cf. SPY post below for guidance.
Saturday, May 10, 2008
Market Outlook SPY for May 12th '08
Dominant TF: weekly and daily charts. 60mins coming back strongly.
Swings: DN-UP-UP
Cycles: still unreliable
Market Direction (daily): congestion/retracement but upper bias still overall
Position (60mins): flat to short (and quite volatile at this time frame)
On last post, i warned about volatility and poor visibility on the 60mins chart. Picture has so far been clearer on longer time frames, and the congestion was anticipated there.
60mins: down, looking for support (137.5?)
MTFS is bearish although it is likely that a support will be found soon, from current lows to possibly 137.50.
Daily: profit taking should be limited.
The obvious retracement has started as mentioned on last post. SPY will now be looking for support without affecting significantly the current recovery. 137.50 looks like a reasonable support level, but Fib levels will also be considered. MTFS certainly does not point for anything more than a moderate pullback. 150 remains the target over the medium term, even if again the road last year's highs looks bumpy, and maybe full of surprises...
Weekly: recovery pausing 'naturally'
Despite the Swing indicator now being Up, we still have a MTFS pattern waiting to complete, and the Swing gradient a little too steep anyway. If we now also add to the picture that entropy is just about balanced, it is clear that SPY will be now looking to consolidate. That's why we'll keep a close eye at possible support levels on the daily chart.
To avoid reading too much in the chart right now, we'll also take into account that consolidations sometimes fail... In such case the Fib (expansion) pattern would start south from last pivot point just above 142. We should obviously know more about it over the next few weeks.
Friday, May 09, 2008
Market Outlook ER2 (RUT) for May 9th '08
Dominant TF: weekly chart, then daily. 60mins coming back
Swings: DN-UP-UP (weekly swing still hesitant)
Cycles: poor fit, but long cycle detected.
Market Direction: moderate congestion.
Position (60mins): flat to short.
Options (RUT):
Short May780 Calls, Long May790 Calls,
Long May550 Puts, Short May560 Puts
Despite the relatively high volatility on the 60mins chart, the retracement on range highs certainly didn't come as a surprise. Shorter intraday time frames give a good picture, but one should favour the dominant time frames providing they conform our trading style.
We will also follow EURUSD and QM closely.
60mins: congestion or possible continuation of erosion.
Last post was correct, and now that the MM pivot level seems penetrated, ER2 (RUT) could go slightly lower. MTFS however does not point for any serious retracement, and congestion is more likely (711 should hold). This is not the dominant time frame so we'll take cues from higher time frames unless needed.
Daily: expected retracement is here at last.
MTFS indicates a moderate retracement so we'll check for channel lows and Fib levels. For the time being, we'll aim at a support level above 700 (high 680s also possible).
Weekly: congestion, possible retracement
No major change since last post:
Fib PR1 seems to be a resistance strong enough to force ER2 to consolidate a little lower. MTFS is now close to completing its pattern. For the time being, we anticipate the some congestion range [690-730] to hold. Should support be found around 690, ER2 would spring back to 750 which would be the test level going forward.
Thursday, May 08, 2008
Market Outlook NDX for May 8th '08
Dominant TF: Daily
Swings: DN-UP-DN
Market Direction (Daily): congestion to retracement
Cycles: quite unreliable
Position (60mins): flat to short
NDX needed to hit 2000 to trigger significant selling. We all anticipated that, it is however still always amazing to see. We now have to see whether the market consolidates soon or not. The bias remains up overall.
60mins: looking for support
Despite the sudden profit taking session yesterday, we have no indication of a continuation of the fall. Significance level is low so we'll favour channel lows and Fib/MM levels for possible support (including current level).
NB: Intraday time frames give great charts with a support level at 1938.
Daily: congestion to minor retracement
MTFS points towards a congestion at this high level but a minor retracement is possible without affecting the ongoing recovery overall. Like on the 60mins chart, we will look closely at Fib/MM levels even more so since significance level is high. In case of retracement, we will look for support around 1910 then 1880.
Weekly: Resistance level around 2000
No significant change from last post:
The Swing is still down, in agreement with MTFS which is still only in an upward retracement mode.
This confirms the scenario whereby the 2000 area should remain a strong resistance level (Fib + MM).
Now we have to see how a retracement accelerates the completion of the MTFS pattern.
Wednesday, May 07, 2008
Market Outlook SPY for May 7th '08
Dominant TF: weekly and daily charts. MTFS tuned up a bit on 60mins.
Swings: UP-UP-UP
Cycles: totally unreliable
Market Direction (daily): congestion to upper bias
Position (60mins): flat to long (quite volatile at this time frame)
MTFS on the 60mins chart has been tuned up a bit as divergence was really growing making significance level abysmally low.
Last post on SPY was conservative yet about correct. SPY is volatile and (only) retraced to below 140 before picking up a bit. Volatility is here to stay on the 60mins time frame.
60mins: attraction to strong resistance MM level
The Swing indicator is UP but unstable (gradient is too high). MTFS also shows a low significance level (even after a minor tune-up), so we'll remain careful on this time frame. Shorter intraday time frames are easier to read, and show an even clearer upper bias with a resistance level at 142.2.
Daily: congestion potential with same upper bias for now.
The upper bias has been stronger than anticipated, hence delaying the necessary retracement or profit taking. Fed news last week may be the cause for this continued rise. The conditions remain the same though. MTFS is bullish at least until the white line clearly peaks or pattern completion. It seems the target is higher still so one may reach 150 before seeing a serious retracement.
EntBin is high so a pause seems inevitable, and we shall not discard a possible testing of pivot level (137.50) before aiming at 150 again. Like I said on the last post, the road to 150 is probably going to be a little bumpy.
Weekly: aiming higher but retracement is likely at first
We have noticed that the Swing indicator is now UP, and it is not quite clear where the down MTFS pattern will actually complete (with a line crossover near or at oversold level).
It is still likely that a retracement will occur to allow a consolidation and a start of a new pattern. We will therefore remain conservative over the medium term, and will keep a close eye on Fib levels for turning points.
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