19/11/2007

Futures analysis

Two days of indecision in the futures imply exactly what I said previously: we have a short term bottom. At the time of writing, the Dow is declining more than 200 points on 'sell' recommendations for Citigroup, so if the situation remains this way, tommorow we can expect a retest of 3450. Also, there will be news on housing starts and building permits, which is to determine expectations for december Fed decision. Now, the futures are entering major support zone, that is supposed to slow this declining market, at least in the short term. Today we saw a higher low in the daily timeframe as little evidence of buying, which was fueled by rising open interest. All of the moving averages have downslope now, so current downtrend is unlikely to reverse.

Daily timeframe indicates indecision and short term slowdown, but intraday data shows practically opposite situation. As the latest decline finally ended and posted a single day correction, the market pulled back only to 38,2% Fibonacci retracement and started to make lower highs from there. Even downside spikes, that occurred late in the day (implying reversal) might be overlapped tommorow, if America continues to decline. Mid term picture remains the same - the market is still prone to retest august lows.