cf. RUT post below
Thursday, February 14, 2008
Market Outlook RUT for Feb 14th '08
Dominant TF: 60mins, but weekly chart also.
Swings: UP-DN-DN
Cycles: unreliable yet again
Market Direction: none, lower bias still
Position (60mins): flat - delta neutral
Options: March iron condor in place
Short Mar790 Calls, Long Mar800 Calls, Long Mar600 Puts, Short Mar610 Puts
We had the turnaround given by cycle indicator on the 60mins chart. It is supposed to be a risky indicator, but can be quite useful too.
Yesterday, we have been surprised by the strength of the upward move. The Swing indicator was certainly already up, but in this overall bearish environment, i thought the resistance would hold. The long term scenario remains the same though.
60mins: good upward momentum now
Gap at open was not anticipated. Some exogenous shock (economic news) changed the dynamics slightly.
MTFS is now looking good, so recovery could technically take RUT to previous highs, and eventually all the way to 750. Entropy is not looking bad either and can sustain momentum a little further.
However the MM and Fib targets (~719) have not been passed clearly yet, so one should be careful not to be over-bullish too quickly.
Daily: same trading range
No big change at this level. We are in the same trading range, with no clear MTFS pattern and a weak Entropy. Despite this momentary reprieve, one shall watch mid to high 730s (i.e. recent highs, if hit again that it) carefully for clues on market direction.
Weekly: congestion - possible pause in down move
As mentioned last time, we are now having a pause in this bear market, with the MTFS white line hooking up. It should not be strong enough to justify a strong recovery but the white/brown lines crossover may indicate an interruption of the fall.
650 was a strong support, as 1750 was on NDX, so the market is probably showing willingness to stay above those levels. Having said that, we have to see the end of the pattern now with the green line joining the party close to oversold levels.
Wednesday, February 13, 2008
Market Outlook NDX for Feb 13th '08
Dominant TF: 60mins
Swings: UP-DN-DN
Market Direction (Daily): congestion with upper bias
Position (60mins): if long for a few days, profits would have been taken yesterday. Most would now stay flat, but also a few points to grab on the way down.
Keeping a few call spreads is always a good idea. The more adventurous will place March put spreads in the mid 1600s.
60mins: end of up retracement
Patterns are pretty clear at this level. NDX retraced up to Fib PR2 (61.8%) and also hit a MM level. The dominant trend being down in higher time frames, this was a quite logical profit target. Now, quite a few would be short again, however the MTFS green line is a little higher, thus dampening the tension on the white line. Entropy and MTFS lines show a modest downward bias, hence one can see a possible test of the 1750 level again (which would be a PR2 retracement again!).
Daily: support confirmed and probably tested again shortly
MTFS and Entropy do point towards a congestion at this low level. There is no indication of much negative pressure left, so buyers may come back around 1750 over the next few days. For the time being, let see how things develop when this happens.
Weekly: decidedly bearish for now, but support could hold
Indeed no reason to be optimistic right now, but one shall always check MM and Fib levels carefully, and one should not discard that there is always a chance that 1750 will hold if things slow down a little *, particularly if the white line reaches oversold level, where NDX could bounce at least momentarily.
1750 is the last defense line before we enter a bear market. Next support level would then be 1640.
* MTFS has some built-in momentum and can reach oversold level as time simply goes by, instead of only following price action. This means that a congestion at this low level may complete the pattern more or less the same way as a market fall would.
Tuesday, February 12, 2008
Market Outlook SPY for Feb 11th '08
Dominant TF: 60mins, with Daily weakening
Swings: DN-DN-DN
Market Direction: down in the longer term, price erosion or congestion with lower bias in the short term
No major change since last SPY post. There is however a feeling the fall may be over. It could be a deceptive impression even if volatility has indeed momentarily come down.
60mins: congestion with slight upper bias
SPY has tested 132 and bounced back a little. There is no energy to take it much higher right now. One shall also notice MM strong support level is now on 137.50, and trading range is now considerably reduced, with a strong support level unchanged at 125.
Most likely outlook is congestion with a very slight upper bias that could eventually take SPY to a PR1 Fib retracement around 134.50 but that remains to be seen...
Daily: continuation of slow erosion for now
The scenario has hardly changed. Recovery failed, and SPY is now slowly coming down. There is little energy either way though. One will keep in mind the MM and Fib targets. SPY could eventually reach a first Fib target just below 130.
Significance level is falling, so one will need to take cues from lower time frames, even in the unlikely event of a Fib pattern emerging north (low:126, high:140, Ret:132)
Weekly: bottom?
Despite the MTFS white line 'hooking up' slightly, and Entropy appearing to have found a bottom, both show a bearish background picture. So we may have a bit of a reprieve, but the negative tone is certainly still there, and we're still aiming at a cup&handle or W pattern formation... or worse.
Monday, February 11, 2008
Market Outlook RUT for Feb 11th '08
Dominant TF: weekly chart taking over, otherwise 30mins.
Swings: DN-DN-DN
Cycles: dominant cycle 126bars pointing down, possible turnaround in about 10 to 15 bars (60mins chart), but confirmation will be needed as it is always the least reliable indicator
Market Direction: none, lower bias still
Position (60mins): flat - delta neutral
Options (since Jan 9th) : Short Feb790 Call, Long Feb800 Call,Long Feb650 Put, Short Feb660 Put. Put spread is relatively safe.
60mins: lower bias
RUT does not show any recovery potential right now. MTFS is still weak and Entropy shows no 'steam' at the moment. Significance level is pretty low, so one should take cues at lower time frames if one is looking for an entry or exit point. Otherwise the most likelt scenario remains continuation of price erosion.
Daily: congestion with lower bias
No change in scenario. There is a feeling that the worst is over for now, but certainly no optimism in the market just yet. Significance level is also dropping, so one should remain cautious.
Weekly: possible pause in down move
It's been a long time since the weekly chart was last the dominant time frame. While the trend remains down here, the MTFS line crossover may indicate a pause. We also see Entropy tempting a recovery. One should therefore not anticipate any substantial fall in the short term. However, no recovery either until the pattern is complete.
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