Short discussion of Emini support and resistance levels today. The 1,052 support level held overnight but then we rallied into a cyclical turning point on the longer time frame chart (2,097 tick). This formed a Pull Back in down trend and the decline continued.

Support Levels at 1,052 and 1,042 (Emini 2,097 tick)

This second decline eventually finished with an "End of Trend" warning signal around the 1,042 support level. We tested this support level 3 times during the day and in the overnight session we’ve stared to bounce.

I’m partial to trading the second cyclical turn after an "End of Trend" warning signal. These support / resistance levels can often develop into trend moves. Plus we’re also seeing less selling pressure.

Cyclical Short Entry (Emini 699 tick)

The best entry today was a cyclical top in the 699 tick bar chart at 1,060. We had confirmation on the lower time frame chart and the move started with an explosive jump down. This down trend went to 1,043 – but I was out well before that with my 4 points! Good luck with your Emini trading.

I’m late getting this post out – so I’ll be very brief.

Yesterday I said that the 990 level would be critical, as there looked like Professional buyers stepped in at this level on Tuesday. Well on Wednesday we opened at 990 and rallied from the "get go". FOMC days are usually quiet in the morning – but not this time.

Emini Support and Resistance Levels (Emini 15 minute)

The Better Sine Wave caught the 990 low on Tuesday. On Wednesday we also got very nice "Pull Back" (PB text on the chart) and "End of Trend" warning signals.

Those "Pull Back" and "End of Trend" levels at 1,000 and 1,010 will be critical for Thursday. For the uptrend to continue we need to hold at 1,000.

My Better TRIN systems are starting to signal Short entries so the uptrend might be losing steam – but nothing surprises me about this rally.

Good luck with your Emini trading.

In Tuesday's update I expected the Emini to form a typical Pull Back and End of Trend pattern. In fact the Emini fell through the Pull Back support level, tested that support level and then continued down. The chart below shows what happened.

Close Below Support Level (Emini 27 minute)

In the last 30 minutes of Friday’s trade, the Emini closed below the cyclical Support level of 886.50 on the 27 minute chart. It is also below similar Support levels on the 45 and 81 minute charts.

Support Level Broken on Climax Volume Down (Emini 27 minute)

The Support level was also broken on a Climax Volume down bar. This usually shows the Support level is not going to hold and could turn into a down trend move.

Cyclical Down Swing (Emini daily)

A down trend move in the lower time frames (27 minute) would match the cyclical down swing we’re seeing on the Emini daily chart. Let’s see how Monday’s trading develops.

Good luck with your Emini trading.

I sincerely hope your trading is going well. Emini-Watch.com recently broke 1,000 subscribers and I’d like to thank every one of you for your support. All the kind emails and messages I’ve received are much appreciated.

I don’t like sticking my head out. But from time to time I can’t help myself. The Emini bounced off 825 today on high volume. This completes a complex correction over the last two and a half days. Tomorrow we could well see a strong trending up day. I hope the annotated charts below speak for themselves.

Complex or "Stair Step" Correction (Emini 15 minute)

Red, White & Blue Volume Reversal Pattern (Emini 45 minute)

Swing Trading Oscillators (Emini daily)

Bond Market Turning Point 20 Days Ago (30 Year Bonds Daily)

Good luck with your Emini trading.

Back from 10 days in Hawaii. There’s plenty of commentary about the pro’s and con’s of government intervention in the markets. I’m not qualified to comment and so shan’t.

However, I will say that the banning of short selling is just not right. Here in Australia the regulator has banned both covered and naked short selling of ALL equities for at least 30 days. This is not what free and efficient markets are about – it will end badly.

On the up side – Emini day trading opportunities have never been so good. Huge intra-day moves, massive liquidity and never a dull moment.

Wide Support & Resistance Levels (Emini daily)

My swing trading oscillators are showing conflicting signals and so aren’t much help directionally. We’re caught between very wide support and resistance levels. Support is at 1,160 and resistance is at 1,290 – a difference of 130 points. In the middle there is a gap that looks like it might get filled.

Hilbert Sine Wave (Emini 135 minute)

The momentum after the gap up open on Friday was down and we’ve now got a cyclical top formed on the Hilbert Sine Wave. This downward momentum may continue on Monday.

Hilbert Sine Wave (Emini weekly)

However, longer term the weekly Hilbert Sine Wave cyclical low is still in place. We closed above the Support level, despite extreme volatility, and so we’re still in an uptrend in this longer term time frame.

Emini Day Trade (Emini 699 tick)

Last chart shows a day trading setup that caught Friday’s low. This is how I use the Hilbert Sine Wave with Volume patterns to identify high probability turning points. This cyclical low in the 699 tick chart also coincided with and "End of Trend" signal on the 2,097 tick chart (higher time frame).

Hanalei Bay, Kauai, Hawaii

Lastly, photo of one of my favorite places in the world – Hanalei Bay on the island of Kauai. If you ever get the chance, go see it – spectacularly beautiful. Oh, and that’s my wife Vanessa – also spectacularly beautiful. Good luck with your Emini trading.

In Wednesday's post I saw 2 things:

• Cyclical lows on multiple time frames (weekly, daily, 135 min, 81 min, 45 min and 27 min)
• Bullish divergence on TRIN

Well, as we all know, the Emini dropped almost 40 points on Thursday. My swing trade got stopped out and I felt pretty stupid.

But, for me, there are 2 lessons to be learned (re-learned really):

1. When cyclical turning points appear on multiple time frames we get a clustering of support (or resistance) levels. In this case between 1,262 and 1,271. And here’s the point – if this cluster of support levels gets broken there are no support levels to slow a drop and the market falls sharply. This recent post on multiple time frames made the same point.
2. Bullish and bearish divergence patterns are only warning signals. I’m usually pretty careful about calling them "warning" signals but lapsed in Wednesday’s post. Divergence can take a long time to be proved correct – trends always last longer than you expect. The pattern I like to see on divergence patterns, particularly momentum divergence, is repeated divergence then a final blow off move in the direction of the trend. The market can usually reverse after that.

Support Level and Capitulation Volume (Emini daily)

Not going to say much about the chart above. Sunday evening Globex trading is showing the Emini up 38 points at 1,278. Good luck with your Emini trading this week.

At the end of Thursday we had high Volume Churn, showing profit taking and a likely Pull Back on Friday. Then on Friday morning the Emini gapped lower, re-tested the 1,298 level and then fell away.

The Hilbert Sine Wave signaled a Pull Back entry ("PB" on the chart below) but the signal did not have good volume confirmation. Turning points work out best with a pattern of Volume Climax down, then high Volume Churn followed by Volume Climax up.

We didn’t get the high Volume Churn which would have shown significant buying volume entering the market. The Emini just wanted to close the gap left over from Thursday’s open around 1,285.

Pull Back Signal (Emini 15 minute)

So the Pull Back entry signal failed and we broke through the support level of 1,286.50. Although there was a bounce after that, the Emini could only manage a high of 1,291.75 and we’ve now had a cyclical turn down on the 15 minute chart.

Large buying volume entered the market at the end of the day to halt the decline at 1,281.50. But a lot of this volume would have just been closing out positions at the end of the week and before a long weekend.

My TRIN system is still long and we’re holding above the trend line shown in Wednesday’s post. Best course of action for me is to wait for Tuesday’s trading to show more clues.

Enjoy the Labor Day weekend if you live in North America. Good luck with your Emini trading next week.

The Emini closed down 1.25 points at 1,459.25 on Thursday. Continued strength in the Emini with large volume buying coming in around 1,454 today.

The chart below shows how important this level has been over the last 3 weeks. At the beginning of February 1,454 was resistance that was briefly punctured twice before a retreat to 1,435. When 1,454 was broken on high volume on February 14, the next resistance level became 1,462.

We have been bouncing between these two support (1,454) and resistance (1,462) levels for the last 6 days. 1,454 held again today with large volume buying early on and a low volume test of that level later in the day. So it looks like we’re on our way up to test 1,462 again.

Although my trend oscillators have peaked and started to turn down I am troubled by other signs of strength in the Emini:

1. Trading Index (TRIN) divergence with the market down but the TRIN showing buying
2. NASDAQ up while the Dow is down
3. Long legged doji pattern on the NASDAQ showing buying coming in
4. Very strong move by the Semiconductor Index (SOX) which usually leads the broader market
5. It has now been almost 20 days since the bond market turned up (I have observed a 20 day delay between the bond and equity markets)

Watch 1,462 closely tomorrow.