Market update - Apr 2nd '09

ES bounced on 781 which was indeed a possibility we had seen, yet to be honest we could not quite anticipate ES passing the 812 pivot level so easily. We obviously can't get it right all the time, but our patterns while hesitant still give is us a 50-50 chance of retracement (as mentioned in previous reports) after this 'spike'. Is this due to anticipation on the G20 meeting in London? Are punters aiming at 832 first before taking profits ? It is now a matter of when going long at what price for those who are not long yet.

ER: similar picture. If it can still reach range high around 430 or even hit 437 again, retracement is VERY likely (same pattern formation on daily chart).

Advice: lower time frames are recommended to take advantage of the current situation.

( posted 6:45 AM UK )

Market update - Apr 1st '09

Nothing surprising in the last 24 hours.

ES pullback has been stopped on the 781 strong support level yesterday. While it could certainly bounce, we still believe ES needs to go lower still and test 766 or 750 again.

ER (TF) may find some relief on 415 (equivalent to the 781 level for ES), but is also likely to aim at the low toward 405 and could even retrace all the way to 380. This is unlikely though. Buying should resume within a couple of days.


( sorry for the late post because of an Internet problem... DNS was down )

Market update - Mar 31st '09

Always a chance of some window dressing on quarter end, but assuming most fund managers have done their homework, here is our read on the market:

ER (TF) bounced on 405 which indeed is a significant support level as mentioned yesterday, and selling pressure seems like abating in the short term. Dynamics have however reversed and stronger support is likely to be needed in the 380 area.

ES also bounced on equivalent (actually stronger support) on 781, and should also settle lower by the end of the week. Targets are again 766, 750 then the high 720s.
No change in our longer term scenario: we still assume the bottom is behind us in our trading plan.

( posted 6:50 AM UK )

Weekly Report on ES & TF - Mar 30th to Apr 3rd '09

NOTE: From now on, unless our indices should substantial decorrelation to warrant analyzing specifics, we shall write a single report for both.


We can clearly see that the retracement we anticipated started Thursday night, and carried on pretty steadily. Very easy to follow on the 60mins charts.

60Mins:
ES broke Fib PR1 and PR2 to now sit on the 76% retracement level which is generally regarded as weak (not to be discarded though). MTFS is oversold so a short term bounce is quite possible even if it is clear that the reversal is now too well engaged to the true support level has to be lower.
ER (TF): selling pressure seems more constrained.


Daily:
Friday selling seems too sudden to justify a full on reversal now even if we believe it could happen this week. Hence we may see one or two up days as Entropy is still creeping higher (VERY HIGH LEVEL THOUGH) and MTFS has not yet finished its pattern. Reversal may therefore only come by mid-week with targets being 766, 750 and quite possibly 725
ER (TF): same situation with targets being 410, 392 and quite possibly the high 370s.

Weekly:
The early signs of recovery we detected last week are more visible, but at the same time, also show indications of the "early crossover" pattern, in other words a choppy recovery at best, and a pattern failure otherwise. We still gear towards a reversal over the longer run, so longer term players may want to look at favourable entry points if they are not long already. We still assume recent lows represent the absolute bottom.


<< PRE-MARKET CORRECTION (NOON UK)>>
The "possible bounce" will certainly not happen.
Moreover we are now looking at testing low 780s on ES now (stall level = 789, Support = 781)


( posted 7:50 AM UK )

Market update - Mar 27th '09

ES and ER are really bullish and their targets given yesterday have already about been hit.

ER: the 437 pivot level has maybe been penetrated on account of high volatility but it could still hold. We personally can't quite see ER (TF) reach 468 without a retracement, yet the main guideline has always been "go with the flow" so why complain now if bars stay blue... We know this will stop soon, but let's enjoy the ride so long.

ES: same scenario.
We would like to see 812 being now tested as support for prices to go higher (846?).

Late buyers have to be cautious though.


( posted ... late ... 9 AM UK )

Market Update - Mar 26th '09

The retracement we expected came quite suddenly yet remains limited if we look at the average range on the daily chart.

ES is still blocked on the major resistance level trying to go higher and it looks like it could break it to unleash some energy to reach Fib PR2 in the high 830s in the next couple of days. Again the overall look on daily and even weekly leads us to think the bottom is behind us but a substantial retracement (750?) is in the cards still, so buyers will have a better entry point by the end of the month.

ER (TF) follows a similar path with a target in the high 430s then 446.
Retracement is also necessary here, so we'll update our scenario when we get closer to next pivot point.

( posted 1:45 AM UK )

Market update - Mar 25th '09

ER (TF) took a breather inches away from resistance level at ~437 to now retrace in the same high volatility environment.
It is now aiming for around 405 (Fib PR1) or the following one right Friday's lows. As said in previous reports, we prepared for this retracement, and are watching out for a bull pattern formation on the daily chart.

ES follows a similar path, and was actually ahead of ER, this explaining why it didn't quite reach its target. ES's rise has been stopped on strong resistance level around 812 to only retrace slightly. It should now hit a significant support level just below 800, yet, we have not the faintest indication of any substantial selling pressure, even if we can already preventively look at another strong support level in the low 780s.

We believe buyers are slowly coming back to the markets, with due consideration that it may still take a few weeks to dissipate the accumulated 'bearish' energy.

( posted 6:30 AM UK )

Market update - Mar 24th '09

ER (TF)
We indeed saw ER find support just below 400 to jump up to close to the strong resistance level. We can see a few salient levels in this area (see daily chart). Having said that, we still believe a cup & handle formation will be necessary at some point.
Today's momentum can be sustained if ER stays above 421.

ES:
Reached its target, and yet still shows some residual momentum above 812. ES is ready for a pause but could just as well try and reach the next target on the daily chart (~833). Having said that, we have to be cautious and prepare for some limited retracement.

This bull run in any case takes away from danger zone (the failed recovery scenario), so we can estimate 750 as a new support level and potential stop for those who went long early enough.

( poste 6:45 AM UK )

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

Similar picture here (see ES below), and clearer picture too.

ER 60 mins:
Swing quality is higher here, making chart reading a lot easier. The retracement now hit Fib PR2 in the mid to high 390s where it could bounce first. However, support on 390 and even 381 would be our natural target level.

Daily:
Same mild retracement, same pattern, so while some buying interest is now visible, we shall here as well look for a lower support level (Fib and/or MM). It is however not clear whether we will see 375 again. A number of market participants will now try and enter limit somewhere below 400.
Having said that, we have to keep the same caveat in mind that here as well, the Cup&Handle formation could fail, leading to a downward Fib pattern with a target near lows. We can't discard that scenario even if we are aiming long. A stop level near lows makes it a relatively low risk/reward trade.

Weekly:
Early signs of some weak recovery in the coming weeks. Having said that, too early to rejoice as one could also just as well hit lows again, and even lower (MM stall level is around the corner at 312). It is quite unlikely though, or at least not predictable at this juncture. Like for ES, long term risk adverse players should maybe wait a few more weeks to see selling pressure abate. Any long trade below 500 is a bargain anyway if we have a long term horizon.

( posted 6:15 AM UK )

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

We finally got the much anticipated pause on our indices. It is never the most exact science, but it occured more or less on stall level on the 60mins chart, concomitant to salient Fib levels as well.


ES 60 mins:
Healthy profit taking with a test of pivot level was bound to take prices to the low to mid 760s. While we're hitting support here, we could see a probable continuation to stall level in the high 750s or Fib level around 755. Obviously 750 is the ultimate test, but we cannot see at this point whether it will go that low.
Looking at price segments, 781 is a test pivot level for a trading range 16 or 32 points wide. At the moment, we are below that key level, so we could well stay in this trading range. If/when passed, ES would in absence of exogenous factors return and stay in the equivalent price segment above.

Daily:
This 2% retracement on Friday remains modest compared to the run we've had in the last 2 weeks, and justifies a yellow bar only. Momentum is still up so we can only anticipate a limited pullback to the 750s level. While we are still in "early crossover" mode (aka failed recovery mode), this is likely to turn into a cup & handle formation still. Should selling pressure increase, we already see strong Fib retracement levels on 750 and 715 and targets just below 700 (unlikely scenario).

Weekly:
Early signs of some weak recovery in the coming weeks. Having said that, too early to rejoice as one could also just as well hit lows again, and even lower (MM stall level is around the corner at 625). It is quite unlikely though, or at least not predictable at this juncture.
Passage of time and a possible bounce could just as well help dissipate the strong selling pressure we've had in the last few months.

( posted 7:30 AAM UK )

Market update - Mar 20th '09

Spot on again yesterday...

I know a few of you trade shorter time frames taking in consideration the dominant trend from this context information. All I can say is to enjoy it while it's free.
Not that i will necessarily sell it, but large projects can force me to stop this report like I already stopped posting forex information.

Anyway, let's get back to our charts:

ES is now engaged in a healthy retracement which could take it down to 750. While the channel is about broken, there is no indication of heavy selling though. In fact, to confirm our profit taking scenario, prices may even need to creep back to 781-783 to then go lower. Shorter time frames are recommended today and witching can also trick us a bit. On the daily chart, the retracement to 750 is also visible and probably anticipated but it is not confirmed at all so we might just be seeing a pause on resistance level for now. The market can indeed rest also. The weekly chart is also trying to show early signs of optimism and long term players may be looking for some good entry points.

ER (aka TF) tells us a similar story, and we would like to see 406 to hold now. Otherwise, we'll check for a support level possibly as low as 375, to here again also help long term players jump in at a good price.

( posted 7:40 AM UK on this first day of Spring )

Market update - Mar 19th '09

If we look for possible exhaustion in this recovery rally, this is maybe not quite the time yet, but we should watch out still.

ES is creeping up and hitting our short term targets day after day to now come close to strong resistance levels. We do see a stall level around 805 with energy levels possibly peaking soon (we've hit 804 now). The pattern certainly seems completed. The daily chart is obviously looking bullish but also shows a strong resistance in current price area (high 790s).
One should not read too much between the lines though. Again, the momentum is still there even if there is NO change in scenario, i.e. ES WILL have to retrace on this "early MTFS crossover".
In the short term, we'll have to watch 782 as a support in case of a pullback.

ER also has a little more room on the up side with a target on 421. Patterns are the same otherwise.

We're coming close to triple witching, so interesting end of the week ahead...

( posted 6 AM UK )