Market update - Feb 20th '09

Markets are sometimes particularly easy to read.

ES broke the 781 level to fall to the 770 area. There is one last stop at 767 before 750. We'll then see whether we are going for a double bottom on the weekly chart or whether it's all gloom and doom. We might see a sudden bounce followed for a while by the same trading range we've seen for a few months.

ER has a Fib target on 414, but should aim straight at around 405-406.

More details in the forthcoming weekly report.

A quick note on EURUSD: likely to hit lows again also.
I personally have a target of 1.245

Market update - Feb 19th '09

Needless to say i was about spot on yesterday.
Selling is not over yet, even if it should abate soon.

ES is going to its [766-770] target while Entropy is now slowing. Only a volatility spike could take prices to target as we are already on stall level (781) at daily level. We have to see how the situation develops over the next few days to assess if ES will fall to 750 or lower. In the short term, behaviour around key 781 will be watched carefully.

ER: while being just as oversold, ER is going to stall level at 414 and may well reach support level on 406. Selling pressure is still quite strong, but one cannot discard a possible bounce or even a short-squeeze on forthcoming levels.

( posted 3 AM UK )

Market update - Feb 18th '09

Most would have gone happily short yesterday, as indicated in yesterday's report. Let's now assess where support levels are likely to be found.

ES: Fib target and stall level are now around 770, but we are obviously so oversold on our 60mins chart that a timid bounce to high 790s is possible at first. Some could take profits here and play shorter time frames.
Possible support level at 781 also.

ER: while the situation looks similar, levels are not quite the same and there is some (limited) bounce potential around current lows. Prices should however settle lower (high 410s or maybe even lower).

At this point, we're not too far from thinking we'll have to test November lows to get out of this...

( posted 7:30 AM UK )

Market update - Feb 17th '09

Confirming yesterday's bleak picture, ES is aiming south and 812 is only inches away from being history.
We shall see today whether that level is tested again as a resistance now, or whether buyers have just given up. We do have some support just below 800 now, just to mitigate the otherwise bearish outlook of a much lower target on the daily chart.

Same story for ER which technically is still on its 437 support level (more a [433-437] support range actually).
We may see prices fall a full price segment (about 16 points apart) to reach the next Fib target around 418 to 420.

In the very short term, we have to observe index behaviour on their support level right now. Although very unlikely, we may see a last minute attempt to bounce on those levels.

( posted 6:45 AM UK )

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

Last week, i forewarned that ES was certainly not out of the woods and could sink further. We're now back to the crucial 812 test level and the picture has not improved a bit. We'll certainly give this support level a chance to hold even the outlook certainly looks a little bleak...

ES 60mins: Aiming at support level (also Fib target), it is difficult to assess whether buyers will come back to the party at this level. The next stronger level is otherwise ~796. Even if current level holds, nothing indicates a possible bounce at this stage, so the most likely scenario is a continuation of this messy trading range.

ES Daily: Not looking too good here either. ES could really sink deep... down to the mid 720s i.e. close to November lows! Having said that, should 812 break, there should be substantial fighting in the 780 area.

ES Weekly: Longer term context is somewhat bearish too. However, despite bars being decidedly red, there is some support around bar lows, so we may avoid the all gloom and doom scenario still. For the time being, staying on the side line is probably the safest bet here until we see a MTFS line crossover, blue bars and a better looking Entropy.

( posted 7:10 AM UK )

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

Going back to last week's report, we had a chance to go long and short to end up lower than last week. As I said, the picture did not look too rosy and we're still in that same messy congestive situation, fixating on our key 437 level to determine which scenario will prevail in the end.

ER 60mins: Failed to pass the pivot level around 453 so we're stuck in the lower part of our trading range for now. Again i insist that the [433-437] support range will be key. Should it break, ER will be in serious trouble. The lower parts of the trading range should be tested again so let's give it a chance so long...

ER Daily: Same messy picture. Here too, 437 looks strong enough to hold even if we don't anticipate any change in dynamics, hence no substantial buying to support any form of recovery. Selling pressure or lack of buying could send ER down to the next support levels just above 400 or even around high 380s again.

ER Weekly: Not looking too good here either. We certainly don't want to look at what would happen if our support levels collapsed. Let's not all think grim though. As mentioned above at daily level, we'll go with the flow until next support level is reached.

( posted 6:30 AM UK )

Market update - Feb 13th '09

We anticipated that the market needed a (last) bout of selling to clean out a few punters. Will it be enough now to turn the page over and look at a new cycle though ?
ES indeed had to test 812 pretty much head on and even reached 805 for a short while. We've seen equivalent levels in the past 4 weeks, so this was clearly a volatility effect.

What's in store for today ?

ES has a stall level at 840 (also a 50% fib retracement level) and a strong resistance at 844.
One should not expect fireworks just now, but any move away from danger zone is positive. Today, one should see some continuation of momentum trading. It is not clear yet whether ES will retrace on the low to mid 840s or whether it will pass it, test it as support to then move to the upper half of the trading range (to the mid 870s). That's for next week anyway.

ER follows a correlated path. It bounced on 437 (hit a low around 433) then reached MM pivot already. It now has to either retrace or move to the upper part of the trading range as well (from 453 to 468). Longer term 468 will be hard to break and we may just stay in that messy trading range for a while still.

( posted 6 AM UK )

Market update - Feb 12th '09

Markets are still quite hesitant. Not really fun to trade on these long time frames, not really fun to report either. One can obviously sit tight and wait for a while, keeping some crucial support levels in check.

ER: Fall stopped on stall level (~442) ahead the 437 level which could have been of concern. Some recovery late in the day does not guarantee that ER will not try and test lows again. The market certainly is a little messy. Having said that, the weekly chart could sustain a drop to 423 before taking off again. Once we leave this danger zone, we'll look at levels around low to mid 450s as our first target.

ES: Same story, same feeling of an unfinished business on the selling side, so maybe one should get over and done with it, exhaust sellers and start seeing some healthy buying. The only difference maybe with ER is that there is less room and the low to mid 810s are the last line of defense for a anticipated recovery.

So, let's be a little cautious again. Short term (tick charts), we would like to stay above 828, or at least in the low to mide 820s. 836 will be our test level to get out of this messy trading range.

( posted 6:30 AM UK )

Market update - Feb 11th '09

Oh well, retracement was a little stronger than anticipated. The fall stopped on the 2nd (stronger) Fib expansion level for both ER and ES.

So, what's is in store for today now:

ER: Oversold and in hangover mode, ER should stay in the same price range. Selling pressure should keep it low within the low to mid 440s. Technically as we said in previous reports, we are not 'worried' as long as ER stays above 437.

ES: Same story, just different prices. ES will be of concern if 812 is broken.

Longer term, we're still in a congestion mode with a likely recovery point down the line. According to each and everyone's risk profile, i recommended going for short times frames, take an aggressive long limit order and hang in there, or stay on the sideline for a bit. No change in strategy just yet.


( posted 4 AM UK )

Market update - Feb 10th '09

ER: We warned of a possible stall, and this is confirmed now. ER resistance level in the high 460s has turned from pivot to strong, so one could see a retracement to 1st Fib level. On higher time frames (daily, weekly), the outlook is a mildly bearish congestion.

ES: Same story, and as we've said in previous reports, ES has easier to read lately. ES should now first reach Fib Expansion and possibly pivot level in the mid 840s. We however do not anticipate any change in our longer term outlook.

Note: FX is no longer part of our free reports.
( posted 4:30 AM UK )

Weekly Report on ES - Feb 09th to 13th '09

Again, markets are very much correlated and we'll here only emphacize on specific prices and possible pattern differences.

ES 60mins: Somewhat overbought ahead of key resistance at 875. This is typical of stall level (867) after a good run end of last week. We'll therefore watch for a first Fib retracement level. One should theoretically be too concerned if there weren't a number of clouds in the sky of higher time frames...

ES Daily: The uncertainty unraveled last week is still around, so we may have some more congestion until a Fib pattern comes out clearly. We remain cautiously bullish even if trading range lows can always be tested again (unlikely though).

ES Weekly: Here again, we have to be particularly careful as Entropy is stalling, Swing is turning south again and MTFS is decidedly quite bearish still. Only that yellow bar gives us a glimpse of hope. Having said that, no gloom and doom here... Let's just watch how we break our trading range at daily level first. All we can say is that the trading environment on longer time frames should remain messy for a while.

( posted 8:30 AM UK )

Weekly Report on ER - Feb 09th to 13th '09

Due to an exclusitivity agreement, there will no longer be forex reports on this blog, so we'll jump in straight away with ER (RUT).

I advised to go for an aggressive long limit order to prepare for a nice up move or go market. I gave an indication of a pivot point (438) so i assume everybody got it more or less at the right time.

Let's now have a look at the week ahead:

ER 60mins: while being understandbly stopped at MM pivot line + Fib Exp target, there is still substantial buying pressure in overbought territory so in absence of major news, one should only see moderate profit taking.

ER Daily: The picture is not so rosy here and it appears that we'll have to wait for Fib Exp 1 level (low to mid 480ss) to be reached to relax a bit. We can have some messy congestion hanging on for a while even if lows will probably be soon confirmed as passed as time goes by.
Til then, caution is required.

ER Weekly: While we still follow our favoured "cup & handle" type of scenario we have to acknowledge that last week's bar only turned yellow from red, and both MTFS and Entropy do not look too good yet. At the moment, we just have to watch that lows do hold on until buyer start coming back to the party. Test levels would then be in the [500-520] range.

( posted 8:05 AM UK )