Market Outlook NDX for Jan 15th '08

Dominant TF: Daily
Swings: UP-DN-DN (from DN-DN-DN)
Cycles (DomTF): pointing down, but somewhat unreliable in this market
Market Direction (Daily): volatile with a down bias
Position (60mins):
Short: would have exited already
Flat: wise
Long: short intraday time frames only

As mentioned over the last few days, NDX found a support on MM stall level (~1904), and is fairly contained in a trading range. Significance level is dropping fast on the 60mins chart, so movements in the trading range must be analysed in lower time frames (15mins chart looks great)

60mins: movement in trading range - upper bias in the short term
the upper bias in MTFS and absence of energy in Entropy do not make this short term recovery convincing at all. Short intraday time frames look a little better, but recovery could very well fade fast.

Daily: congestion to erosion
MTFS is in congestion with lower bias mode, so the pattern must complete in oversold territory now without necessarily going much lower. Entropy is close to a bottom though, and since the Fib pattern seems to have found its target earlier on, one may have a good recovery once negative pressure is fully exhausted. Volatility has always been a wild card with NDX so it may take anything up to a week to materialise.

Weekly: definite down bias, check Fib and MM levels
As mentioned recently, bull mode is over and we are now in correction mode (not bear mode yet though), and one can notice that the Swing indicator has been relatively hesitant at this level. I recommend taking cues from MM and Fib levels at this stage. The Swing indicator is way too steep to be stable (~ 3 times the natural angle of repose), so we know we have to wait for volatility to calm down a bit.

Note: this proprietary Swing algorithm differs from conventional algorithms which always toggle in lower time frames first. We are in this instance probably close to a key level at this time frame.