cf. NDX post below.
Friday, January 25, 2008
Market Outlook NDX for Jan 25th '08
Dominant TF: Daily
Swings: UP-DN-DN
Cycles (DomTF): pointing down, but somewhat unreliable in this market
Market Direction (Daily): congestion to low
Position (60mins): flat to long (shorter intraday time frames), selling 2150 call spreads would be a very conservative bet, otherwise 2000 is pretty safe too
We were short last time on NDX (Jan 18th). Target was obviously 1750, but behaviour on support level was not easily predictable. 1750 has been penetrated deep but hasn't broken, making current bounce even stronger.
60mins: check resistance levels
Nice bounce from recent lows, NDX is not out of the woods, but could well reach PR1 (1865) to intermediate MM level (~1880). There is no indication from MTFS or Entropy that it would go much higher right now, but momentum can always pick up as we go along.
Daily: support confirmed but...
Some may say the worst is over, let's just go long. Hmmm, there are trading opportunities at shorter time frames indeed, but on the daily chart, while we certainly have Entropy coming up, MTFS is not showing the best looking line crossover. This is not the easiest scenario, but i would anticipate congestion once the current up move (60mins chart) is over. Bar is still only yellow, and new MM support level is now much lower (cyan dots turned white)
Weekly: definite down bias still
No panic, but 1750 could be tested again, or at least congestion in the lower part of the trading range may happen. One can notice that 2000 never broke as a strong resistance level even if it appeared broken during 4th quarter 2007, and on the contrary, support level dropped!
The current snapshot has been changed to show more MM levels (ugly, but explicit)
Thursday, January 24, 2008
Market Snapshot for NDX - Jan 24th '08
More or less same scenario as for SPY, only slightly more bearish maybe.
NDX always over-reacts (higher volatility).
Market Outlook SPY for Jan 24th '08
Dominant TF: Daily
Swings: UP-DN-DN (from DN-DN-DN)
Cycles: unreliable (too trendy)
Market Direction: congestion at best, possibly lower still
Position: flat for most.
125 seems to hold, and contrarian traders are in already.
60mins: bottom has been found... for now
SPY made a good recovery in the afternoon, and indicators do look much better. Significance level is not too high, so one would have looked at lower time frames for a possible long entry.
What next? Again, some profit taking is possible early in the day (resistance level), even if bears now get slowly exhausted.
Daily: no strong recovery just yet
MTFS is only looking slightly better bow with lines attempting an upturn, yet the early crossover must leave us cautious, and the bar is still red after all. Entropy may be bottoming out (with a EntBin = -4).
Since the rebound happened on Fib target and MM pivot level, moderate optimism is possible.
Weekly: bottom?
MTFS and Entropy do still point downward, but EntBin is only -1 and MTFS significance level is quite low. No rejoicing however, we have to wait Entropy to bottom out, MTFS to look better and the end of the series of red bars.
Wednesday, January 23, 2008
Market Outlook RUT for Jan 23rd '08
Dominant TF: Daily
Swings: DN-DN-DN (from DN-DN-DN)
Cycles: unreliable (too trendy)
Market Direction: congestion at best, possibly lower still
Position: short or flat
The rate cut stopped the fall on MM stall level as mentioned in previous post.
60mins: unconvincing attempt to recover
RUT may have found a good support level at 655, but there is certainly no indication of a strong recovery. RUT may hover around current levels, or try going lower again.
Daily: lower
MTFS is still not looking great. OK, we may have a good looking candle after the rate cut, but probably not good enough... 655 remains the stall level and while the fall may be stopped for a while, 625 remains a possible target.
Weekly: congestion to lower
MTFS and Entropy point downward. The 655 stall level on daily chart is Fib level here, so all the more reason to hold, yet we now at least need to see the MTFS white reverse up in oversold territory to anticipate the end of the current correction. Entropy should also bottom up at the same time.
Monday, January 21, 2008
Market "Correction"
A SPY commented chart has been posted over the weekend on the other ts-trading-technique blog: http://ts-trading-technique.blogspot.com/2008/01/are-we-close-to-bottom-on-spy.html
Now, there is no need to analyze market direction, so let's just try and find where support levels will be found:
SPY: 125 first, but Entropy will be SO STRONG on the down side, and has potential to rapidly draw prices to the next weekly support levels (117, 108). 125 is however QUITE STRONG ALSO, so while it can (and probably will) be penetrated momentarily, one should not panic: it could very well hold for now. Let's update the scenario once the initial shock has been absorbed later today.
RUT: Despite being a broader index, RUT has been hit badly by the current volatility (exposure to rates, credit crunch etc). Now support level is somewhat lower at 625, with a possible (yet unlikely) pause at MM stall level around 655.
NDX: Like other indices, NDX now targets 1750.
Again, we have to first see the reaction on those levels, either a strong reaction to try and short-squeeze the bears, or more likely the 'hangover effect', i.e. the market being a little groggy...
Friday, January 18, 2008
Market Outlook NDX for Jan 18th '08
Dominant TF: Daily
Swings: DN-DN-DN
Cycles (DomTF): pointing down, but somewhat unreliable in this market
Market Direction (Daily): obvious
Position (60mins):
Short: definitely
Flat: wise
Long: short intraday time frames only
We have noticed on Jan 16th that support level turned lower, so a renetry short on the 1st red bar (here 1871 but effectively earlier and higher on lower time frame charts).
60mins: lower
As mentioned in earlier posts, polar bears are having a 2nd Christmas here. It is fairly common to see price acceleration when important levels break. There is no change in dynamics so one can only anticipate a slowdown on current Fib target ~1840 (low time frames), but more likely lower (stall level ~1812).
Daily: lower until pattern completion
MTFS is obviously bearish and nothing seems to be able to stop the fall until the pattern is complete with a line crossover in oversold territory, and with a better looking gradient. It could take a few days... and until then, NDX could well shed a few more points. MM support level is now 1750, with a stall level just above 1800.
Weekly: definite down bias, check Fib and MM levels
We incidently have a support level around 1800 (last lows) coinciding with a possible target on the daily chart.
We can also check Fib retracement levels, with 50% retracement right here (which could be penetrated to 1800 actually), then PR2 (61.8%) at 1750, which is also a possible target.
Until then, no panic... this is just a market correction which we may have forgotten but which happens from time to time.
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