Bull Bear fights = Volatility - 14 Sep 2011

The bear that re-entered did not maul the bull enough over the last few days and a huge range resulted.  This consequently leads to a weak downtrend, if at all, for now. The Sell signal obtained is still valid and below is an analysis of what needs to happen to continue the downtrend.

The ES is in Setup period 8 today. In order for this Setup not to be cancelled, today's close cannot be above the critical resistance of 1180, which also happens to be the the 61.8% Fibonacci level. IF there is a close above 1180, then it would be clear that the bulls have won the daily battle and more upside should follow. Having said that, it has been noted that the sentiment has been rather awful, and all fast bear rallies since August has had lower than usual volumes supporting the rallies.

Now, IF today and tomorrow closes below 1180, but above 1125, a very unique condition appears that allows a high probability for a tank below 1125 by next Wednesday.

Looking at the right panel, 30 mins chart, ES seemed to have failed the moving avergaes and is currently testing for a breakout again. It has until about 8pm to decide on a reversal or not. It appears unable to make a higher high. However, at 0830hrs ET, economic data is released - retail sales and PPI. Looks like the charts are not really revealing much, so the data might be pivotal for the next week's price action.

Hang on... soon, time will tell.

The MadScientist
14 Sep 2011

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