T.G.I.F.

Oh well, yes, i was right. I announced that purge and short sellers are happy today but i won't boast or rejoice in sympathy for millions who are depressed by these markets. To those i just have to say that the bottom is now around the corner. Markets have now reached the levels they were supposed to reach.

EURUSD: Hit the lower boundary of its short term range at ~1.245 where it could try and bounce a little. EURUSD is oversold but not yet ready to turn around. Over the medium term, one cannot discard a target around 1.23 (stall), or even 1.22 (strong support)

ER: There we are. We've hit 380, so we can now rest for a while. Volatility could exarcebate profit taking or some short squeeze, but more realistically, ER should stay low to dissipate the massive negative energy built in the market. Over the medium term, 437 is key level.

ES: Same story. We're now on 750 which is quite a strong support level. Here also a bounce is possible if not likely (tgt: ~781), and here also bear pressure is enormous. Short sellers may want to take profits and/or tighten stops.

Over the longer term, we still have a possible ES target around 710, but 750 could still hold so we'll remain quite careful here. The purge is not technically over and volatility can play more tricks. At this juncture, one can take profits and wait for a clearer picture, otherwise short intraday time frames are recommended.

(posted 00.30 AM Eastern)

Going with the flow...

What did I say yesterday in conclusion of the daily report? Yes, i used the word "purge" on purpose, and there was indeed an easy lucrative short. It may be painful for some but we need to go through it to rebound. Most institutionals have given up on 2008 and are preparing for a better looking 2009 but at the same time, we may have a patch of blue sky before 2008 comes to a close.

EURUSD: A very modest bounce is possible today but the overall trend remains down to a ~1.245 pivot level. Mid term, we however have to notice a likely bottom somewhere between stall level (~1.22) and ~1.245. This is no excuse to go long, but only to take shorts a little more cautiously.

ER: Markets are somewhat correlated and even a bounce on EURUSD may have an impact on ER. However the the trend here remains down until a new support is found. Such support could be near current lows, but is more probably around 390. What's another 20 point drop these days anyway...

ES: yesterday's fall stopped on a strong short term support around 812, but the downward pressure is still strong so we could be heading towards 750.


The purge is not over, yet it does not mean markets will lose 4 or 5% every day until we eventually hit the final bottom (I mentioned a possible ~710 target for ES in previous reports). Again, we'll remain cautiously bearish again today, and as usual, go with the flow...

(posted 11.30 PM Eastern)

Something's brewing here...

A bit of action and some good fun for intraday players yesterday. It seems these low levels are fiercely fought, yet no change in our market outlook...

EURUSD: 1.27 is now a STRONG resistance level but shows weaker energy levels. Our preferred scenario is the continuation of current drifting with steps on 1.257 then [1.251-1.253]. Obviously, in absence of intrinsic energy, EURUSD will be more sensitive to exogenous factors.

ER: Here also, lower highs and lower lows should normally indicate lower support levels. However, the stunning recovery on day close proves that 437 is still going strong. We will check for a channel breakout to change our mind. Until then same drifting, i.e. cautiously short.

ES: Fib/ MM target levels concurrently on 828 have been tested successfully, but there is still no underlying conviction the market is ready to turn around just yet. Here too, we'll check for a channel breakout on the daily chart.

NOTE: We may see a final purge coming these next few days. Our ES target is 812, or even 772 ! (lower time frames recommended)

Just another Prozac day...

In this all gloom & doom, the good thing is that markets are relatively easy to read. We'll refer to yesterday's weekly report.

EURUSD: Clear swings. €/$ is aiming at range lows again, more like a continued drifting situation until a strong support is tested. Technically such support should not be too far, so market participants are now a little hesitant.

ER: Should aim at lows again (~440) or lower. That support level is very strong yet there is a potential to break it to finally purge the market right down to 380. Too early to say though.
Energy is low on the 60mins chart, so we may see the eye of the storm today.

ES: Same situation with a possible return to 830. Low short term energy here too, with the same possible scenario of a purge to the low 700s in the longer term.

(Posted 0.01 AM Eastern)

Weekly Report on ES - Nov 17th to 21st '08

Last week, i recommended remaining very cautious about turning bullish too quickly and it proved certainly wise didn't it? 1000 is now remote and just like ER, we're now back to lows. ES hit a first Fib target (~820) and staged a modest bounce but bars remained red all the way...

NB: The ER report is more detailed. Please refer to it as markets are largely correlated.

ES 60mins: aiming at lows again
ES follows the same general market direction (c.f. ER below) and could aim back to lows with a target sitting on a Fib/MM level : 827.
However we have some indicator divergence on our adaptive MTFS so we'll wait for a bar or two after the open to review the scenario here too. We cannot exclude the 875 key level being tested again as resistance now.

Daily: not looking good
Same as for ER, we have all indicators pointing down. We will however notice that since the Fib/MM target has already been hit on friday we may see a retracement to the 855 area (Fib PR2) to possible bounce back. In such case, like on the 60mins chart, we would need to pass 875 clearly to pave the way to 1000 again. We have yet NO such indication right now.

Weekly: desperately low...
MTFS is so oversold and entropy is so low that we all know a recovery is bound to happen but this is not at this time frame that we'll time it properly. We will however watch Entropy bottoming up to signal it. We might be just a few bars away, so we'll certainly keep our finger on the pulse...

NB: Like for ER, daily updates will be posted on this blog this week again.

Weekly Report on ER - Nov 17th to 21st '08

Dominant TF: Daily. Gradient is too high on the 60mins chart.
Swings: DN-DN-DN from UP-UP-DN (where's my Prozac ??)
Market Direction(daily): bearish

Last week monday, we were right on the 500 level waiting for it tested, passed and confirmed. It again failed and dropped 2 price segments (32 points wide, so we got our target right around 440, then am amazing bounce to only fail again short of our key 500 level. In a way the good thing is that moves are relatively clear again, yet we see longer time frames taking the lead hence we shall carefully take signals in the dominant trend i.e. short, and volatility tells us to pay a lot more attention to shorter time frames. So, being short in a bear market does not stop us from being cautious.

So, let's have a look at our charts, starting with EURUSD:

EURUSD: The 1.27 level broke to expand the range to [ 1.245 - 1.29 ]. Volatility picked up on Friday again with a down move which stopped on stall level just above 1.25. We could see a minor bounce, but EURUSD should generally stay in the lower part of the range i.e. below 1.27 and even aim back at the support line. In the medium term, we still target previous lows or even 1.22 as mentioned in previous reports.

ER 60mins: looking for support
Volatility is again quite high as it looks like buyers have given up on the 500 level for now. We now have to see whether a support level can be found in the 440 area or lower. There is some good chance of a slow-down and the 437.5 is quite a strong support level. We have lower targets also, but we'll have to wait one hour in the trading day to update our scenario at this time frame.

ER Daily: not looking good...
Obviously, like on the 60mins time frame, we're looking at a bottom in the 440 area or ... lower... All indicators are still pointing decisively down, so we we could see ER drop further in 32 points segments. At the back of our mind we still have a target in the 380 area. Should 440 hold we have far too much negative pressure remaining that while we could have a bounce, ER should remain range bound for a while. We indeed have a [~440 - ~560] range with a key pivot level, i.e. 2x32 points below and above that key level.

ER Weekly: is there light at the end of the tunnel?
Yes there is, but we probably have to wait a little longer still. Like on the daily chart, all indicators are bearish and we can only (faintly) hope these recent lows will hold. At this time frame, the target level is rather around 380 and we may see buyers momentarily give up to gather forces at that level.

ON ACCOUNT OF THIS EXCEPTIONAL MARKET SITUATION, DAILY UPDATES WILL BE POSTED ON THIS PUBLIC BLOG THIS WEEK AGAIN

Oops... wrong button...

I don't what some top traders at big financial institutions had for lunch yesterday, but they certainly had some appetite left in the early afternoon !! Some massive program buying was indeed triggered on key levels. We indeed saw yesterday some substantial selling in the morning as anticipated and key levels hit on major indices. On ES thet key level was close to previous lows, and as said before would open the way to a sell-off to the low 700s. That scenario is temporarily rejected.
Again, it would take quite a few more days like yesterday to see sunny skies again.
This short term recovery may stop the hemorrhage for now, but we shall remain a little cautious at our time frames.
Today again, shorter time frames (<30mins) will be recommended.

EURUSD: A bounce on 1.245 came back to the level as a springboard to trigger the afternoon rally very close to the stall target level at 1.87. Short term trader should now take some profits, and try and test the 1.269 pivot level for support. Long term trend hasn't changed yet, but some upper bias remains for this end of the week.

ER: ER hit a rock solid 437 support level then went on a nice afternoon rally, probably exacerbated by some short squeezing. Bears have to learn to give back sometimes... This retracement has a target level around day close (~489) but could well test 500 again on momentum trading. Indicators are actually short term bullish even if there is no change yet on the daily chart. We'll wait at least a few more days to confirm a double bottom. We recommend staying quite cautious.

ES: Exact same scenario except maybe the stall level was deeply penetrated and buying actually occured inches before the strong level around 813. Market correlations and program trading do explain the slight discrepancy to calculated level and confirm that ES is not a 'driver' at the moment. Today, we can see momentum fading a little on Fib target but one could maybe still see more buying to 920. A pullback to [875-880] levels (Fib,MM) is however more likely to test how solid is this short term recovery.

Ice Age

Some will start finding these markets a little depressing, yet sailors also don't often suntan on the deck either and have to go through rough seas now and then. Some traders/investors paid too much attention to their skin and can't take the pressure now.

Anyway, yesterday was again a little more abrupt than anticipated but we hade seen a lot of buyers giving up (500 tested as resistance on ER for instance) so a support level breaking induces a lot of selling searching for the next level.

Today, on EURUSD a substantial level has been hit around 1.245 even if the underlying trend is still there. Maybe a pause or a bounce today or tomorrow, but now aiming at 1.22 as mentioned in previous posts.

ER: Negative sentiment has to take ER to 437 close to recent lows, which will be the recent test. This revives a scenario of mine in recent weeks of an absolute bottom around 380.

ES: Again, same story here with a first target around 828 very close to recent lows at 827 and a Fib target at 821. Here again looms that same bearish scenario of an absolute bottom around 710...

At least, in this period of climate change, some bear species are still thriving...

Quick sands...

Tuesday was a down day as expected. EURUSD broke the support level to settle on the next support just above 1.25 which should hold today. A bounce would likely be contained below 1.26

ER: I mentioned yesterday that ER would try and find support somewhere above 482. There we are now and even if we could see some reprieve today or even a minor bounce, 500 has now been tested again as resistance and we could actually go lower in the next few days. Indicators however indicate more a drifting situation than an outright fall, so this support (or the next one) can hold.

ES: Same situation with a support level aroun 890. A short term bounce is possible but here again, the drifting continues...

Oh well, just another day...

Will this ever end... ? Have buyers decided to enter into hibernation already ? No, one should not dispair and a trading range is a good way to slowly dissipate sellers'pressure. Obviously, there is still some 20% risk of a fall to the 700s on ES, but a support should be found near current lows.

Let's have a look at our charts:

EURUSD: 1.2695 is a good support with a limited bounce potential. The trading range is now reduced to [ 1.27 : 1.29 ] with a lower bias.

ER: We have 500 slightly penetrated, but that's not a problem since we have multiple support levels on 500, 496 and even 482 so the market will probably settle on one. While sellers'pressure is there, there is no indication of one of those support levels breaking.
No bounce either...

ES: Same story, but downward pressure is a little stronger. Last week's lows 900-905 could be tested again or even hit a target on 890-890. No major fall expected though.

Weekly Report on ES - Nov 10th to 14th '08

Last week, the report was announcing the 1000 battle, but i certainly expected a bit more action there. Anyway, better luck next time...

ES 60mins: same hurdles just below 940 and then ~965
We do not have a strong indication of a new round coming on Monday, but we may get there in stages testing ground. First step would be to confirm 940 as support.

Daily: Aren't we all a little tired of this all?
While we start seeing some upper bias in this market, there is certainly not enough energy to even think of passing 1000 in the short term. Will we gather forces or will market players heal wounds and rest a bit in this trading range? We'd all love to turn the page and be bullish again but who's pulling the trigger first?
Like everyone, we have to be very cautiously optimistic this week again.

Weekly: possible bounce but...
Some indicators show a bounce coming but at the same time do not anticipate enough energy to carry through to any sort of full strength recovery just yet. It could take a few more weeks, so we'll call it a pre-alert or early warning and will check lower time for confirmation as signal later on. Please don't read more into these lines: we are NOT buying yet!


NB: Like for ER, daily updates will be posted on this blog this week again.

Weekly Report on ER - Nov 10th to 14th '08

Dominant TF: Daily, 60mins with the weekly chart naturally a little behind in this volatile environment.
Swings: UP-UP-DN from UP-UP-DN (have we bottomed ??)
Market Direction(daily): some will take a chance going long with a stop below recent lows.
Options (RUT): put spread / split butterfly still a reasonable option but caution is required. Nothing with taking profits now.

Last week monday, i clearly mentioned a "cautious retracement trade" was possible, like a put spread or a split butterfly. We certainly had no indication of a strong bounce just yet. Hmmm, can we really say more this week? Dynamics are still the same, so is our word of advice to follow charts on shorter time intraday time frames.

Now, let's have a look at our charts:

EURUSD: I was almost spot on last week saying we had a clear support and yet only limited bounce potential to 1.29. Again €/$ should remain fairly range bound in the short term with a slightly lower bias (no indication yet of ~1.2695 support level breaking). Upper resistance remains around 1.293. Long term we still have a possible target around 1.22 almost hit already on Oct 28th, should this 1.27 key support level break eventually during the course of the week. This ~2cts range is however relatively tight and we should therefore remain cautious of breakouts in either direction.

ER 60mins: support must be confirmed or...
Playing a dangerous game again around key 500 level. Our chart shows limited bounce potential and yet at the same time does not indicate that level breaking (c.f. MTFS). We'll have to remain cautious and review our scenario using a shorter time frame. For the time being, since swings are 'up' we can always try a long with a tight stop below recent lows. Breaking the first Fib retracement level could level to a recovery to the 560 area (see daily below)

ER Daily: Key 500 level!
There is no guarantee 500 will hold, yet it is likely to do. There is still some remaining downward pressure which could dissipate to open the way to a target around 560. We'll keep checking price segments about 32 points apart. Should 500 break, price segments work the same on the way down with a support on recent lows exactly 2x32 points lower. For the time being, "hangover" mode still prevails though, so ER could remain range bound for a few days.

ER Weekly: ?
Significance level is lower so we will not pay too much attention to MTFS and Entropy. However a straightforward recovery (blue bar) is very very unlikely. We have to admit this crisis has surprised us already but there is nevertheless still a tremendous amount of downward pressure to dissipate, so it is way too early to rejoice and buy frantically into this market even if we may have an up week this week. We must keep at the back of our mind that if 500 and 440 break, the TRUE support is around 380. Sounds frigthening doesn't it?
Again, we'll have to keep this time frame as background info only for now and follow the 60mins charts rather.

ON ACCOUNT OF THIS EXCEPTIONAL MARKET SITUATION, DAILY UPDATES WILL BE POSTED ON THIS PUBLIC BLOG THIS WEEK AGAIN