cf. ER2 post below for guidance
Wednesday, April 30, 2008
Market Outlook ER2 (RUT) for Apr 30th '08
Dominant TF: weekly chart, 60mins had to be retuned
Swings: DN-UP-UP (weekly swing hesitant)
Cycles: good fit but high noise level
Market Direction: upper bias
Position (60mins): undecisive.
Options (RUT):
Short May780 Calls, Long May790 Calls,
Long May550 Puts, Short May560 Puts
RUT (ER2) has tried to breakout on the up side as expected, but has shown little energy and is now trying to find some support to possibly go higher later on. A pause or retracement seems inevitable even if we cannot pinpoint the exact timing right now. Shorter time frames may help.
We will also follow EURUSD and QM closely. We spotted the breakout as it happened, and still believe 1.5625 to be a key level going forward.
60mins: will MM pivot level hold?
MTFS is not giving us a clear pattern, and Entropy is weak and relatively directionless. In absence of any significant economic news (GDP?), no major move to expect over the next few bars.
Daily: same upper bias, but a retracement will be necessary.
We are again at range highs, and while MTFS looks positive, the white line is close to overbought level with other lines lagging behind. If we add a high entropy level (EntBin = 4), a retracement should occur shortly. This means that we should not pass range highs in the short term.
Weekly: congestion
The worst certainly seems over, and the upper bias is still there, so ER2 is trying to pass Fib PR1 yet with some difficulty. To be on the safe side though, we will wait for the MTFS pattern to complete now (line crossover). Until then we have to consider the remaining downward pressure which will slowly dissipate.
ER2 can also possibly reach the very strong 750 resistance level before retracing/congesting but the most likely scenario for the time being is the same [690-730] trading range. Levels above 750 are quite unlikely in the next couple of months.
Tuesday, April 29, 2008
Market Outlook NDX for Apr 29th '08
Dominant TF: Daily.
Swings: DN-UP-DN
Market Direction (Daily): up overall, but volatile still.
Cycles: good fit, and long cycle peak detected
Position (60mins): flat
NDX is crawling up... aiming unconvincingly at 2000. A pause looks more and more likely.
60mins: overbought, trying to go higher
NDX has passed 1900 and is trying to go higher. MTFS is however overbought and if we look at a lower time frame (15mins has a higher significance level), we have a strong resistance in the higher 1930s. A retracement is possible in the short term (cycle peak).
Daily: wavy up...
No major change since last post: NDX is on its way to 2000. The MTFS pattern is now confirmed and should continue until lines meet again somewhere near overbought level. We however notice tht the white line is peaking and EntBin is very high, hence NDX could possibly take a pause in the short term. In the worst case, NDX would test channel lows or back to the 1875 pivot level.
Weekly: a pause on the way up is likely
Like on lower time frames, it is now visible that NDX is aiming at 2000 (MM + Fib). We can however notice that this could leave the bearish MTFS incomplete. While possible, this scenario remains unlikely and a consolidation seems necessary at some point. We'll therefore check for a Fib/MM level (1950?) for a retracement which will help complete the MTFS pattern.
As said earlier, the 2000 level will be key to market direction for the rest of the year.
(May call spreads above 2000 are quite safe)
Sunday, April 27, 2008
Market Outlook SPY for Apr 28th '08
Dominant TF: 60mins followed by the weekly chart.
Swings: UP-UP-UP
Cycles: not a good fit, but low frequency detected
Market Direction (daily): congestion to upper bias
Position (60mins): flat looking for long entry point
SPY bounced on resistance level (tested for support) to now reach range highs again, exactly as anticipated on last SPY post. What next now?
As a note, the last EURUSD post really came spot on as the breakout occurred that same day. We will keep an eye on it as EURUSD is back on the key level and could actually go lower, impacting all other markets starting with crude oil.
60mins: upper bias but hesitation at range highs
SPY is trying to go higher, only stopped by a 1st Fib target and range highs. MTFS looks overbought yet positive, but Entropy is lacking energy to breakout right now. Despite this hesitation, going higher remains the most likely scenario though.
Daily: congestion to upper bias
SPY is now back to year-to-date highs, but could well go higher. MTFS is pointing higher yet SPY could also first find support on MM pivot level (137.50). In such case SPY would aim at the 50% retracement level at 141.70. The MTFS pattern does not however indicate a straight path to 150 but the bias is UP overall.
Weekly: aiming higher
MTFS lines are certainly pointing higher but the pattern itself is not a recovery pattern. In most cases, this kind of pattern announces a retracement at some point. Now that the PR1 Fib level is passed, this may happen on the 50% Fib level or higher, and looking at previous support levels, testing 137.50 could set a strong base going forward.
Friday, April 25, 2008
Market Outlook ER2 (RUT) for Apr 25th '08
Dominant TF: weekly chart, 60mins declining
Swings: UP-UP-DN (weekly swing was previously down)
Cycles: unreliable
Market Direction: upper bias
Position (60mins): undecisive.
Options (RUT):
Short May780 Calls, Long May790 Calls,
Long May550 Puts, Short May560 Puts
We have seen RUT constrained in a tighter range. If we look back a little the trading range since Jan was roughly [650:720], then cut in half [690:720], then now in half again [705:720]. Such situation should end up in a breakout, probably on the up side. We have to try and find out the exact timing for it. We got it right yesterday on EURUSD, didnt we ? About EURUSD, again and again, i repeat that 1.5625 will be a key level for a possible change in trend.
60mins:
ER2 (RUT) is again at range highs, also a strong MM resistance level. The level looks hard to break, yet it should only be a matter of time. MTFS and Entropy are somewhat positive, and we are now closer to a breakout on the upside, but we are likely to first see another round in this narrower trading range.
Daily: same upper bias, but not too convincing
The same last post can apply again today (hasn't changed much in the last week)
ER2 (RUT) is indeed hesitant around range highs. MTFS shows some mild upper bias, but Entropy is so weak there is at this point in time very little indication of a range breakout. The most likely scenario is more congestion (i.e. same higher part of current range) for the time being. Only some new energy (endogenous, i.e. breakout, or exogenous like some economic news) could change this scenario.
Weekly: congestion to down bias
Yet the worst certainly seems over with Entropy bottoming out and the MTFS pattern is about complete. The last few blue bars complete the picture.
To be on the safe side though, we will recognize that the MTFS while having an upper bias could well indicate some congestion at this low level still. We will wait for the MTFS pattern to complete now until then the downward pressure is fully dissipated, hence a mild negative bias still prevails. The most likely scenario is the same [690-730] trading range. However, in case of a coming breakout on the upside, the 50% retracement level around 750 would be also quite strong. Levels above 750 are quite unlikely in the next couple of months.
Thursday, April 24, 2008
Market Snapshot for EURUSD - Apr 24th 2008
Here is a snapshot on EURUSD, which may breakout on the downside. Maybe a little too early to say, but always interesting to watch in realtime...
Market Outlook NDX for Apr 24th '08
Dominant TF: 60mins.
Swings: UP-UP-DN
Market Direction (Daily): up overall, but volatile still.
Cycles: good fit, but not reliable (high noise level)
Position (60mins): flat or long with tighter stops
NDX reached its Fib target (OP), and as expected on last NDX post, found some support on MM pivot to stall at Fib level again. What next?
60mins: overbought, trying to go higher
NDX is hesitating at this level. This is also visible with a MTFS pointing higher while overbought and Entropy being quite weak.
New energy (economic news, breakout) will be needed to make NDX aim at 2000.
Daily: upper bias, but resistance level.
The daily chart also shows a Fib target level around 1910. The MTFS pattern looks fairly positive but since we have a high Entropy level (EntBin = 4), we shall remain careful. Entropy is showing a lower high, and if the MTFS white line also peaks while other lines lag far behind, a retracement would be certain. We will therefore watch our indicators as well as NDX behaviour on resistance level carefully. Until then the bias is still positive.
As a note, any retracement would just be a slow down on the way to 2000.
Weekly: patience...
Like on lower time frames, it is now visible that NDX will try and aim at 2000 (MM + Fib). However, unless the MTFS pattern evolves dramatically, there is very little chance that we switch back to bull mode, i.e. a pullback is almost certain either before or after hitting 2000 (the swing indicator has not toggled up yet either)
This is an important clue that call spreads above 2000 is quite safe.
As said earlier, the 2000 level will be key to market direction for the rest of the year.
Wednesday, April 23, 2008
Market Outlook SPY for Apr 23rd '08
Dominant TF: 60mins followed by the weekly chart.
Swings: DN-UP-DN
Cycles: good fit, but unreliable still
Market Direction (daily): congestion to upper bias
Position (60mins): flat
It was indeed probably a safe thing to take profits (on the 60mins chart), as SPY retraced a bit on MM level, exactly like NDX (cf. post 2 days ago). All in all charts are not too difficult to read at the moment.
60mins: hesitation at resistance level
SPY penetrated the MM resistance level then took a breather to now test it as support. Although MTFS looks slightly negative, we shall favour a positive bias at least in the very short term. The 30mins chart (not shown here) is also pointing higher.
We however have no indication of a range breakout yet.
Daily: congestion to upper bias
Mild upper bias, but certainly not the best looking MTFS pattern ("low-rev 2nd gear"). Like on the 60mins chart, we have no indication of a range breakout yet, so despite the current upper bias, we'll keep an eye on SPY's behaviour on range highs.
Weekly: recovery still stopped on Fib PR1
Entropy is improving indicating more and more clearly that the worst is probably behind us. Yet we have to see how SPY behaves on PR1 Fib level (38.2%). Significance level is high on the MTFS, indicating we're still in 'soft landing' mode rather than in recovery mode, hence SPY should stay in the 130s for some time still. Should PR1 break, SPY will stop one Fib level up, but since the MTFS pattern has not completed in oversold mode, we may see some volatility ahead.
Tuesday, April 22, 2008
Market Outlook ER2 (RUT) for Apr 22nd '08
Dominant TF: 60mins and weekly chart
Swings: DN-UP-UP (weekly swing was previously down)
Cycles: good fit, and possibly reliable
Market Direction: up
Position (60mins): overbought, undecisive.
Options (RUT):
Short May780 Calls, Long May790 Calls,
Long May550 Puts, Short May560 Puts
April positions expired positive. Little has changed since last post (which proved correct), ER2 (RUT) is still hovering around range highs.
60mins:
ER2 (RUT) is still at range highs, also at strong MM resistance level. This level may be hard to break but MTFS indicates ER2 not giving up just yet, even if Entropy is now very weak. Should the cycle indicator prove right, we would also be close to a peak. The MM range has narrowed to [688:719] about a week ago (upper half of previous range). This congestion may lead to a sudden breakout later on.
Daily: same upper bias, but not too convincing
The same last post can apply again today.
ER2 (RUT) is indeed hesitant around range highs. MTFS shows some upper bias, but Entropy is so weak there is at this point in time no indication of a range breakout. The most likely scenario is more congestion (i.e. same higher part of current range) for the time being.
Weekly: congestion to down bias
Yet the worst certainly seems over with Entropy bottoming out and the MTFS pattern about complete. The last few blue bars complete the picture.
To be on the safe side though, we will recognize that the MTFS while having an upper bias could well indicate some congestion at this low level still. We will wait for the MTFS pattern to complete now until then the downward pressure is dissipated, hence a mild negative bias still prevails. In case of a coming breakout on the upside, the 50% retracement level around 750 would be also quite strong.
Sunday, April 20, 2008
Market Outlook NDX for Apr 21st '08
Dominant TF: 60mins. Some may want to shift the set of time frames down to (30mn, 60mn, 240mn).
Swings: UP-UP-DN
Market Direction (Daily): up overall, but volatile still.
Cycles: very good fit, but high noise level
Position (60mins): up
I anticipated a bounce but to be honest it was not possible to forecast it would carry over to a good looking recovery. Those who switched to a faster set of time frames certainly didn't get caught here.
60mins: overbought, but where is the resistance level?
MM levels have now moved twice upward since last post. MTFS and Entropy are also looking much better. We will look for a possible resistance level on currentl levels, so NDX could well try and consolidate a further rise on MM pivot level.
Daily: upper bias remaining after strong rise.
We seem to have a Fib pattern which could take NDX higher. We have to recognise that the MTFS pattern may fail, but at the same time significance level was lower and is now picking up strongly.
No rejoicing though as this is not th emost bullish situation so we'll watch Fib targets carefully, the first one being 1910, i.e. close to current levels.
In the medium term, NDX may well reach the next level around the psychological level of 2000.
We're not there yet.
Weekly: patience...
In addition to lower time frames, it is now visible that NDX will try and aim at 2000 (MM + Fib). However, unless the MTFS pattern evolves dramatically, there is very little chance that we switch back to bull mode, i.e. a pullback is almost certain either before or after hitting 2000.
This is an important clue that call spreads above 2000 is quite safe.
As said earlier, the 2000 level will be key to market direction for the rest of the year.
Friday, April 18, 2008
Market Outlook SPY for Apr 18th '08
Dominant TF: 60mins followed by the weekly chart.
Swings: UP-UP-DN
Cycles: fairly good fit, but unreliable still
Market Direction (daily): unclear, congestion
Position (60mins): target in sight
On our last post (Apr 15th), we warned about tightening stops but the subsequent reversal (Apr 16th) admittely surprised us by its strength.
Shorting SPY following the 60mins chart was a good move indeed, which move maybe surprised us by its strength. A bit of hesitation yesterday, what to expect today?
60mins: resistance level in sight
SPY stopped its rise on stall level, and is now inches away from strong resistance level. It may go a little higher to previous highs, but energy is dissipating so no major breakout to expect.
Daily: congestion
SPY bounced on the 50% retracement and now could well test MM levels or even previous highs. MTFS and Entropy are however still pointing for congestion at best.
Weekly: on its way to test Fib level again.
Entropy is improving indicating more and more clearly that the worst is probably behind us. Yet we have to see how SPY behaves on PR1 Fib level (38.2%). significance level is high on the MTFS, indicating we're still in 'soft landing' mode more than in recovery mode, hence SPY should stay in the 130s for some time still.
Thursday, April 17, 2008
Market Outlook ER2 (RUT) for Apr 17th '08
Dominant TF: weekly then 60mins charts
Swings: UP-UP-DN
Cycles: good fit but very unreliable (low signal/noise ratio)
Market Direction: up
Position (60mins): long but looking at taking profits
Options (RUT):
Short Apr760 Calls, Long Apr770 Calls,
Long Apr570 Puts, Short Apr580 Puts
Short May780 Calls, Long May790 Calls,
Long May550 Puts, Short May560 Puts
Since last post, MM levels have changed on the 60mins chart, indicating a potential rebound on strong support level. Having said that, we have all been quite surprised by the reaction to earnings announcement. Yet, we're again in the same trading range still.
60mins:
ER2 (RUT) is now again back to range highs. It closed on stall level yesterday, so some profit taking is always possible, yet, MTFS and Entropy both indicate higher prices. 720 is a strong resistance level though.
Daily: same upper half of the same trading range
The 688 Fib support level held, which is understandable as the lower part of the trading range early March was prior to the "Fed boost". However, the earnings announcement came as a surprise still, and we don't see on our chart any reason to believe in a substantial change in dynamics in the short term. Looking at prices, the upper bias seems obvious, but MTFS and Entropy do not indicate ER2 passing the upper range boundary just yet.
Until we see evidence of a range breakout, the likely scenario remains congestion in the [700-720] range.
Weekly: congestion to down bias
I repeatedly said that we have to wait for the MTFS pattern to complete, and until then the downward pressure is dissipated, the current negative bias will prevail.
ER2 (RUT) should consolidate at this low level and a line crossover may occur soon. We'll see how a new pattern then develops. We'll also keep an eye on Fib retracement levels. In the very worst case scenario, the 625 support level would be hit, but would certainly hold. On the up side, 750 seems quite safe for our condors (Fib + MM).
Wednesday, April 16, 2008
Market Snapshot for EURUSD - Apr 16th 2008
Here is an update on EURUSD. The bias is obviously still up, but we'll check levels carefully for a possible breakout.
Market Outlook NDX for Apr 16th '08
Dominant TF: 60mins. As mentioned last time, some may want to shift the set of time frames (TFS) down (30mn, 60mn, 240mn)
Swings: DN-DN-DN
Market Direction (Daily): erosion
Cycles: unreliable
Position (60mins): flat to short
I was admittedly too conservative last time (3 trading days ago), but the situation became clearer since, so those who switched to a lower time frame as recommended will have shorted NDX.
60mins: erosion overall but bounce is likely at first.
Classic head&shoulder followed by Fib development. There is still a mild erosion potential which could take NDX down to 1750. If we stick to the current chart situation though, MTFS and Entropy are the contrary pointly very slightly up. NDX could therefore reach 1810 again in the short term. We may even have a new 30mins Fib pattern developing at the same time.
Daily: retracement looking for support.
NDX has bounced on the 50% retracement level, but MTFS is clearly indicating a lower bias, so PR2 (61.8%) (+MM) is a more likely support level. MTFS also indicates higher lows, so NDX could well go higher later on.
Weekly: patience...
We certainly see MTFS looking better, accelerating the dissipation of the negative pressure we've had for a few months. There is no substantial recovery potential right now but bars are blue, so we may see some kind of a cupd&handle formation and NDX finally going up in a few weeks. The exact bottom cannot be determined here, so we'll follow shorter time frames for decision points. In the longer term, the 2000 level will be the major test level determining direction for the rest of the year probably.
Tuesday, April 15, 2008
Market Outlook SPY for Apr 15th '08
Dominant TF: 60mins followed by the weekly chart.
Swings: DN-DN-DN
Cycles: unreliable
Market Direction: unclear, lower bias
Position (60mins): still short, tightening stops
Shorting SPY following the 60mins chart was a good move indeed, which move maybe surprised us by its strength.
60mins: looking for support
SPY is trying to find support on current levels, yet it could well test stall level around 132. We do indeed notice new MM levels with a narrower range (higher support level). This may mean that 131.25 will ultimately hold if tested again. MTFS is still somewhat bearish, so this should translate in a soft landing around these low levels.
Daily: looking for support
Last time, i anticipated a moderate retracement, but such retracement may take SPY a little lower, so we'll check for Fib levels for possible support.
MTFS seems to indicate the retracement should be contained though. Significance level being lower at this time frame, we won't read too much here and rather concentrate on concordance of likely support levels (~131).
Weekly: again, no significant change yet.
After hitting PR1 (38.2% retracement), SPY is nw consolidating, again until the negative pressure eventually dissipates over time.
The MTFS pattern does not show any recovery potential just yet, but any possible down move going forward should now be cushioned (~131 support also?).
Monday, April 14, 2008
Market Outlook ER2 (RUT) for Apr 14th '08
Dominant TF: 60mins and weekly charts
Swings: DN-DN-DN
Cycles: very good fit but very unreliable (low signal/noise ratio)
Market Direction: down
Position (60mins): short
Options (RUT):
Short Apr760 Calls, Long Apr770 Calls,
Long Apr570 Puts, Short Apr580 Puts
Short May780 Calls, Long May790 Calls,
Long May550 Puts, Short May560 Puts
We have no RUT data, so we swapped for ER2.
We have pointed out how strong the resistance level at the upper boundary of the trading range. We're now halfway down and we'll watch for a possible further deterioration to levels prior to the Fed's bold move. As we said over and over, it will take more time to dissipate the negative prssure.
Options positions are however still looking fine.
On the forex front, despite the current volatility, we'll still keep an eye on EURUSD key level : 1.5625
60mins:
Interpretation has now to be adjusted a little with ER2 which is a little more volatile. Our last report on RUT was correct in direction, but admittedly did not fully anticipate the snowballing effect we've seen.
We here see levels moved downward with a strong support level back to 688, and at a same time the overall range being reduced. At first sight, 688 looks pretty strong, but MTFS is still quite bearish, so we'll also consider the next support level at 670. Entropy is still average, which surprisingly is more indicative of erosion than an actual downward pressure. This would confirm a continuation of current situation.
Daily: looking for support
Not surprisingly, Fib levels are about the same as on the 60mins chart, and 670 looks a plausible target. The weakening of the MTFS is not incompatible with this scenario.
At this point in time, there is no indication that March lows would be hit again.
Weekly: congestion to down bias
I repeatedly said that we have to wait for the MTFS pattern to complete, and until then the downward pressure is dissipated, the current negative bias will prevail. ER2 (RUT) should consolidate at this low level and a line crossover may occur soon. We'll see how a new pattern then develops. In the very worst case scenario, the 625 support level would be hit, but would certainly hold.
Friday, April 11, 2008
Market Snapshot for ER2 - Apr 11th 2008
For some odd reason, I have no access to RUT (it seems I'm not the only one), so I swapped for the continuous futures contract ER2 today as the technique can be used on any symbol.
Again, cf. today's posts below for guidance.
Market Outlook NDX for Apr 11th '08
Dominant TF: 60mins with weekly chart coming back too. We will notice sub-optimal significance level, so shorter time frames may be considered too (30mins).
Swings: UP-UP-DN
Market Direction (Daily): hesitation on resistance level
Cycles: unreliable
Position (60mins): flat
NDX has been evolving between MM levels, after reaching strong MM + Fib target levels (retracement was anticipated on previous post). I here added a shorter intraday snapshot to better visualise dynamics on a 30mins chart.
60mins: still undecisive
We have classic Fib formations here and we would certainly generally favour the bigger one pointing higher. MTFS while showing some hesitation is also pointing up. Yet, for a change, we'll look at the 30mins chart too. MTFS is not very different there, but we will keep an eye on that Fib formation there pointing down.
Such hesitation may take NDX either to 1836 or even 1819 (less likely). It may take up to a day to determine direction.
Daily: fairly bullish still but retracement is likely at first
NDX may have started the retracement we anticipated (MTFS pattern and Entropy peaking). Now since the MTFS green line is higher, there should not be any major change in trend once the retracement is over. We will therefore consider Fib levels as possible supports.
Weekly: patience...
no change since last post:
The Swing indicator is hesitating, but is still DOWN. MTFS is still moderately bearish despite the bounce in the last 2 to 3 weeks. Again, we have to see completion of the MTFS pattern and dissipation of negative pressure in the market.
NDX has now reached PR1 (~1880) exactly as anticipated, but the MTFS pattern should certainly prevent NDX from going higher for now. It seems a pause or a moderate retracement is inevitable. The 2000 level will later on be a lot more determinant for future direction.
Thursday, April 10, 2008
Market Snapshot for EURUSD - Apr 10th 2008
We publish a EURUSD snapshot now and then, as we believe the 1.5625 remains a key level worth watching carefully. That level is currently penetrated but isn't breaking. The bias is still up, but one could consider going flat shortly.
Traders who wish regular updates on forex or any other symbol must contact me for a quotation. I however wish to add that I will consider selling this whole web service later this year.
Market Snapshot for RUT - Apr 10th 2008
cf. SPY post below for guidance. Markets are correlated, so only minor adjustements for specific MM and Fib levels are required.
Market Snapshot for NDX - Apr 10th 2008
cf. SPY post below for guidance. Markets are correlated, so only minor adjustements for specific MM and Fib levels are required.
Market Outlook SPY for Apr 10th '08
Dominant TF: 60mins followed by the weekly chart.
Swings: DN-UP-DN
Cycles: unreliable
Market Direction: upper bias
Position (60mins): short
Yesterday's post on RUT was correct, except maybe that retracement passed PR2 and even almost hit PR2. Just more profits overall...
Back to SPY. Last post was also correct. Same behaviour on range high, so the same pull-back was anticipated.
60mins: will MM support hold?
SPY is now down to the 50% retracement, and seems to have bounced there late in the day. MTFS is now engaged downward, so support should be found lower. SPY could therefore test 135, or even 134.
Daily: moderate retracement
With a high EntBin (=4), profit taking was expectable, but retracement should remain moderate. Since significance level is low on this time frame, we shall rather consider MM and FIb level on the 60mins chart. The bias remains upward overall.
Weekly: again, no significant change yet.
As expected, the bounce took SPY up to PR1 (38.2% retracement) and is now taking a breather. At this time frame, we only have to check how negative pressure dissipates over time. The MTFS pattern does not show any long term recovery potential just yet, but any possible down move going forward should now be cushioned. We therefore just have to be patient.
Wednesday, April 09, 2008
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