Homework for Monday 2008.12.01

30. November 2008
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ESZ8 - The expectation is the big players will return to a normal work week (back from an extended Thanksgiving break) and put the market back on the course it was originally on... down.  The overnight activity is already a sign of this.  All the gains of "Friday" are already gone and we are hovering right around Thursday's close.  If we rally to 897 (Friday's high), 904 (close of 10/15 and 11/06), or 917-920 (50% of previous daily move down) it's time to short. (We may not get that high, however.)

  • Sell 904 and 917 areas
    • Resistance at 887 (see next bullets), 880 (trendline), 865, and 855
    • Be aware of R1 at 906.25 and PP at 867.76 when dealing with targets near them.  In other words, these areas are especially important, since we have overlapping sup/res at those areas.
    • Coincidently, the 50% point of R1 and PP is 887, which is ALSO the 50% point of Friday's High (887.75) and Close (886.25).  If that wasn't enough, from today's open (5pm CST) and the past 6 hours of activity, 887 is exactly at the 25% point from the high and low of that activity (half of half). Thus, 887 must be an important point of rotation.
    • Observation: the move from 10/28 to 11/4 was approximately 180 points.  From 11/21 we started a rally.  If we move 180 points up from there, that puts us around 920.  This is very close to the 917 area (50% of previous daily move down).  So, I feel this makes the 917-920 area important.
 
Summary - 15:11 CST - We were looking for 904 to sell and only got 897.50.  Right after the open (Sunday afternoon), we hit that 897.50 and never looked back, falling 80 points!  Looks like we should've used the LOWS of 10/15 and 11/6 instead of the CLOSES (the two dates used in the analysis above).  The lows would've given us 897 (big red line in chart below)!  Dead on!  At least we were looking at the right bars/dates, but just not the right data.  Friday's high should've tipped us off, since it topped out at 897 as well.  All support levels failed today.  There was no stopping this move.

If we look at 11/5 and 11/6, our models for today, there were two big down days (45 and 53).  Today, we we had a HUGE down day of 80 points.  As usual, a compression of moves.  Today wiped out half of the rally from all last week (see chart below).
 

Homework

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