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A quick review of last week’s guidance

Last week I said:  “It appears noteworthy that the euro/usd has not made a new high to confirm the SPX’s new high.  I think it’s worthwhile to monitor this currency pair for clues as to what to expect from the SPX.”

The euro/usd pair continued to consolidate in a range all of last week and has yet to break out to one side or another – looking for a close below 1.48 or above 1.5 for further clues.

Regarding the SPX I said:  “The current technical picture for the ES (SPX futures contract – quotes for those without futures accounts: http://pfgbest.com/traders_tools/quotes.asp?page=chart&sym=SPZ9 ) remains overall bullish.  So long as the ES doesn’t take out the lows from Thursday and Friday of last week, ES 1082.5 roughly, then I’m expecting the ES to head to 1104 as a first stop, and then to test the 1110-1120 range.  If ES does make it to said upper range, I would then expect a correction down to the 1080s, but that would be a lot of action for the next week.”

This outlook ended up being very accurate – as the ES stayed above 1082.5, made a run to 1102, paused, shot up to 1112, consolidated in the 1100-1110 range and then dropped to a low of 1083.5 at the end of the week – if only my foresight could be this good every week.

For the next week it appears likely that a head and shoulders pattern could be forming – see Fig. 1 for a chart I generated and posted on the subscriber’s site on Friday of last week.  So long as ES stays above 1083.5 Sunday-Monday, I’m looking for upside targets of 1098.5 and then possibly 1102.5 to 1105 with a max target of 1108 before I expect the ES to make another drop below 1083.5, possibly towards the end of the week if not sometime the week after – that downside target is tentatively in the 1050-1066-1072 range and ill be able to generate something more precise if/when the ES confirms my current analysis.

Regarding a possible turn date I said: “Lastly, don’t forget that this Tuesday could likely live up to its name of turnaround-Tuesday.  But I would not try to pinpoint Tuesday as ‘the day’ and would use a 1 day buffer before/after Tuesday, 11/17/09 so I looking at Mon-Wed as a temporal ‘top window’ – may not be THE TOP, and may end up being just A TOP, or maybe nothing of significance whatsoever – just something to keep in the back of your mind.”

The SPX topped Monday and was trading about 30 points below the Monday peak on Friday.  So this projection appears to have been accurate.  At this time, it appears unwarranted to assume that the Monday peak was THE TOP and ill be trading under the assumption that it was just A TOP.  I would reconsider this if the ES were to make a low below the most recent swing low at roughly ES 1026.  A future possible turn date appears to be at the end of Dec, right before Christmas

A few charts are attached with commentary:

Fig. 1 – ES hourly

Fig. 2 – VIX Expanding wedge

Fig. 3 – SPX VPCI system chart with long term VWAPS

Fig. 4 – DOW (INDU) VPCI system chart with long term VWAPS and LT ellipse

Good luck trading.

Categories: Charts ,Commentary ,Exclusive ,Markets

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