term, those who have been short can stay short, eventually cashing in some profit. Some may want to sell on breakout.

ER:
Similar story as we can expect. ER reached stall level and is should now aim to targets given previously i.e. close on on 375.

Since ER and ES are slightly out of synch, ES could settle around 730 to follow ER... We shall see...

Note on EURUSD: 1.27 is STILL key level...

( posted 6 AM UK )