cf. NDX post below
Thursday, March 20, 2008
Market Outlook NDX for Mar 20th '08
Dominant TF: 60mins then Daily. Weekly chart coming back too.
Swings: DN-DN-DN
Market Direction (Daily): congestion to down
Cycles: high noise level
Position (60mins): neutral to negative delta. short.
Three trading days agao, i said: "The trend is still down, and technically the incapacity to pass 1750 does not bode well for the next few days and weeks". It seems to apply again today, yet we'll give a chance to recent measures like the Fed cut to sieve through the economy and markets.
We'll keep a look at other correlated market as well as EURUSD. The € is at last showing signs of abating a bit.
60mins: trading range for now
The Entropy gave us a good indication again, along with the reversal of MTFS. NDX indeed did find have momentum to break the strong MM level (1750) and the first Fib target (1755). NDX could find support at the bottom of the range, although most probably higher.
We notice Swing legs being quite steep, so those interested in swing trading should move to a lower time frame, always keeping in mind the context provided by higher time frames, i.e. dominant down trend.
Daily: down, but looking for support
It is always risky to read too much into charts, but MTFS is trying to point upward and Entropy is showing less negative pressure. It may not be enough to build a support level just yet though.
I would suggest taking cues from other time frames for the time being, keeping in mind the bias is still down.
Weekly: again and again, it is bearish...
It is almost a pity this is not the dominant time frame, as this is certainly the easiest to read: trend is down.
To mitigate this scenario though, one can see that Entropy is extremely low (EntBin = -5) so a bounce is quite possible in the near future. We may have to wait for ENtropy to finally bottom out and then for the completion of the MTFS pattern. Until then, the bias is certainly down.
Wednesday, March 19, 2008
Market Outlook SPY for Mar 19th '08
Dominant TF: Weekly followed by 60mins.
Swings: UP-UP-DN
Cycles: upturn indeed but doubtful reliability
Market Direction: Upper bias, and more indication that fall may be over, but no substantial recovery in sight just yet.
The Fed's massive rate cut certainly had an immediate effect but cautious optimism must still be exercised among bulls and contrarians. At the same time, bears may want to tally their profits and take it a little easier now. Being greedy could eventually prove costly.
60mins: nice bounce indeed
We do notice that the turnaround happened on Fib target as wll as MM stall level... The Fed cut, or any positive news certainly has a stronger impact when the conditions are right like on Monday afternoon.
MTFS and Entropy certainly are looking good, but SPY is only at range high and EntBin already culminates at 5, so profit taking is quite likely. In such case, we would have a range shift, i.e. SPY tesing pivot level to try and stay in the higher part of the MM range now (i.e. pivot to strong reistance further up).
Daily: no recovery but watch out
Reaction to the Fed cut induced a MTFS divergence. Entropy also bottomed on Monday already. The recovery is however not comfirmed yet, and as on the 60mins chart, SPY may just jump to the higher part of the sam erange since January, i.e. more or less within the [132-138] range.
Weekly: are we out of the woods?
Any move away from the nerve-wrecking 125-127 test levels is good, but too early to say that the worst is behind us. So, no rejoicing just yet. MTFS is still quite bearish, so is Entropy. Obviously, with EntBin at -4 (min is -5) one tends to think a bounce is in the cards, so SPY could go higher and alleviate pressure on MTFS. All in all, we would then see completion of the MTFS pattern within 4 to 6 weeks, and be in a better position to go higher then.
Level-wise, it is quite clear that the test level will be 137.50 support last year, then resistance earlier this year. It would be good to see it passed then tested as support again. It could however take a while.
Again and again, for the time being, patience and caution must be both exercised.
Tuesday, March 18, 2008
Market Snapshot for EURUSD - Mar 18th 2008
EURUSD snapshot. This pair could show interesting patterns over the next few days and weeks. (cf. previous posts and 'twin' blog for interpretation)
Market Outlook RUT for Mar 18th '08
Dominant TF: weekly chart, then daily and 60mins
Swings: DN-DN-DN
Cycles: unreliable (low signal/noise ratio)
Market Direction: same trading range
Position (60mins): short but target in sight.
Options:
Short Apr760 Calls, Long Apr770 Calls,
Long Apr570 Puts, Short Apr580 Puts
I warned on last post (Mar13th) that there was no recovery potential. We indeed went back to support level as anticipated. What next?
60mins: aiming at lows again but some relief could be coming
RUT went back down to the MM support level, and even penetrated deep enough to almost test previous lows. Furthermore, it is possible that the last 2 bars testing 656 as a resistance level now is paving the way to go lower. Previous lows are in the low 640s, then there 632 is a Fib target. MTFS looks bearish, but a support could be found at current levels or a little lower (white line diverging) and Entropy is now picking up a bit.
Daily: same as on the 60mins chart, i.e. more price erosion but a support could be found soon (625?).
The trend is undoubtedly down, but we have Entropy bottoming out and maybe a little bit of a divergence on the MTFS white line. The momentum should however take RUT a little lower, and even possibly hit 625 at some point.
Weekly: nothing new, i.e. congestion to down
We're now back to the previous lows, i.e. a level we had clearly anticipated. We're on Fibonacci PR1 as well as MM stall level, which may cushion or even stop the fall also confirming levels seen on lower time frames. MTFS however still looks very bearish here, but as mentioned over and over on this blog, this negative pressure can sometimes also dissipate slowly through the passage of time. For the time being, we have NO sign of recovery, and should the current level fail to resist this on-going down pressure, 625 seems a reasonable target for now... Only the completion of the MTFS pattern will tell us when the fall is finally over.
Monday, March 17, 2008
Market Outlook NDX for Mar 17th '08
Dominant TF: Daily, then 60mins
Swings: DN-DN-DN
Market Direction (Daily): congestion to down
Cycles: high noise level
Position (60mins): neutral to negative delta. short.
The trend is still down, and technically the incapacity to pass 1750 does not bode well for the next few days and weeks.
60mins: down but...
The MTFS pattern points down, so does Entropy. However, a support should be found within a few bars. NDX should stay in the lower part of the [1688-1750] range. The fact that 1750 has turned to strong resistance indicates a difficulty going higher anyway. We'll watch the Entropy bottoming out for a possible sign of a support, probably close to the bottom of the current range.
Daily:
Last time, i warned against getting carried away by the strong up day we had. We indeed saw no follow-through and we are still in a 'price erosion' mode.
Failing to pass 1750 would certainly point to a lower support, possibly around 1625 (125 point interval between salient MM levels).
Weekly: again and again, it is bearish...
But Entropy is so low (EntBin = -5) that a bounce must occur sometime soon. Difficult to know exactly when though. The 1750 support level looks like history, but there is a minute chance it can still hold if the forthcoming bounce is strong enough to stop the fall.
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