are 982.5, 988 and 992.
A move above 992 will do a serious damage to the IT bear case IMO. The bounce should take ES to at least 988 and if not for the opex week, it would have been achieved in the first 30 minutes of the day. However the opex week gyrations make this complicated.
In my market forecast from Aug 10th, I was looking for ES 970 as the first stop on the move down. We should see that today (Monday) IMO. That is where I will scale out of my Aug puts.
Market 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:
What 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:
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.
My posture going into weekend: Long oil, solar; Short financials, real estate.
Here is a zoomed in version of the hourly chart on ES. It shows what has happened over last week or so. ES paid a visit to 865 on Wednesday and promptly bounced back. ES 875 has acted as support region. After the move up to 884 region in Wednesday night globex session, the down move was contained by 875 region. In tonight’s globex session, ES is precariously close to breaching 875 again. If 875 gets breached conclusively here, then it will turn very ugly for bulls on Friday – a big gap down at open.
On the upside, ES 884-885 is a big resistance. If that gets overcome, then ES 890 is the next stop and after that ES 896 (corresponding to SPX 900). I think that the move down to ES 850 and below will not happen before this Opex. ES will most likely be range bound between ES 875 and ES 900 or there about.
ES 884 (globex high) and ES 875 (morning low) are key ES levels going forward. IMO, ES 875 will not be breached for few days. There will be an upward bias unless some really bad news comes out.
Breach of ES 884 should create a rapid move towards ES 895 region. The first attempt to breach ES 884 failed during pre-market. Next attempt should succeed IMO, which should take us to ES 888, followed by a retest of ES 884 and then into the close, I think we power up ahead towards ES 895.
Expect a head fake down to ES 884 sometime overnight or tomorrow. If we do go to ES 890+, I will hedge my calls (all of them) and un-hedge them when we visit ES 884 region again.
If however we breach ES 875, I will close all my calls and go short.
After a 60 point move down in 4 days, SPX found support at 870 on Wednesday.
Pre-market is showing strength…
On wendesday, ES built up lot of volume in the 880-882 region. If the gap up is above that, then this region might act as support and we might get a trend-up day.
Dollar is weak again, pushing oil back up. Here are key resistance levels for some of the stocks and indexes that I follow. These are good points IMO to initiate a short position.
Be wary of today being a trend up day though. As for the move to the downside, I think a visit to 790-810 is in the order.
ES – 886, 900 (key resistance levels)
CME – 290 (previous swing lows)
ICE – bounce to 90 (major resistance). Next level is up at 105 – doubt if ICE gets that far
AAPL – gap fill at 140 (The gap at 142.50 may not get filled)
RIMM – 67.50-68
GS – 142.5 and then 145
Oil – 63 (trend line), 66 (50% retrace of move down)
Look at the ES Hourly graph for past few days. ES has largely been confined to the range between 908.5 and 919. This graph is from 3 hours ago. And not surprising that about an hour ago, a rally attempt in ES was rejected precisely in the 918-919 region.
ES did make a foray out of this trading range, but swiftly returned back on Tuesday. Let us see what Wednesday presents itself with. I will continue to trade in the range unless proven wrong. I will be looking at TICK to tell me if we have broken out of the range and are trending.
DISCLAIMER: Nothing contained anywhere on this site constitutes any investing advice or recommendation. Any purchases or sales of securities are solely at the discretion of the reader.
During the day, I just have 4 charts open on whenever I am trading. These four charts are ES, NQ, $TICK, EUR/USD.
Below is the ES 1 min chart from Thursday Jun 25, 2009. Note that the time is shown in terms of Pacific Time Zone. I was trying to make sense out of what the hell happened in today’s tape. And I found some examples of blatant tape manipulation. Here are some examples. This happens all day long. One just needs to be aware that it exists out there and has to adjust accordingly.
Exhibit 1: 12:12pm PT to 12:22pm PT – ES declined on decreasing volume. So, one would expect the decline to stop soon, which is what happened because ES then went sideways. Good – this is what we would expect.
Exhibit 2: 12:28pm PT to 12:38pm PT – ES declined 4 points in 10 minutes on increasing volume. One would expect ES go keep going down as the momentum is building. However not only does the tape stop going down all of a sudden, but it also reverses. This is tape manipulation.
Exhibit 3: 12:47pm PT to 12:47pm PT – ES again melts up on decreasing volume. One would expect it to stop doing so and reverse. But it doesn’t. This is again tape manipulation.
Finally, folks – how about some love shared once you are done reading this stuff. Thank you 
