Here is a quick take on the market scenario as at current status...
ES mini (S&P500 futures)
The daily ES chart shows a completed Head & Shoulders pattern that not only achieved its target in 3 trading sessions, but extended losses and retraced sharply after FOMC statement about leaving interest rates near zero for an extended term until 2013. The next day, due to European debt concerns, particularly the downgrade of France, the anticipated bounce was cancelled and the ES thrugged further down. It is clear that volatility remains with swings in excess of 30 points seen on the ES and its index.
IF there is going to be a bounce, 1180 and 1212 are levels to watch... and perhaps more importantly, the neckline may be the final resistance, whcih co-incidentally has the 200MA lurking about the neckline. Given the MACD, this recent move appears to be the first of many and is not a flash crash (similar to 6th May 2010).
Today, at time of writing, 0500hrs ET, the ES appears to have rebounded and claimed 15 points. Europe is up 2% and Marketwatch.com headlines reads "A Rebound gets underway". This was due to a reaction from the French Prime Minister who cut short his holiday just to return to make a statement that France will do take certain measures... only to stave off a downgrade at this point. This sounds really odd, as it is a reaction... also, the French and German banks were so affected by GreeK exposure that the last reporting season saw many reporting losses due to Greek exposure. There will be more to come.
Looking at the ES 30 minute chart show an interesteing intersection of resistance and supports.
There is a mid channel resistance and a uptrendline resistance at the current point. The ES had bounced off the larger downtrending channel support after reentry from a breakdown. That bounce off was also significant as it was a cross point for two channels of different angles. A breakout above 1150 would put a bullish bounce in force and should follow through to close above 1170 on Thursday.
At this point, a breakdown would mean that the bounce is not ready.
IMHO, I am at this point expecting a breakdown later tonight...
Another reason why so...
Below is the STI index chart as of this morning. There have been many gaps in the STI which actually appears very much weaker. A possible reason may be that funds are exiting Asia for US Treasuries and Gold. But that is another story for another day. The STI daily chart needs to close above 2800 at least for a chance. Today, the STI gapped down past two support levels (as indicated) and traded lower until the afternoon session. The STI closed at 2793, and looks unable to rally above 2800 resistance with commitment. This leaves it in the area between 2800 resistance and 2700 support. Although the stochastics are oversold, it is not indicating a turn - just yet.
That's all from me for now... more next week!
Have a good end to the week and take care!
The MadScientist - 11 August 2011
Note: Any material posted here is of my sole opinion, and my opinion may differ from others. It is definitely NOT a solicitation to do anything else as a consequence of reading this material. The material presented here is intended for educational purposes only.