Update of the bear rally - 1 Sep 2011

The bear rally that was identified to have started earlier is well underway and about to mature late this week or early next week. Looking at the ES futures (S&P500 E-mini futures) chart, it looks on track to rally into 1240-1255 over the next few days. However, I would be cautious and looking at the 30 min charts for a possible turnaround. This bear rally although relatively strong this week, has a few things to do before resumption of the uptrend takes place.

Firstly, 1255 is the neckline resistance that should be reached by next week Monday. What happens here should be telling of the underlying trend for the next few months. IF it breaks well above 1255, the next resistance level is 1330 (dotted red resistance line). Breaking 1330 would put the ES futures back into a bullish trend. However, it appears to me that this brief rally should tire out at about the neckline or at least pause about 1240 as there is a FadhilFibo level as we call it after our dear friend who noticed this phenomenon. It is at this range that the ES would be meeting the 55/89EMA as well for the first test.

As of today, the Force Index looks like it is weakening and a decent rally by Friday with volume is required to keep the uptrend till next week.

For now, it's rally time... watch the Non-Farm Payrolls and Unemployment data on Friday at 0830hrs ET for a very good indication of directional continuation or change.

The MadScientist

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