Market update - Feb 24th '09

As mentioned yesterday when the Euro was somewhat higher, the real key level is 1.2695 indeed, in the short term anyway. EURUSD may fall to target but we have serious contenders waiting to jump around last week's lows.

As far as ER and ES are concerned, no surprise either, except maybe that support level have been penetrated a little firmer than anticipated, shrugging off lower time frames to go and test targets on longer time frames.

ER is now aiming at stall level around 390 and possibly even a Fib target on 383. A strong bounce is to expect at some point though (like end November '08).

ES is following the same dynamics except it is closer or on target already, so will it follow and take the entire market to 728, or will it resist here and contribute to the bounce.

There is however still a LOT of negative energy to dissipate, and we don't quite see the end of it right now. Shall we see a lot of fighting at this key level ? Well, if not, the picture could be quite ugly with a 100-point fall ...

( posted 5 AM UK )

Weekly Report on ES - Feb 23rd to 27th '09

Oh well, when i said "ES could really sink deep" last week, i somehow didn't quite anticipate we would have such heavy selling, but it was witching day on Friday, thus adding to the high volatility environment.

I added a commented chart on the technical blog, and we still have a strong correlation to our other Russell index (see article below), so we'll just glance at ES peculiarities here.

60mins:
Inches away from it's 750 target, so immensely anticipated that buyers came back to avoid options being exercised and maybe triggering a more dramatic bloodshed. The following bounce has been here more convincing than for ER, with MTFS looking like it could take prices a little higher. ~780 will be key and we have to be careful as options and futures expiry can certainly spike the market. Longer time frames certainly do not provide any support for optimism just yet...

Daily:
MTFS here confirms a bounce potential in oversold territory, possibly to a Fib retracement level, on mid 780s or close to 800. Having said that, i wish to reiterate that we have no reason to go long right now, as there is no recovery potential right now.
However 750 is quite strong, and we may just see prices hover for a while in the bottom half of the same range we've had for the last 2 months, i.e. [750-812]

Weekly:
Same as ER, and as mentioned on the commented chart, the picture at this level is just as bearish. Without any change in dynamics and assuming 750 will hold (even if possibly breifly penetrated) the above scenario of prices being restrained in the lower half of our trading range is our best bet. We'll therefore check the key 812 level later on in case of a sudden bounce.

( posted 6 AM UK )

Weekly Report on ER - Feb 23rd to 27th '09

Good call last week with our target just above 400. ER indeed is now sitting on a strong support level on the 60mins chart. Yet, we'll see that this may be a short lived reprieve only.

60 mins:
Sometimes the timing is not ideal to assess what comes next. Indeed ER fell to 406 and almost broke it late in the day to only see a very mild bounce on traders squaring their positions ahead of the weekend.
Technically a bounce to Fib PR1 is possible, but isn't likely at this vantage point. Should selling pressure abate (probable scenario), ER could stay for a while in this [406=437] price segment.

Daily:
To maybe help us draw an overall picture, ER at this level is very oversold with MTFS indicating a likely bounce (however limited in amplitude) at this level. This could confirm a return to Fib retracement level or even a test of the 437 level by mid week if volatility keeps on playing tricks on us.
However, there is NO change in scenario, and the fall should then resume to the bigger Fib pattern expansion target. We therefore still aim at 380s if the 60mins support level breaks.

Weekly:
Again, the bigger picture here supports the overall scenario here. MTFS and Entropy are still quite bearish. Last bar is just as red as the last five daily bars, so let's just try and see where this whole thing might stop.
We've got a Fib retracement level just above 400, confirming Friday's support level, yet it is difficult to see what could stop ER from testing previous lows. Obviously, we'll watch lower time frames carefully to separate the cup & handle scenarios from its double bottom counterpart, the latter looking more probable.



Note on EURUSD after reactions to my Friday's comments: short term players will certainly have jumped in the bandwagon (i.e. long) to Fib target. Longer term positions are still unchanged. The level 1.2695 is key level now.

( posted 5:30 AM UK )

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 )