Market Outlook SPY for Oct 16th '07

Dominant TF: Daily (and 15mins)
Swings: DN-UP-UP
Market direction: Congestion. Upward bias still valid overall despite some profit taking.

60mins: Congestion to mildly down.
Our word of warning proved to be correct. As for NDX, we clearly had a classic pattern forming. Now, what's next?
The late recovery cames mostly from day traders squaring off positions on day close, but SPX should go lower. Watch 153.4 (Fib) or even 153.1 (MM) in the near term, as it is likely that AdStoK lines will now go lower to cross in oversold territory.


Daily: Profit taking, but not change in overall direction yet.
AdStoK is so overbought with a white line declining, but Entropy is still holding fairly well. This is not indicative of any strong retracement in the near term.
We however now have a red bar, so profit taking could continue at a slow pace, possibly to 150 which would be tested for support and is a Fib PR1 level.
It is certainly too early right now, but one should keep it in mind.

Weekly: mildly UP.
The Swing indicator is now more firmly up, but the key swing price level is still close at this time frame.
Entropy is also looking better and the trend should remain mildly up for the time being as AdStoK lines are close to crossing with a strong up gradient.
We can however see some divergence in AdStoK and a low significance level at this time frame, so this is only background information at the moment, and one should focus on lower time frames (15mins and daily).