Market Update - Jul 17th '09

How are we going to end this bullish week ? ES reached the strong resistance level in the high 930s and is still pulled higher on the daily chart. The resistance is however quite strong, and could hold this time around. Tick charts even seem to indicate a potential reversal if 930 breaks on the down side. Prices should remain quite high, i.e. hovering around the 930s unless volatility is exacerbated by lower volumes on a typical summerly Friday afternoon.

TF is slightly behind ES (reached stall level on 523 while ES already hit its strong resistance level at 937.5). It follows the same dynamics and the same resilience, so the overall possibility of a significant reversal is rather meek.

( posted 7:30 AM UK )

Market Update - Jul 16th '09

Merkets behaved as planned yesterday with ES reaching 930 (target with high 920s...) only to retrace on stall level. Obviously as mentioned in the past, volatility as a time compression agent, hence we did not expect the target to be hit so quickly.

Prices should keep on hovering around current levels, possibly reaching the top resistance level since buying pressure is still there on the daily chart. The 60mins chart though is however announcing a pause without any substantial retracement for now. EntBin is quite high though so we'll watch the MTFS behaviour closely, particularly when the green line stops pushing. This would trigger a return to the 906 level.

Same situation for TF which is massively overbought, (MTFS is stuck on its ceiling values). It could also return to 500 later on following ES leadership. At this time of the year, trading volumes are lighter and quarterly results of blue chips and other market leaders can rapidly move major indices.

( posted 5:50 AM UK )

Market Update - Jul 15th '09

Pretty cheerful Bastille Day yesterday with prices rising to key level as anticipated. While overbought, Es should stay relatively high and maybe creep higher still. One cannot discard a return to stall level in the high 920 before the end of the week.

Does that change our mid term scenario ? Well, we're still in a channel for now, so this last few up days are part of normal trading activity, and again, 875 may have been the current bottom we've been looking for. There should be more selling down the line, so we may have range bound bound markets, which are music to the ear of income traders with condor positions.

We can notice a return to the 500 level on T. Like ES, and despite a short term bullishness, TF could reverse or stay range bound for a while. Here too, income traders can take advantage of price segments (16 or 32 points wide), separated by the 500 key level.

( posted 7:30 AM UK )

Market Update - Jul 14th '09

What did i say yesterday ... ? One must always be careful on salient levels like this 875 area on ES. One could have thought the upward retracement would be limited to the high 880s (Fib + MM) but ES actually found enough energy to reach the 50% retracement level, and could in fact even test the PR2 level (61.2%) close to MM pivot around 906. The daily chart seems to confirm more bullish potential indeed, even though this is only part of a normal cycle.

We've been repeating over and over since the beginning of this June pivot that retracement would be limited. We now see this bounce on 875 (16% retracement + MM pivot) as the potential base mentioned in previous reports. Again reading charts on key levels is difficult, and this is only a bounce at the moment. Selling pressure is still there and options traders with call spreads above 950 are pretty safe. Going forward, we may indeed see a trading range, or more testing of the key level. Equilibrium price is probably lower, but selling pressure also tends to dissipate over time, particularly during slower summer months.

( posted 7 AM UK )

Weekly Report - Jul 13th to 17th '09

After some substantial selling, the week actually ended on a softer note on account of low volumes. ES and TF are still holding on their key support levels respectively 875 and 468.

We are likely to see more selling next week although a bounce is also possible first (depending on ES bahaviour on 875 again). We have indeed the MTFS clearly on a bear pattern but the white line has been striding rapidly ahead and could therefore reverse in the next few days (check reversal of the white line in oversold territory). It is in any case difficult to have a very definite scenario ready when prices are sitting right on key support levels. The longer term chart still point for a lower support (~840 on ES, ~460 for TF) which area again could form a good base to move higher then (i.e. no panic yet over the long term).

( posted Sat 11th 8:30 AM UK )

Market Update - Jul 10th '09

ES is sitting on 875 now from where it could try and bounce. However while this key level is obviously quite strong, higher time frames still point towards drifting lower to the bottom of the trading range (859, then 840 on the weekly chart). As always, let's wait for the level to be broken first.

As mentioned yesterday, TF should also aim lower towards the bottom of the trading range in the 460s.

( posted 6:45 AM UK )

Market Update - Jul 9th '09

Again, markets seem to behave in a fairly orderly manner. On the ES chart, the 875 level shows some resilience still and is so oversold that a moderate bounce is possible.
We still keep our lower target for now, in the 860 area, then maybe 840. As mentioned many times in previous reports, this is not a trend reversal but only a normal pause after the extraordinary recovery since March.

TF came close to the 469 support level yesterday where it bounced temporarily. Like ES we aim for a lower target now. Our support level should be hit within a few days, but low volumes can cause normal seasonal volatility.

( posted 7:15 AM UK )

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 )