An Updated Look at the YM Emini Futures - Sunday January 24, 2010

Those that have been following know that there are two areas that I have been targeting for a CIT of this up move off the March 2009 lows. The first is the 10313 – 10625 area and the second is the 11250 - 11875 area. We first reached 10313 on November 16, 20009 and at that time I posted an updated look at the daily chart of the YM.

The angle of ascent since that 11/16/09 date has been NIL. Since 11/16/09 to the most recent high on 1/19/2010 we only gained 345 YM points in a little over 2 months. And we have given that back entirely plus an additional 200 YM points in the last 3 trading days. What we made over the last three days is a pattern called Three Black Crows. And the selling the last three days was made on good volume.

The YM / DOW snapped the uptrend off the March lows on Thursday 1/21/2010 for the first time. The ES / SPX has been the weaker of the two indexes and actually snapped the uptrend off the March lows over a month ago and has since been riding up the south side of the uptrend line. The OEX, which I like to look at as a leading index, has been below the uptrend off the March lows since 11/27/09.

That this significant reversal happened in my first key area, and after a blowoff over the high of the range, and in light of the price action over the last three months - I believe that this is in fact the CIT I have been anticipating and that the HIGH FOR THE YEAR HAS BEEN PRINTED.

What do I expect from here: Typically after Three Black Crows you will either get a pause day like a doji or a close higher. I think if we do get a bounce it is a shortable bounce. I do not expect the YM to get back over 10566. I will be targeting 10309 – 10430 for swing shorts.

ONE KEY THING TO NOTE: SINCE THE MARCH LOWS WE HAVE NOT HAD MORE THAN 4 RED DAYS IN A ROW ON THE YM. We just had 3 for Three Black Crows. If we bounce up from here it will look like the typical pattern we have had since the March lows (will look like just another buyable dip). Instead I think it will be a shortable bounce.

So what I am watching for now is a move up to the area I mentioned 10309 – 10430 to be met with selling and selling to a lower low than we make right now. That will be confirmation of the CIT.

In the original Oct 25th look at the daily chart I have a chart with my hand drawn view of how I see price action playing out. So please also see the previous Daily Chart Updates that can be found here: LINK

Also please remember the paragraph in the original October 25th daily chart update which is worth repeating here: Keep in mind that money in trading is made not by being right in your predictions but by being on the right side of the price action. This is just what I see happening. It could or could not happen. I will not try to force my will on the market. The best traders I know don't care what the market is going to do...they just know what THEY are going to do if the market does A or if the market does B. Much better to be prepared to act on what the market does than to try to predict what it is going to do. All that being said the above is my forecast of how I see price action playing out from here.