EminiForecaster Blog and Update History

Accurate Stock Market Forecasts for the Emini SP and other Futures

Archive for January, 2009

Sunday Forecast + New Study

The EminiForecaster.com official forecast for the trading week ending Jan
30, 2009 is now posted.

http://eminiforecaster.com/members/membersblog/forecaster.php

There are no changes to the forecast.  Per the forecast, we see the market
topping early in the week and then declining from there.

Virtually every day in the last week has large gaps on the chart making
cyclical forecasting difficult.  This is also the market’s statement that
it is not happy with the current circumstances, and the market does not
like this kind of uncertainty-  The Overall Market Rating remains bearish,
which supports the case for safer trading on the short side.

I have been conducting a study this morning looking at the percentage of
the time the market makes a high or low in the first N minutes of the day
based on the last 90 days (in New York time).  The results are as follows;
By 10AM a high for the day is made 29% of the time and a low for the day is
made 22% of the time. For the times 10:30 and 11:00 (and before), they are
33% and 29% for highs and lows and 37% and 34% respectively.  This means a
high or low for the day is made by 10AM, 10:30AM or 11AM,  51%, 62% and 71%
of the time respectively.  Note that over the last 90 days, there is a much
higher occurrence of  the high coming first in the day (consistent with a
bear market).

This study is very interesting because if we combine it with one other
concept, it tells us a lot about potentially catching big moves during the
day.  That other concept is one I have discussed here before; range or
volatility.  We can get measures of range from either the VIX (volatility
index) and dividing by 16 (see Sheldon Natenberg’s new book for more detail
on this and other interesting computations) and then multiplying by the
index.  At this time, that gives us a daily range of approximately 25
points.  The other way is to look at Average True range computations.  Over
the last 10 days, the range has averaged about 30 points.  Combining these
ideas together, this tells us, as we depart from high or low prices early
in the day, we are likely to make a 25-30 point move off that high or low.
Used strategically, this information can have a huge positive impact on
your trading.

Let us know if the study above is helpful to you.

Key levels for this week are a bit tricky because of all the gaps we are
seeing in the forecast. We might see 840-850 and 856-866 on the upside. The
market attempted to test the December lows in Globex on Friday and rallied
off that low.  It started to try for it again when the Obama administration
released a “bail-out” news story.  This drove the market higher consistent
with our forecast.  It is not unlikely that governmental attempts to keep
the market at or above current levels will be made, so use caution and
expect volatility.  On the downside 797.50 is key.  Below this is the 740
area on the cash index (this corresponds to November, 2008).  Because of
the key levels being in ranges, this week, the levels written here should
carry precedence over the support and resistance lines on the forecast.

It is interesting to note that the S&P futures are trading at a discount
to cash.  This indicates negative interest rates and carrying charges on
the contracts.  At this time, the market is closed and the futures are
quoted about 9 points below cash (substantially more than it should be
based on fair valuation).

Above all, use caution in this market.  There are forces working the
market violently in both directions through economic conditions and
manipulation.  It is best to keep risk parameters reasonably tight for your
account size and trading more on the near term.

Wishing you the very best,

Rob, Vadim & Staff

Introducing NEW EMF Platform!

EMF Official Forecast

The EMF Forecast for the trading week ending Jan 23, 2009 is now posted.

http://eminiforecaster.com/members/membersblog/forecaster.php

There is a change to the forecast from Thursday’s tentative update due to a shifted cycle. Monday is a holiday so be sure to omit the gline on that day.

Per the forecast, next week is up. We are also at or near the bottom of a range after having tested December lows on Thursday and bouncing from there. The best strategy is likely to keep the trading relatively short term in nature. Due to possible substantial changes due to the new and incoming Obama administration. This week the new administration may come out of the gate with aggressive solutions to economic problems that could keep the markets volatile. New policies could also invite asset shifting into some industries from others and start new trends etc. It is important to be aware of what is occurring and how it relates to your trading.

New key levels are as follows: 874 and 910 to the upside and 826 and 813 to the downside. However, keep in mind the above note that range and direction may be a tough call this week. For that reason we recommend keeping an eye on the intraday alerts for near term calls on the market.

If we manage through the 910 level on momentum and or a closing basis, the 925-930 level is possible.

Have a great 3 day weekend. We wish you the very best in your trading.

Rob, Vadim and Staff

EMF Tentative Forecast

The EMF tentative forecast for the trading week ending Jan, 23 2009 is now
posted.

http://eminiforecaster.com/members/membersblog/forecaster.php (click next
week)

Per the forecast, we see peaking around Tuesday at some point then a
decline for the rest of the week.

Keep in mind, as we have previously mentioned, the Overall Market Rating
is bearish. This typically occurs where index option put premiums are
trading at a discount to the calls. This is historically abnormal since
puts are typically used for hedging a down market and will thus sell at a
premium. Since the majority will tend to be wrong, it is bearish for puts
in this context to be at a discount.

As a result of the continued bearishness, you may do better on the short
side than long positions. This is best achieved by selling into rallies
(or resistance areas), with the alerts and/or the forecast.

This week we experienced substantial news contrary to our forecast which
has kept the market from moving to the upside as much as it probably would
have if not for the issues going on with Bank of America and Citibank etc.
This tendency for downside mentioned in previous forecasts bears out as an
example of using caution on the long side, because is sure seems the
market is looking for any excuse to sell off.

Personally, I received my year end statements this last week and reviewed
them and, much to my surprise, did better than I thought I had. As many of
you know, I am an extremely conservative trader and don’t use leverage. I
managed to return around 24% on most of my accounts. I only tell you this
for one reason- because I was able to achieve this largely by choosing my
trades wisely (and conservatively). The lesson here is, a handful of well
selected trades and very conservatively traded accounts can result in
superior returns in this highly volatile market environment. I urge you
to do the same by trading conservatively to try to let the tortoise beat
that hare we all try to tame within ourselves. I believe this area of
trading is where most players go wrong. The S&P is really much more of a
beast to tame right now that it has been in the past. The following
experience I had this week demonstrates this: I am talking to a group
about putting a hedge fund together for very wealthy investors and with
the trading program I am proposing, we are looking at trading one S&P mini
contract for every $400,000 in the account (based on our analysis) in order
to get the risk return profile we want. That is how crazy volatile this
market is right now. We are scaling a contract worth $42,000 to $400,000.
This is close to 1/10th of the contract value in order to achieve the risk
we want.

Continuing this discussion of volatility: I never imagined last week we
would test the lows from last December this week with the crazy volatility
we are seeing, or I would have provided that low 813 area in the key
levels. After hitting it today, we had a strong bounce (over 4%); the
markets effort to get back to the upside it wanted. If we can manage to
follow the current forecast for the rest of this week, key levels should
be 858 and 874 to the upside and 829 and 813 to the downside. Watch out
for the volatility. I will update these levels again on Sunday.

Wishing you all the Best,

Rob Vadim and the EMF Staff
P.S. We are working to get SMS and Email alerts for the EMF service to you
still-= Thanks for your patience.

EMF Official Forecast

The EMF official forecast for the trading week ending Jan 16th 2009 is now
posted.

http://eminiforecaster.com/members/membersblog/forecaster.php

There are no changes to the forecast. We expect the market to be up next
week. There may possibly be some more downside here before going higher,
so be cautious. Key levels to the downside are now 875 and then the 853
area. To the upside are 910 and then 930. The OMR remains bearish and
volatility is again, as expected, on the rise. This suggests downside is
likely to be more profitable than long side trading in the near term as
previously mentioned.

We wish you all the very best in your trading.

Rob, Vadim and the EMF Staff

EMF Tentative Forecast

The EMF tentative forecast for the trading week ending Jan 16th is now
posted.

http://eminiforecaster.com/members/membersblog/forecaster.php (click Next
Week)

We expect the market to be up next week.

The OMR remains bearish. At the same time, volatility continues to
collapse as the VIX is still at around the 42 level. This is still a
fairly high number, but, is low in recent terms. Many are of the mindset
the volatility is behind us, there are many reasons this will not likely
be true. The government has done absolutely nothing about fixing a huge
mortgage problem that, if left to its natural course, will cause even
bigger problems than we have seen to date. This will also be at an
accelerated rate over that which has been seen so far. This suggests one
thing; volatility. Short side trading in the weeks and months to come,
may tend to be more profitable with less risk. For the next week however,
we see some upside per the tentative forecast.

Current Key levels are 891 (which we saw in Globex last night). Below
this, the 885 level. To the upside 926-930 and the 940 area.

As always, manage risk prudently.

We wish you the very best in your trading. We will have more on Sunday-

All the Best,

Rob, Vadim & Staff

EMF Official Forecast

The Official EMF forecast for the trading week ending Jan 9, 2009 is now
posted.

http://eminiforecaster.com/members/membersblog/forecaster.php

There are no changes to the forecast. Per the forecast, we expect the
market to decline this week. It looks like the Nasdaq related indexes may
show strength starting mid-week, but please keep in mind, the forecast is
best suited for the index with the most volume; the S&P 500, followed by
the Dow. Continued usage of the alert/updates is recommended for entry
and confirmation.

The Overall Market Ranking continues to be bearish, but has shifted
slightly to the positive side suggesting a potential future change in
sentiment. Due to the holidays, we will watch to see how this manages to
change in the next week. The volatility has also collapsed a lot in the
last week. This may be due to bears on vacation, or it could be an actual
shift to a more bullish market. For now, our intermediate term indications
remain bearish however.

Key levels in the coming week are 933 and 952 on the upside. In the event
the forecast is inaccurate, a break of 952 on a closing basis will make a
strong case for 1000. To the downside, we see 892 as a first target, with
875 below that. Estimating, under the circumstances, with the holiday
ending makes forecasting perhaps a bit more challenging than normal weeks.

We wish you the very best in this new year in all your endeavors!

Best,

Rob, Vadim & the EMF Staff