Market Update - Jul 8th '09

Always good to see the market behaving as anticipated. We've seen the 883 level holding for a while, to now test a stronger support level at 875. The thing is that we have some indication of further selling, so while this test area should hold the selling pressure in the short term, we'll keep an eye on a lower Fib targets on the daily and weekly charts. Likewise, if/once 484 is broken, TF could shed 4 to 5% to reach the low to mid 460s later on this week.

( posted 5:50 AM UK )

Market Update - Jul 7th '09

After hitting top stall level near 930 a few days ago, ES fell to the bottom stall level yesterday (883), thus confirming range trading on the daily chart (cf. weekly report below).

ES could potentially rise to 900 (Fib level). However the daily chart is still drifting so ES should remain in the bottom part of the trading range, and one can envisage 875 (May lows) being tested later on this week.

TF also bounced bounced on a salient level, and shows the same "failed recovery" crossover on the 60mins chart, hence while it can aim back termporarily to the high 490s, TF should also resume its drifting down. Again, a likely target could be in the 460-470 area where it could gather strength to aim back to higher levels (600-625) later on (September ?)

( posted 6:50 AM UK )

Weekly Report - Jul 6th to 10th '09

So, we've had the long awaited retracement last week, so far limited to one price segment on ES (921 -> 906 -> 891), still roughly 15 points apart. While it should later on go lower, we are still in the same trading range on the daily chart, and selling pressure remains relatively limited on higher time frames.
Breaking 875 which would mean falling another price segment would definitely confirm the retracement we announced a long time ago. Now to be honest, we tend to often ignore the minor 23.6% Fib retracement level which sits on 883 on the weekly chart. So, considering the fairly weak selling pressure, the level may be valid and after a period of trading range on the daily chart, prices could eventually rise again.
To be on the safe side, traders who aren't short or delta negative, may want to enter in a breakout both ways, possibly even reducing the spread between entry levels or even try a short butterfly.

TF is still hovering on the 500 key level (Fib support : ~498 on the 60mins chart). Despite a possible short term bounce, that level needs to be broken still. We've noticed here also a narrowing of the trading range, and also a typical breakout environment, potentially exacerbated by lower volumes going forward.

So, to summarize, let's keep an eye on our key levels, watch a possible bounce early in the day (after the long weekend) and watch carefully the trading ranges given by our price segments. We still favour more retracement even if selling pressure is not as strong as we would like to get over and done with this selling phase. We would then at last see the market then move on and resume its course north, eventually attacking the almighty 1000 level.

( posted Sunday 7:30 AM UK )

Market Update - Jul 3rd '09

Aaaaaah ... At last! We finally got our reversal point. The market reacted on a bad unemployment report at a time when it was already prone to retrace thereby exacerbating its effect.

ES is now aiming at a lower target still, either on 886 (Fib Expansion), or stall (882). We're now at last testing important levels where the market will have to chose between bouncing on the 875 area or retace fully to 840 or lower. We should be able to have an answer within a few days (more details on the weekly report).

ER is following the same path, with a possible pause here in the high 490s (Fib level), but probably aiming lower later on.

Let's note however that it is too early to announce a major retracement. There is a lot of residual energy in the market, and the 875 to 882 area will be the true test. We cannot discard the possibility of the market stabilizing just 1 price segment down, range trading between current lows and 906.

( posted 8:15 AM UK )

Market Update - Jul 2nd '09

ES jumped to almost reach stall level yesterday, reaching about Fib PR2 (61.8% retracement on the daily chart) and only has some residual energy to go higher. It could however creep higher to the top of the trading at the stall level again or even the strong resistance level on the mid 930s. A more likely scenario in the short term is a period of hesitation in the low to mid 910s though. In case of some acceleration of selling, we do notice a Fib target just above 900. However we have no clear pattern yet which could indicate the sizeable retracement we've announced for a while. (Will it ever happen ?)

TF shows a very minor pause or retracement to come on the 60mins chart, but remains more resilient overall. It could well try and hit 520 again by the end of the week. On the longer term, just as ES, TF shows a provisional pivot on the weekly chart with a very high entropy, which should indicate a reversal, but it may be a long way away still, and probably on current highs, if not higher.

( posted 7 AM UK )

Market Update - Jul 1st '09

New day, new month, new quarter...

Anyway, ES broke its upward channel yesterday (60mins chart), and could now be drifting a bit, pretty much directionless at that level yet pushed up on the daily chart. We're again waiting patiently for a confirmation of the reversal on the weekly chart.

For the time being, it seems the 906 area represents a strong support level at the moment, and the daily chart points toward a return to the top of the trading range, so we'll check 921, then 937 (price segments are about 16 or 32 points wide).

Same situation again for TF with a potential return to 512 then 520, yet we're looking at an erosion later on, which does not facilitate our market reading as the pivot or reversal will look a little fuzzy at first.

( posted 9 AM UK )

Market Update - Jun 30th '09

Strange situation yesterday confirming that one should not be fooled by the apparent calm of this trading range. End of term window dressing among portfolio managers maybe...

ES tested 906 (907.25 to be exact), TF had a spike almost hitting 500 to then reach stall level again. One could now be led to think that markets should start taking short term profits again on top of the trading range (Fib pattern already visible with the same target on key 500 level). There is nevertheless still some potential to aim a little higher first.

We therefore change our immediate scenario for 926-930 target (Fib level) on the 60mins chart. We are still in a configuration eventually pointing towards a pivot point and a return to ~900 but we have to admit selling pressure is very low right now.

Today we'll watch out for a possible channel breakout on the 60mins chart, otherwise wait for the next pivot in the 926 area. On TF, it seems that it may unconvincingly reach 512 (or 516?) but we first have to wait patiently for that next pivot to be confirmed and to align with our longer term scenario.

My 2-cents for the day are again not to read between the bars. The bearish Fib pattern is starting to show, the weekly chart is ready to fall, but the 60mins charts shows positive energy still, so patience is always a virtue.

( posted 6:40 AM UK )

Weekly Report - Jun 29th to Jul 3rd '09

Patterns are evolving rather slowly, so little change in our outlook this week. I invite you to take a look at the commented TF snapshot on our technical blog.

So, our ES chart is now stalling in the high 910s, starting to feel some effects of gravity with a possible return to the pivot level (~906). The daily chart is rather undecisive and while being on a "UP" swing has little energy and should therefore remain constrained to the same trading range. Again, it is not easy to figure out which level will provide enough energy to take prices higher later on.

TF follows the exact same scenario with a return to the 500-502 range first, and as ES will probably have to break this key level to exhaust the current selling pressure. We would then see a target around 460-468 on TF and 875-884 on ES.

( posted Monday 7:20 AM UK )

Market Update - Jun 26th '09

Not only 906 was passed fairly easily (see yesterday's report), but the pattern has now crystallized for a target either around current highs (~920) or more likely mid to high 920s (~927).

This does not change our longer term scenario even if retracement potential now looks reduced of course. We'll therefore watch the daily range carefully, and particularly Support/Resistances and Fib levels.

TF follows the exact same path and therefore does not provide any any extra information to help us here. So we'll have to go through this upward retracement first, and wait for the next pivot to be confirmed. Again, the most likely route is a return to the consolidation even if selling pressure has diminished substantially.

( posted 6:50 AM UK )

Market Update - Jun 25th '09

The soft landing mentioned previously turned into a sudden upward retracement (with a sizeable overnight gap) to test key levels broken earlier (906 for ES and 500 for TF).
It iw quite normal to see them being tested as resistance now, so nothing surprising as such.

The 60mins chart is however hesitant (reached a Fib PR2 on 908.5), so we'll have to watch this 906 level very carefully. Would there be no overnight spurt of energy, one would say that this is normal level testing, notmal range trading, and the overall trend toward consolidation would resume shortly. That scenario is still more than valid on the daily chart, but this volatility on shorter time frames is of concern and one cannot discard moving up one price segment again in the next couple of days.

Despite this high volatility, we'll nonetheless stick to our consolidation outlook provided by our daily and weekly charts.

( posted 6:40 AM UK )

Market Update - Jun 24th '09

We indeed saw a kind of a pause on ES while TF was suprisingly more bearish yesterday. This is in line with our consolidation scenario. Patterns are not exactly in sync so let's take a closer look at our charts:

The 60mins chart shows ES sitting on the 2nd FIB target with no visible intention to drift lower for now. It should however settle lower after a while. The daily chart is still on its way for that lower consolidation level as mentioned in the weekly report.

Same for TF, currently in between Fib levels, aiming slowly but surely to 480, 467 to probably 459.

Buyers should come back to the charge somewhere in that area.


( posted 8 AM UK )

Market Update - Jun 23rd '09

We had anticipated this move on several occasions, even if it is never too easy to pinpoint when the breakout will actually occur. It was therefore a clear case for a stop entry just below support levels or simply follow the last pivot and enter limit or on some pivot confirmation.

ES went almost straight to the target we gave yesterday (2nd Fib expansion level) and should aim at stall level in the low 880s but some soft landing is possible in the short term. The daily chart points lower though, so any bounce on the 60mins chart is likely to be short-lived.
Note that on all time frames, an absolute bottom would be around 840, i.e. we do not revise our longer term scenario described in previous reports to see ES test 968 then 1000 within a month or two.

TF also shows a soft landing area around current lows, so shall we see 500 tested as a resistance again to then aim lower ? Like for ES, a longer term consolidation target is probably in the 460s where buying would resume in concert with ES.

( posted 7 AM UK )