Market Outlook SPY for Jan 14th '08

Dominant TF: Daily
Swings: UP-DN-DN (from UP-DN-DN)
Cycles: unreliable
Market Direction (Daily): probably lower still - support must be tested
Position (60mins):
Short: exited
Flat: wise
Long: no way!

One can take cues from RUT or NDX as patterns are quite similar.

60mins: congestion to lower, testing support level
Significance level is dropping fast at this time frame, so we may want to switch to a lower time frame for a possible entry later on. MTFS is low and pointing down, so SPY will probably test lows again. Entropy does not indicate a down pressure though.

Daily: congestion to down
SPY remains a little bearish, but the early MTFS crossover can indicate congestion at this low level. Entropy has not bottomed yet, but we can anticipate the fall to stop near support level (at least in the short term...)
One should in any case wait first for MTFS to show a clearer pattern with crossover (preferably in oversold territory) and Entropy to bottom out for a clearer picture. As a reminder: Markets are discrete, event-driven, and reaction around support level will probably constitute the next event to come.

Weekly: congestion to down
SPY will now be looking for direction now that lows have been tested again. The bias however remains very much down, at least until Entropy eventually picks up again.