Tuesday 27 May 2008

Possible "End of Trend" Retracement Tomorrow

The Emini bounced up over 10 points today. This was right on cue after Friday's bullish divergence warning signal on the Better TRIN.

Emini End of Trend Image

Expecting "End of Trend" Move (Emini 45 minute)

But I'm expecting a retracement tomorrow. The chart above shows the cyclical turn made on the Hilbert Sine Wave along with high volume churn.

The cyclical turn typically sets up a final down thrust that finishes off the down trend move. I call this a "completion" or "end of trend" pattern and it is quite reliable.

The high volume churn also shows that there is selling volume above 1,385 and the Emini is having trouble getting through. Lets see how tomorrow plays out.

US Dollar versus Japanese Yen Image

US Dollar versus Japanese Yen (Daily)

If you trade the Emini it's worth also following what's happening in the Bond and Japanese Yen markets. A strong US Dollar in Japanese Yen terms shows that money is flowing into US investment markets and likely to drive prices up.

The chart above shows the US Dollar has been caught in a range between 102.5 and 105.5. We've now made a cyclical low turn and broken through a falling trend line.

If the US Dollar continues, this is bullish for the stock market and supports my medium term bullish outlook for the Emini.

Good luck with your Emini trading.