Market Outlook NDX for May 27th '08

Dominant TF: Daily & 60mins
Swings: UP-DN-UP (from UP-UP-UP : congestion area)
Cycles: unreliable
Position (60mins): short to flat
Market Direction (Daily): congestion

Last post was correct in terms of direction but proved to be too conservative. When I said "support must be found lower, I expected 1985 to hold at least for a while. The market decided however to retrace 100% to erase all gains this month. This didnt in the least affect our positions.
Again, we will a close look on the €/$ rate and as well oil prices which definitely influence the markets'mood at the moment.

Columbus Day on Monday.

60mins: some minor downward bias but retracement is quite possible.
The MTFS in this situation can point towards congestion to a possible upward retracement. A middle of the road congestion with a very slight upward bias is the favoured scenario. The Swing pivot is not confirmed yet.

Daily: congestion to minor retracement
MTFS is not bearish even though lines are pointing down. The most likely scenario is a congestion to a possible minor retracement. Fib PR1 (38.2%) looks like retracement target but we'll rather watch for a possible bounce on channel lows first.

Weekly: Congestion at key level
I clearly warned of a possible peak on last NDX post 3 days ago. The Fib/MM levels indeed stopped the seemingly irresistible ascension back to former highs. Having said that, there is no major change in the configuration and while the bar turned yellow, MTFS is still moderately bullish and Entropy has not peaked yet. We will therefore at most favour a slowdown scenario for the time being, but NDX could well resume its rise later on. We will remain "positively cautious" at this time frame, and wait to see how NDX behaves here as this is a key level:
Pivot number 3 (2050) could indeed turn into a full downward Fib pattern (target 1700), or could be erased to take NDX back to last year's highs (>2200). Again the cautiously bullish scenario is still favoured for now and confirmation should come within weeks. Since this is not the dominant time frames, clues will certainly arise from lower time frame indicators.