Market Update - Sep 2nd '09

Didn't i see it coming... ? We had that typical "air hole" configuration which translated in a sudden fall which i thought would be limited to 16 points.
Es instead shed the full size of the current trading range.
It is not an error of the model per se, but simply the same difficulty to gauge to which extent volatility will compress time. ES had to come back to 1000. It could have been anytime this week.

Now the trouble is that indicators have obviously been fairly bearish all day on the 60mins chart, only mitigated slightly by very very light trading after hours. ES should therefore remain low until all bearish pressure is dissipated. The 1000 level will probably hold (intraday levels show a support [996-1000] range) although it has now been traversed several times hence has lost some of its strength, and we cannot discard the equiprobable chance of a breakout ( for another 32 points ??).

1000 is obvously a key level, and the bottomline is that there is still some bearishness to evacuate either through a price drop or passage of time.

We have to note however that again TF is considerably more bearish than ES and could settle below 550 if ES doesn't hold its current 1000 support level.

Longer term outlook remains unchanged. This is at this point only normal profit taking after the "irrational exuberance" since March.

( posted 7 AM UK )

Market Update - Sep 1st '09

The good thing is in times of turbulences is to be able to count on at least a few invariants. One is the 32 point price segment (itself subdivided in sub segments of 8 and 16 points) we've seen on ES for a very long time.
So, even abrupt "air holes" convert into price moves we could call quantum leaps.
ES shed about 16 points in a couple of days to find support around 1016 and is now bouncing up to 1024. What a coincidence...
We can also draw a parallel approach using Fibonacci.

Now the short term hesitation is still there and passing 1024 may be a little difficult but the true test is around 1029 to 1032.
As mentioned in previous reports, one cannot discard the necessity to retrace lower to 1000 to gather strength. Over the longer term, even if ES is now lacking stamina (Entropy is fading), the outlook is still modestly bullish.

We note that TF is also bullish over the longer term but is more bearish in the short term. Therefore the overnight bounce on ES may be short-lived. Salient levels will be checked carefully.

( posted 7 AM UK )

Weekly Report - Aug 31st to Sep 4th '09

As mentioned several times last week, 1032 seems to be a tough one to pass, with fallbacks on 1024 or lower around 1016 (again major energy levels are more or less 8 points apart on ES).
Difficult to give an accurate scenario as a retracement is quite possible if only to gather strength to go higher later on still. The weekly chart shows energy exhaustion like lower time frames, but seems nonetheless set on a course to a higher Fib level.
Volumes should pick up by 10% in the next couple of weeks, thus helping to resolve the current uncertainty.


TF: We note that while the long term scenario is the same, indications of a forthcoming retracement are more visible. TF could shed up to 16 points to 562. should erosion persist, we'll check the 568-570 area first.

EURUSD: in bounce territory at this level (1.428), but could well drop to 1.422. Longer term upside potential is definitely there still even though energy is slowly dissipating at the moment. Support at 1.422 may do the trick and allow EURUSD to rise again.

( posted Sat 11 AM UK )

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Market Update - Aug 28th '09

Well, there was no post earlier this morning, but it doesn't seem like i missed much action so far... ES is still stuck in the [ 1024 - 1032 ] price segment (you will notice it is about 1/4 of the overall range).
Again, buyers might just give up... so we'll watch for a possible breakout.

More details in the weekly report

( posted lated 6 PM UK )

Market Update - Aug 27th '09

As mentioned yesterday, the current stall on 1032 may tire buyers after a while. We are still in the same tight range (support ~1024), so yesterday's post is still valid.
Again, while a drop (breakout) is possible around 1024, at this point in time we have no indication from higher time frames that prices would go lower than the Fib level (~1013).

TF also seems locked in a narrow congestion range, but shows more resilience still. Having said that, there is a strong resistance ahead, this hesitation could end up with some retracement in the next few days to a week (573, then 562).

EURUSD: support on 1.422 should hold, but the bounce looks limited. In the longer term, we must note that if EURUSD does not pass 1.434 (first: 1.428), buyers may also give up here and retracement to 1.418 (or lower) could then be envisaged.

( posted 6:20 AM UK )

NB: a bit of traveling ahead, so will try and post while connecting at the airport tomorrow morning.

Market Update - Aug 26th '09

ES seems to have trouble passing 1032 and buyers might just give up and let sellers lead the game at least for now. We'll check 1024 for a possible drop to the Fib levels around 1013 and then 1000.
Again (cf. previous posts), this is only normal hesitation and the longer term trend remains fairly bullish (same targets).
Same story for TF.

EURUSD: our support area mentioned yesterday is still valid. Prices could land there for a while and then bounce back. One might not get to 1.4646 straight away, but 1.4373 then 1.4404 are plausible targets.

( posted 6:20 AM UK )

NB: There will probably be no post on Friday morning.

Market Update - Aug 25th '09

ES stalled on the resistance level around 1032 as anticipated, then retraced slightly to the minor 16% Fib level (~1020). Further erosion is possible but should only be visible in intraday time frames. Longer time frames are also losing steam but remain marginally bullish.

We do note Fib levels around 1013 then 1000 again.

Same story for TF, with Fib levels around 571 and 561 (minor Fib at 577), and here again, current erosion is nothing but normal and should not turn into a sizable retracement either.

EURUSD: No change in outlook just yet. We are watching for a bounce on 1.426 to 1.428 to aim back at range highs around 1.44 (mid term). If our support breaks, we'll review our position to probably go short for a 1.398 then 1.369 targets.

( posted 6:50 AM UK )

NB: there will be no post on Friday

Weekly Report - Aug 24th to 28th '09

Not only we got the expected breakout, but we almost got a move of a full price segment (32 points) in a single day. Prices indeed almost reached 1030 and could still creep higher later on after first settling on these new resistance levels. No retracement in sight.

TF follows a similar path with a 595 target now. Levels are not exactly in sync with ES but this should not significantly affect the overall correlation.

Note that while we might see a continuation of this bull run for a while (maybe over a month), this recovery is still relatively fragile and one could see some serious retracement in 4th quarter (Entropy is way too high)


A quick word on EURUSD: still bullish while on target around 1.43
It could try and aim higher still. We shall try to calculate our targets more accurately next week, but let's say already that we have a looong term objective price around 1.464

( Posted Sat 7:30 AM UK )

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Market Update - Aug 21st '09

Not much happening on our index futures yesterday with the same hesitation around trading range highs.
Chances of breakout are quite significant so any good news could trigger the next round of buying. We would then check our 32 point wide price segments for targets.
TF is in the same situation, so while we may see a continuation of the same congestion, it is also likely to aim higher even if we can't pinpoint exactly when. Maybe today, maybe not...

( posted 6:30 AM UK )

Market Update - Aug 20th '09

ES is back on the 1000 level after bouncing on trading range lows.
While this is a very strong resistance combined to Fib PR2 on the 60mins chart, the chances of range breakout are substantial.
One should not put the "cart before the bull" though. We note that the weekly chart offers a breakout level around 1015.

Note on EURUSD: rangy with a possible pivot down if 1.426 resists. Retracement would however be relatively limited (higher time frame)

( posted 6:30 AM UK )

Market Update - Aug 19th '09

ES almost made it to 991 yesterday, but is now looking at retracing lower to the bottom of the trading range (~980) and problably lower still later on. The 980 level is a good test right now. Markets could shed another 3% within a week in case of a breakout.

Again, we have no indication of a reversal on longer time frames just yet, so this is only normal profit taking, as well as a normal period of hesitation on a key level (1000).

( posted 7:30 AM UK )