Bottomless ?

At least EURUSD is going exactly where anticipated. It reached our 1.381 target and could find a support at this level. We can't however dismiss the possibility of testing 1.36720.

ER: Aiming at 625 although it could bounce on stall level here around 640. Down pressure is certainly too strong to expect any recovery soon, unless of course another exogenous shock abruptly changes dynamics.

ES: Trying desperatly to find some support around 1125, the market would otherwise shed more... In case of breakout, target would be 1072.

Conclusion: again & again, same as previous days i.e. have fun on short intraday time frames or go enjoy indian summer. No rush to get back into the market.


NOTE: Sorry but won't be available this Friday. Back to normal on Monday

Mid Week Update

Markets are still in 'hangover mode' with a US$ strenghtening. The target range given yesterday [1.381-1.384] is still valid. There is some support on 1.391 in the short term, but the € could even hit 1.3672 within a week.

ER: You will notice i was spot on yesterday. Slight upper bias could take ER unconvincingly a little higher, even to pivot level in in 680s. This does not mean in the least a recovery and the same congestion/volatility yo-yo situation is still in place.

ES: Retraced quite a bit in pre-market but ended around the 1165 area again. If passed, ES should normally test low 1180s. However there is still little energy in the market and any adverse news can stall this upper bias.

Conclusion: same as previous days i.e. have fun on short intraday time frames or go enjoy indian summer. No rush to get back into the market. It will still be there where you're back from holiday.

(snapshots available on request)

Crazy Tuesday

What a day again... we all wonder whether we'll all have more of those... great for intraday trading, and certainly not so on the daily time frame.

Yesterday was a good day for the US$ which easily broke the 1.416 pivot level. We're now back at testing the 1.381 - 1.384 levels on EURUSD over the next few days (or less...). Obviously nobody sees a strong US$ in the medium term but we'll go with the flow as always...

ER: good recovery as hinted yesterday. We also notice our price segments still work after bouncing on 656, to reach 688, i.e. 2 price segments. Another down day is likely until this yo-yo calms down along with volatility. We could get back to the low 670s today. We anyway need to go through this hangover period before going solidly up.

ES: similar situation here except that ES didn't have enough steam to even test 1188 (was a good day though). 1165 is an important level, and ES is unlikely to hold it so here again another down day is expected.

Obviously bailout news will impact volatility again, but it seems market participants have had enough of it, and we could see markets behaving a little more normal in a few days... yet again 3rd quarter results may spur more nervousness again...
Daytraders have more fun ahead, but more conservative long term investors need more time to test the water.

(snapshots available on request)

Black Monday

Yesterday again I warned to be cautious and even to stay away from the market. Intraday trading was about OK in the morning but prone to execution problems.

What can we expect for tuesday?

ES: prices found some support on 1125, the MM level even if penetrated, can be regarded as holding. Having said that, it is clear that a LOT of uncertainty remains in the market and a lower bottom is possible (1070?). After yesterday's shock, a technical bounce is likely even if not visible yet.

ER: Same - Despite the bloodshed, it seems there is also a support level here (656 on MM, 645 Fib), and also a lower stronger level at 625.

Again, I recommend staying on the side line until volatility comes back from stratosphere.
--- DO NOTE HOWEVER THAT THE MARKET COULD THEN ALSO QUICKLY GET BACK TO RANGE HIGHS ---

Weekly Outlook for ES - 29 Sep to 3 Oct '08

Dominant TF: weekly, 60mins with Daily lagging behind
Swings: UP-UP-DN (from UP-DN-DN)
Market Direction(daily): short or preferably flat. Following intraday time frames is most recommended, but staying on the side line is fine too.

Oh well... true, i saw a 2 segment retracement to 1219 before monday last week, and to no surprise, volatility brought it down even further to tease the 1180s again. The good thing is that the 60mins chart always responded nicely. Lower time frames behaved like a charm too. Now what to expect? We'll stick to a still negative bias overall with a high probability the worst is behind us. Does that mean a recovery is under way? If so, it is still well hidden.

ES 60mins: stil range bound
Again we recommend lower time frames here. on this chart, we'll watch the 1219 resistance which could at last open the way to 1250. Until then, we can only expect more of the same uncertainty... We've got a slight upper bias for now, so we may have not to wait too long.
(UPDATE 6AM: bailout finalisation is jittering markets again - Will post a new report later today when support is visible - Could return to recent lows )

Daily: ? ? ?
Entropy is improving but no clear pattern otherwise, and this until the 2 spikes are fully digested. I would recommend waiting a few more days for volatility to reduce. Bars are still yellow after all, and so do not express any strong recovery yet.

Weekly: Congestion to lower for now
Still some negative pressure here despite higher lows. The market may congest below the key 1250 level which remains crucial to a long term rebound.
The market could certainly stay in "hangover mode" for a while...

Weekly Outlook ER - 29 Sep to O3 Oct '08

Dominant TF: 60mins, Daily, then Weekly (shorter intraday TFs recommended)
Swings: UP-DN-DN from DN-UP-UP (from UP-DN-DN the previous week) expressing how hesitant the market is at the moment
Market Direction(daily): flat
Options (RUT): Vega is sky high but no change to our condor positions.

Last week I cautiously warned to wait for the drifting to stop on a strong support level. We've touched it now at 688, exactly where anticipated, yet we have no indication of a solid recovery coming in the next few days. I even doubt any news from Washington DC can really bring confidence in the market in the short term.

EURUSD: €/$ is also hesitant with $ making some gains to a target level around 1.457 that was quite visible in intraday charts. On our time frames, there is a chance 1.464 acting as a strong resistance in the short term and $ then making further progress. In absence of shock, congestion would be the favoured scenario. Knowing the bailout plan is about to be finalised, a shock is inevitable and a breakout either way is possible. I shall again revert to a 233/610/1597 tick charts until we retrieve some visibility.
(UPDATE: Monday 1AM Eastern - the breakout occurred on bailout plan approval. Support level is now 1.4404)

60mins: congestion - slight upper bias
After bouncing on 688, ER reached the highest boundary of this price segment, the next one possibly taking prices to 719. Yet, we have no indication of much energy capable of taking ER to the high 710s, and certainly not higher than the next segment boundary i.e. 719,(again unless new surprisingly positive information on the bailout plan shakes current dynamics).

Daily: better stay away from the market for now...
Despite the high volatility environment, this is still a drifting environment we're having at the moment. The good news is that 688 may be the support level the market needed, the bad news being that there is no real buying at this stage yet despite the trading restrictions. ER could therefore congest with some price bursts here or there until volatility subsides.
We'll gradually watch Fib retracement levels being passed and eventually wait for 750 to be tested again to celebrate...

Weekly: congestion - HIGH volatility
After 2 extraordinary weekd in terms of volatility, we'll watch the market calming down and 750 being passed to ge back into it.
Obviously, it's not so bad for condor players like us at the moment despite the sky high vega. It may sound a little too early, but one can start thinking about tuning positions a little more delta positive.

End of another wild week...

Hello again,
Yesterday's general comments are still valid, i.e. shorter time frames are recommended as our visibility of 3 to 5 bars may sometimes be reduced in times of high volatility even if the outlook is overall correct. For instance, if we analyse yesterday's movements on ES, charts expressed an upward movement (strong open), yet the first 60mins bar closed around the upper boundary of our price segment (~1205), we then saw an excursion all day to the top of the price segment above to even reach the mid 1220s. ES closed lower and even lost about all gains in post market trading.
This is typical of a high volatility environment, but this warning should not affect our outlook overall. The general market dynamics stay the same.

EURUSD: We spent the day on shorter time frames where we watched the 1.464 level being tested over and over. We updated our support to the 1.4557 MM stall level very close to yesterday's lows. The bounce brought the €/$ more or less where it previously was and we now expect much of the same today with a slight upper bias.

ER: Not much movement here. ER tried to move to a higher price segment, but closed the day hovering at the boundary (~704), and sank in post market. We therefore expect a continuation of the same drifting situation and anticipate the market to test a strong support level. At the moment we canonly hope 688 will be that one. Again, it will take a long time to digest the current volatility.

ES: Same situation with the same ongoing drifting looking for a support level (1188 for now), and hoping for volatility to subside at these time frames. The hangover period is probably going to be very very long and we again recommend moving to lower time frames or stay on the side line for now.

(snapshots available on request)

Quick update for Sep 25th

Due to the current volatility and uncertainty of the market, i shall post a few more quick reports on the public blog. Please contact me still for other symbols.

The general commentary remains the same: move to shorter TFs for a bit of fun or stay cautious if using our 60m/D/W charts. The worst may be over, but the hangover effect is still there for a while...

EURUSD: After testing 1.464 all morning to a very soft response, the market decided to look for a support on 1.46. Again, no surprise but did we get the extra push to reach 1.495. Not sure in the short term, but we'll get there eventually. At this time frame as well as daily, we'll keep our UP bias.

ER: What will stop this endless drifting? The market decided to test another price segment and we're now on our way to 688. The good thing is that this support level is significantly stronger, but the downside is that there is no sign of a bounce yet. That's good for our options condor anyway, so we won't complain.

ES: The shock we had last week impacted ES more than the larger market, and it appears that while ER tried to catch up yesterday, a support around 1188 (same segment) is holding. A technical bounce is quite possible here but like ER one should not build undue expectations in the short term. ES should stay in the same price segment (<1204), and 1219 looks very strong.

(snapshots available on request)

Mid Week Update

ER: Retraced to 704 as expected (see yesterday's report), and could actually drift lower still but we'll give a possible bounce a chance on this support level even if there no such indication whatsoever yet (bars are all solid red still).

ES: ES retraced deeper than anticipated. Like ER, it could technically bounce here, and like ER, there is no indication it will do so yet. It may take a long time for prices to settle even if the overall bottom is probably behind us now.

EURUSD: bounce on 1.464 or 1.46 is very likely.

(snapshots available on request)

Catching up on the Weekly ER Report

Dominant TF: 60mins, Daily, then Weekly (shorter intraday TFs recommended)
Swings: DN-UP-UP (from UP-DN-DN) strange isn't it...
Market Direction(daily): flat or long (intraday recommended)
Options (RUT): Vega is sky high but no change to our positions

Sorry about yesterday. ER became TF and I reacted a little too late for the open. ER is close to ES anyway, so besides specific levels, dynamics are the same and and market reading similar enough. Here is a shorter report for the rest of the week.

EURUSD: I mentioned gong long on € but the retracement to ~1.47 seemed remote still. Forex also went a little wild so no surprise the € strengthened even we saw it breaking the resistance fairly easily. EURUSD should retrace a bit and now stay above 1.464 (first target is ~1.47) and eventually climb back to reach 1.495. A period of congestion is also possible as we anticipate volatility to subside a bit in the next few days.

60mins: profit taking - retracement
Restrictions on short selling must be impacting trading even if we don't quite see its full extent here on futures. To no surprise, 750 was a resistance too strong to break, and profit taking was obvious. We now see prices possibly stabilising in the price segment above 719, or more likely in the segment below ([704-719]) as there is still some negative pressure to dissipate in the first few bars of the day.

Daily: hmmmm what now....?
Last week's post expressed concern about prices drifting to 690, and volatility even brought prices lower to 675. Now we have to wait and see where prices will settle. Indicators have taken a bit of a knock but seem rather positive, so again we can assume a support to be found and prices eventually testing the almighty 750. It can take days though.

Weekly: upper bias in an extremely volatile environment
Our indicators show how painful it is for ER to try and pass 750. Like last week, we'll rather watch shorter time frames taking in consideration a possible breakout effect. In the short term, uncertainty and volatility need to settle, so the more aggressive investors will jump in now, others will wait for the 750 confirmation.

Weekly Outlook ES for Sep 22nd to 26th '08

Dominant TF: weekly, with 60mins coming back
Swings: UP-DN-DN (from UP-DN-DN)
Market Direction(daily): short or flat

ER has just been delisted from the CME
http://www.cmegroup.com/trading/equity-index/us-index/russell-2000.html
We need to sort out access to ICE to keep our charts up. Sorry for the inconvenience.
Note: despite being hit by vega, our October options position remains unchanged.

I've already commented this crazy week on a day by day basis. This was certainly the only way to sail through the storm. You'll notice that it is also in line with our significance level, favouring either the weekly chart or the 60mins one. Now let's see what's in store for monday. I shall comment the market on a daily basis on this blog until volatility settles a bit.

EURUSD: Last week's report was quite correct overall. Obviously we've had a few interesting swings on the 60mins chart, but since this weekly report focuses on the daily chart over the next few days, we here see a resistance level around 1.453 then 1.464. We have no indication of further gains even if there are concerns that the Fed & Treasury emergency plan will cost so much that it should ultimately weigh on the US currency.

ES 60mins: still a strong resistance level ahead...
Let's not come back on this wild rally and just focus on volatility which will remain VERY high for at 2 days. Prices should technically also settle on the first Fib retracement level and tease the 1250 level, but it is not possible to fully anticipate the effects of the 10-day ban on short-selling. From a pure dynamics point of view, 1250 remains a crucial pivot level. ES could retrace 1 or 2 segments (i.e. to 1234 or 1219), and will need to pass and test 1250 as support to engage into a bullish trend.

Daily: ? ? ?
What happened last week is clearly a spike at this level. Last week's caution warning is still valid as the model must digest the spike over a few days. We'll revert to the 60 mins chart, which displays a higher significance level anyway.

Weekly: Congestion to lower for now
Here again, i warned of lower lows, and the advice was certainly 'spot-on'. Despite the formidable recovery on Friday, the current trend remains still down technically, and again the 1250 level is key to forthcoming market direction. Obviously new market regulations on short-selling could allow ES to pass 1250 etc, yet if one just reads the chart as it is, more time and effort will be necessary to dissipate a lot of negative pressure still accumulated overt time.

We shall follow shorter time frames carefully until MTFS and Entropy both look healthier. We're certainly not out of the woods yet...

What a day !!! (Episode 2)

What did i say yesterday about wild swings? Whoever predicted the 1PM turnaround before market open was a true psychic... Lots of talks to try and reassure the market, lots of intervention from central banks, and high volatility on witching day... enough to want to stay on the sideline! Anyway, no rest for the braves, so let's have a look at the situation for today.

ES: Gained 100 points between 1pm and 8pm (left charts open after the close on this special day). This is simply MAD! I don't think i've seen that in 15 years...
Now what's coming next? Well it's going so fast that we have to watch lower time frames. Resistance level there is 1234 and 1250. A lot of operations due to witching day pushed prices away from equilibrium which will be found early today. Coming back to our regular segment analysis, even if we jumped a few yesterday, we are now in the 1219-1235 segment, so we'll watch the 1219 support level holding in case of substantial profit taking. Taking into consideration that segments can themselves be split in two, we also have an intermediate level at 1226.
Our 60 mins chart and our Daily chart go exactly the opposite way with the 60mins being more significant, hence we'll follow the remaining upward momentum until it finally fades. Over the longer term, the Daily chart will obviously prove right, and the pattern there will be complete by then. A period of congestion may follow. We'll obviously review all this in our weekly report this coming weekend. For now, yesterday's support held and we're away from danger zone for now... let's just trade like nothing happened...

ER: I have no superlatives for yesterday afternoon price action... All very similar to ES, so i won't repeat myself. We'll watch 719 holding in case of some substantial (and perfectly rational) profit taking today. Ultimately, when things cool down, we'll have to clearly pass 750 to call these volatile moments 'history'. For the time being, let's just follow intraday time frames. Again, 719 will be key level for today's market direction. In case of some congestion, we'll watch that ER stays in the same price segment.

EURUSD: another crazy crazy day again here. Prices paused indeed for a while, tried to break the 1.44 level again to then fall at 1PM, exactly when the prices reached a brand stall level above 1.45. Nothing wrong with that except everything happened in 'fast forward' mode...
Now we have a pattern that is trying to complete while prices are now sitting on a 1.461 pivot. The downward momentum could take prices a little lower or stay a little above pivot level until ready to bounce. There is some downward pressure on the daily chart waiting to dissipate.