Here is a 60 minute bar chart covering e-mini day session trading since the 865 low in early July. Much to my surprise a supply shock developed during the first hour this morning. It can be recognized by the unusually wide range of the first hour bar and the unusually high volume during that hour (blue arrows and blue dash oval).
I think the sellers are now in control of this market. My best guess for today’s low is now 990 and I doubt that any rally the rest of the day will carry much above the 1000 level. Looking a little further ahead I see support at 980, the dash green line. The midpoint between the September 2008 top at 1291 and the March 2009 low at 666 stands at 979. You can also see several minor tops and bottoms which have formed at the 980 level.
I have no reason to think this is anything other than a normal reaction within the up trend from 865. My guess is that we shall see the e-minis trade near 980 sometime next week, and then the market will start a rally to 1035. By the end of October I expect to see the e-minis near 1120.
