A test of 1120 is highly probable. A slice through /ESZ0 to 1109 indicates a broken uptrend, and a test of 1090 would be a short term support point (+2 points for each day forward). Breaking this uptrend channel implies a test of 1080 (+.5 points for each day forward).
Elliott Bears might imply an inverted cycle: 2007 high as start of "2", 2008 low as "3", April 2009 peek as "4", placing us headed toward cycle "5" (implying a violent test of the 2008 low and overshoot).
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Putting on my bull hat.. /ESZ0 could be in a cup & handle. Impulse ends at 1154 (+.5 points for each day forward.)
There is enough wiggle room for the /ESZ0 to fall to 1087 (+.5 points each day forward), and still launch to 1154.
Elliott Bulls (very few out there) ;-) Might say cycle: 1999 high = "A", 2001 low = "B", 2006 high = "C", 2008 low = uncharted territory, making April 2010 "1", July 2010 "2", and now heading to a "unattainable grab the pullback" that never comes as the market relentlessly lunges higher.
The positive bias in my days forward estimates is a good way to indicate a short term uptrend based on the technical channels I observed on the daily /ESZ0 1 year timeframe.
Friday, September 17, 2010
TED collapsed. Fear Barometer in Range
TED collapsed below 15 (from a recent high of 48.63 on 6/14/2010). There are no bank/credit fears priced in the lending market right now. Place your watch for a touch/break above 17.
The fear barometer is holding a range since July, but ignoring the volatility in flashcrash May, the range goes back to 4/28/2010. The upper and lower averages are decreasing. Currently, we are at the high of the 2 month channel. Short term says this uptrend may be contested, since the spreads are becoming relatively expensive. A swing down from 23.81 to 21 appears probable in a two week timeframe.
A move down paired with a lower SPY would continue to confirm a trading range. A test of SPY 110.50 is highly probable, given the decreasing impulse of the September rally.
A move down in the fear barometer with a higher swing low and breakout higher formed on the SPY implies an uptrend may be forming. Reasoning: the spread is pricing in the uptrend, and relaxed fear levels.
Coincidentally, a break above 24 with a higher SPY implies increasing fear of heights. This does not indicate the uptrend will stop, just the dominant trend's end will be swift and fast. A higher swing bottom and breakout of the fear barometer will help identify the market direction.
The fear barometer is holding a range since July, but ignoring the volatility in flashcrash May, the range goes back to 4/28/2010. The upper and lower averages are decreasing. Currently, we are at the high of the 2 month channel. Short term says this uptrend may be contested, since the spreads are becoming relatively expensive. A swing down from 23.81 to 21 appears probable in a two week timeframe.
A move down paired with a lower SPY would continue to confirm a trading range. A test of SPY 110.50 is highly probable, given the decreasing impulse of the September rally.
A move down in the fear barometer with a higher swing low and breakout higher formed on the SPY implies an uptrend may be forming. Reasoning: the spread is pricing in the uptrend, and relaxed fear levels.
Coincidentally, a break above 24 with a higher SPY implies increasing fear of heights. This does not indicate the uptrend will stop, just the dominant trend's end will be swift and fast. A higher swing bottom and breakout of the fear barometer will help identify the market direction.
Thursday, September 16, 2010
Terminology
Three words I encourage you to use today..
Mysterysis: A system that has memory, where the results of the current input (or stimulus) to the system output a highly questionable result.
Liqrudity (or Licrudity): An unnatural state of liquidity.
Contestigate (Contestigation): A form of investigation where all data collected is used to contest a hypothesis.
Mysterysis: A system that has memory, where the results of the current input (or stimulus) to the system output a highly questionable result.
Liqrudity (or Licrudity): An unnatural state of liquidity.
Contestigate (Contestigation): A form of investigation where all data collected is used to contest a hypothesis.
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