Plan & Trades for Jul 13, 2009

July 12th, 2009 9:50 am mylifemytrade Leave a comment Go to comments

2009-07-12-es-hourlyMarket Outlook: Here is the hourly chart for ES as of close on Friday Jul 10, 2009. IMO, the close was very bearish. Here is why:

  • ES is still nicely within the down-trending channel and is at the upper boundary of the channel. So the next move should be down if the channel is to be respected.
  • The down moves in this channel have been vertically down. A near vertically down move would take ES would mean a dive of 25 to 30 points, bringing ES down to 845-850 level.
  • The bounce from ES 865 level has been very weak. ES barely managed to peek above ES 884. This means that price levels above 880 have been thoroughly rejected.
  • The action in last few hours of Friday Jul 10, 2009 was even more telling. ES had a had time staying about 875 level. (See the area within red rectangle in the chart below).

    • 2009-07-12-es-875-wallWhat the area in the red rectangle above shows is that price levels above ES 875 were time and again rejected. And that the market is readily accepting price levels below ES 875.

What I see next happening with very high probability is:

  • New monthly lows on ES – possibly as low as ES 850 (psychological mark – will not be breached the first time)
  • ES will breach Wednesday lows of 865.25 in the Sunday evening/night Globex session

Caveat 1: You must have noticed how the news flow has turned very negative all of a sudden. The P/C ratio spiked last week. Too many people have leaned bearish very quickly. There is a slight chance that there might be a counter-trend bounce here. But the probability is very low.

Caveat 2: Just as the market is about to break through key technical levels, our Timmy boy Geithner has started to make appearances again. Over the weekend he has started to make his *positive* statements. Usually this is an indicator that the government is about to intervene and prop up the markets in a much stronger way than they have done in most recent past (= last month or so). So, I will be wary of going short in too big a way here.2009-07-12-geithner

My posture going into weekend: Long oil, solar; Short financials, real estate.

Categories: Daily Plan, Market Forecast, My Trade - Options Trade Tags:


  • Ouch.. got the call wrong.. But that nice dip near the opening allowed me to close my short positions... Solar longs unfortunately aren't doing too well today. And so aren't the oil ones.. But EUR/USD is approaching 1.4000, which very likely gets taken out.
  • just my 2 cents but after thursday and friday's inability to make a new low, i think we'll see 895-900 (SPX) before seeing new lows. we may test the neckline of the H&S.

    also, declining volume since june11 highs make me question this recent down trend.
  • premarket action does agree with your analysis.

    I went into the weekend hedged because of a possibility of a retest of 890-900 region.
  • ES is close to testing last Wednesday's lows of 865.25. But quite notable is the fact that NQ is no way near that.. it is almost 1% off the lows.
  • Modab
    Hi MLMT,

    Thanks for the post..... Looking to see /ES break to the downside as well. I am also waiting for oil to stop making lower lows and lower highs (hourly chart) to initiate a long position. We are short term oversold on oil and due for a bounce to a min of 64.

    Good luck this week!!
  • Oil - I agree is due for a nice sized bounce.. Tomorrow might present a good opportunity to go long. I will go long with USO Aug calls. If oil really takes a massive beating, then I might dip a bit into Jul calls (as lottery play).

    I think that a good sized move up is around the corner. I think that the low might be seen as early as first few hours of Monday trading.
  • Modab
    I like your thoughts. Maybe break recent lows get some more suckers short and weak longs to sell and then turn it around. Ill watch the action in the am around the recent lows. The tape should tell us something around that level.

    Have a great night
blog comments powered by Disqus


free counter
free hit counter