Homework for Friday 2008.12.11

11. December 2008
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ES - Last night's homework listed a few reasons why the pull back was hitting a ceiling and there were multiple formations and measurements indicated the rally was over.  Since Thursday's open, we are now down 75 points (Thursday's action and current overnight action).  This intraday downward move was so great, I had to adjust my factoring on my Gann measurements to include it all!  The rising wedge is playing out perfectly, as the pitcher is pouring out red bars.  As Oscar like's to say, "The fundamentals always come out in the charts first."  Today, the fundamentals were the automotive bailout talks failed.

The big picture: From the chart below, you see the latest overnight action has stopped cold on the .618 level of our pitchfork (light grey line).  This is also in the area of a 90° rotation down from the top (825), which is also an old favorite level that has come up multiple times in the past.  Coincidently, the 180° rotation lines up with our lows from a couple weeks ago.  This puts a full 360° rotation all the way down at 575!  However, before we get there, we have the MOB (big green block) to get through at around 712.

 

From just looking at the current bar, it feels like today's action has already played out and it's very early in the overnight action!  Where do we go from here? 

  • As mentioned above, 825 is the main support in this area.  If we manage to break it, look for a rally back up to it to short further.  
    • Initial targets of 816 (90°), then 807 (180°), and the extreme 789 (360°).
  • If we don't break 825 and instead rally from here, look to sell 864-866 (360°, see chart below).  Coincidently (maybe not a coincidence?), this is also an important area that we have seen many times before.  

 

 

Summary 11:25 CST -  While watching the overnight action, we hit an important support level at 829.  With that large of a downward move, it makes sense that we were out of sellers at that point and rallied back up to the 865 area (as mentioned in the above HW).  After a 10 point fall from there we rallied up to 872.  This is an area that has come up multiple times in the past and was mentioned in Thursday's Homework.  From there, we got another 10 point fall.  Currently, floating somewhere between those levels.

Homework

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