Week March 28th - Double bottom or H&S?

Let's start where Wednesday's update left off and look at a few possibilities. Thursday's morning break of the 268.20 led to a near vertical fall to test 260 and then retraced the whole move in a similar fashion.  Obviously 260 is now very significant and the move off suggesting a test of the new range highs (280/285).  Will it? I do not believe that the move from 297 to 260 was the full correction.  I still find open interest a little bearish but becoming less so with the fund longs getting less and less net short. Still, few new shorts and thus no conviction to the downside.  If the mkt breaks 270 tomorrow, I would be looking for another attempt up.

Conclusion: still looking for more downside, but expect this bounce to develop a little more. 276.60 or 281.20/285.


60 Min - if the assumption is that the move from 290 to 260 was impulsive, then thus correction looks text book ABC (3-3-5) correction.  This would target between 281.20 and ard 285. If ends up being a running flat, then it would not make it past 276.60.  Either way, better to be flat and looking for what then next move is.

Daily - shows nicely the bearish signals (engulfing pattern) with fall to 260 and now the bullish hammer off the test of 260.  However, we did test the 10 day MovAve on Friday and came off. Basically, if we can't take 281.20, we are going lower than 250.

Point and Figure - break of 45 degree line would open up the possibility of hitting 283 target and consistent with the Elliot ABC count discussed above.

Commercial Net (open interest) - surprisingly, still lots of selling to do. If market does fall, expect to see this go back to 2008 net position and set up another bull run.

Supply and Demand - my own Supply and Demand showing a deficit for 2011/2012.

Euro - still held back by trend line and retracement at 143.