cf. NDX post below for guidance.
Monday, June 30, 2008
Market Outlook NDX for Jun 30th '08
Dominant TF: 60mins, Daily, but would also follow 15mins
Swings: UP-DN-DN (from DN-DN-DN)
Position (60mins): profit taking, or still short
Market Direction (Daily): drifting down
Yesterday's forecast for ER2 was again accurate with the fall stalling on the mid 690s, however no recovery in sight just yet...
About NDX, last post insisted on looking at pure price patterns such as Fib and MM levels, as support levels are not easy to determine and do not coincide across time frame seems. We should see portfolio readjustments and repositioning over the next few weeks as earnings come out.
NB: During summer months, there will be only 1 FREE market snapshot per week. No change for subscription clients.
60mins: volatile, but congestion with lower bias overall.
There are several possible scenarios and on account of likely window dressing for 2Q08, institutionals may move the market up or down today.
Technically, we do not have a recovery setup in MTFS so despite some buying and possible testing of the MM pivot level, NDX may resume south later on in the day. Switching to a 15mins TF (dominant) would help.
Daily: continuation of price erosion until support level is found
MTFS is somewhat bearish but Entropy may bottom out in the next couple of days, so again, if we except for spurrious volatility in the short term, NDX should try and find support on Fib PR2 near 1816... or lower...
Weekly: Looking for buyers
No major change from last post: Again it seems the buyers are waiting for a support level to get back into the market (or are they on holiday already?). Bars have turned decidedly red, the Swing indicator toggled back to Down and Entropy has peaked. However MTFS despite showing a "failed recovery" pattern, is not quite indicative of a market fall just yet. We do acknowledge however that the last bar being very bearish indicates a lower support level.
Since this is not the dominant time frames, clues will certainly arise from lower time frame indicators, and we will rather focus on price patterns at this level: we will again keep in mind the last high around 2050 could turn into a full downward Fib pattern (target 1700), or could still be erased to take NDX back to last year's highs (>2200). Again we will remain very cautious until a pattern is confirmed over the next 3 to 6 weeks. Nothing wrong with switching to lower time frames or otherwise enjoying some holiday...
Friday, June 27, 2008
Market Snapshot for NDX - Jun 27th 2008
cf. ER2 post below for guidance. Market correlations along with analysis of specific Fib/MM levels will provide a clear picture for this symbol.
Note: like for ER2, the MTFS acceleration has been tuned to 0.15 to better fit with price action. I know "curve fitting" seems dreadful to some analysts, but in this case that's exactly what we are looking for.
Market Outlook ER2 (RUT) for Jun 27th '08
Dominant TF: weekly, 60mins, with Daily declining
Swings: DN-DN-DN (from DN-DN-DN)
Market Direction(daily): short
Position (60mins): short
Options (RUT): 625 or lower for July puts.
Yesterday's post on SPY proved correct again, yet some self criticism engages me to admit i expected more short term support (see 60mins section yesterday) while my target (see Daily section) was about spot on.
On ER2, last post was also correct, and here again we see how correlated markets are since both should find support by end of the month. Obviously, we'll see institutionals doing some window-dressing to make their balance sheet look better if they can, hence quite some volatility is anticipated over the next couple of days.
60mins: lower, looking for support.
MTFS is quite oversold, and LEntBin is typically in bounce area (-5) so since ER2 closed yesterday on MM stall level (~696), we may see prices hovering somewhere current lows and MM support level at 688.
Daily: lower, aiming at 688
Significance level was low for bearish MTFS so i retuned it slightly. One could otherwise just follow price patterns. Anyway it seems ER2 is aiming straight at 688 which is a Fib/MM target level. "Retuned" MTFS is not too bearish so that level should hold. Obviously, we would like to see Entropy bottoming too.
Weekly: lower for now... is the tide turning?
No change from last post: As mentioned on other symbols, the eventuality of a pivot level around last highs (765) makes this configuration crucial as a Fib pattern can develop both ways in the coming months. While remaining very cautious going forward, we still believe a support will be found to eventually take ER2 higher.
Thursday, June 26, 2008
Market Outlook SPY for Jun 26th '08
Dominant TF: weekly, 60mins and lower intraday TFs
Swings: DN-DN-DN (from DN-DN-DN)
Market Direction (daily): further erosion
Position (60mins): short
On NDX yesterday, support was found indeed as anticipated, but my short term forecast was wrong as i did not expect a strong bounce. However, this is only a 1-day glitch and the daily trend remains unchanged. I also wish to remind my warning to switch to lower intraday time frames to capture yesterday's move.
Back to SPY now: Last post on June 23rd indicated a possibility of reaching a lower Fib target, yet also insisted on the strength of the current MM support level. We've indeed seen a mild bounce on 131.25 which has some difficulty in materialising into a stronger recovery.
Note on EURUSD: we're in a trading range which could breakout either way. We still favour a scenario of the $ strengthening a bit over the longer term but short term players seem to see it differently. Again we have to first wait for reactions to the Fed meeting next week. There are also more and more rumours of central banks to intervene too.
60mins: looking for direction on support level.
MTFS shows some recovery potential on support level, but it will need to be confirmed first. SPY may test the support level again, as Entropy is too weak to take SPY higher straight away. The overall trend being down, one may just stay in a congestion area from current lows to Fib PR1.
Daily: lower
Bars are still red, and every indicator is somewhat bearish so support will have to be found lower, to a possible 100% fib retracement, i.e. close to year lows.
Our target is MM stall level just above 128. We also have a Fib target in the same area.
Weekly: crucial time...
No major change from last post except that a retracement is now in place with a Swing indicator now firmly down. We are therefore eagerly waiting to see where the support level will be...
This is indeed a crucial configuration as the last pivot point (144.30) is now developing into a full downward Fib pattern with a 125 target level at first.
MTFS looks more and more like a failed recovery pattern, confirming this scenario mentioned several times over the last couple of weeks.
Wednesday, June 25, 2008
Market Outlook NDX for Jun 25th '08
Dominant TF: none really... 60mins at best otherwise switch to 30mins and lower intraday time frames
Swings: DN-DN-DN (from UP-DN-UP)
Position (60mins): short
Market Direction (Daily): drifting down
Yesterday's forecast for ER2 was again pretty accurate with a definite continuation of the lower move with some buying pressure during the course of the day only to resume its course south to the mid 700s. with indeed some congestion early in the day and then the development of an upward Fib expansion pattern.
Now back to NDX, last post insisted on switching to lower time frames to capture the change in dynamics. NDX indeed failed to reach 2000 (on stall level at lower time frames). The question now is: where are we going to find support and sufficient energy to reach last year's highs again?
NB: I invite readers to always consult posts for all three symbols for a better long term outlook as all three are quite correlated, yet also provide interesting information when analysed individually.
60mins: short term support may be found.
NDX yesterday bounced on the 30mins stall level (1890) which is also a Fib target hence some support at that level. MTFS is however not indicating any strength so we should see continuation of price erosion like seen on the last 2 bars of the day. NDX could therefore hit 1890 again and even go a little lower. However congestion with a lower bias remains our favourite scenario for now.
Daily: some price erosion looking for a support level.
The cyan support trendline drawn the other day has proved correct and we may be entering a down channel. Despite lower signinficance level, we also notice MTFS drifting and Entropy being slightly negative. We'll be looking at pure price patterns for a support level which could be a little lower.
Weekly: Congestion at key level
It seems the buyers are waiting for a support level to get back into the market. Bars have turned red, the Swing indicator toggled back to Down and Entropy has peaked. However MTFS is not indicative of a market fall, but only of a congestion with a now lower bias. Obviously, MTFS patterns sometimes fail to complete or fail altogether hence our reading method from several angles.
On last post, we noticed: MTFS and Entropy seem to be resilient for the time being, yet we also do notice the MTFS white line weakening and Entropy peaking though.
While we have some divergence forming we shall again keep in mind the lat high around 2050 could indeed turn into a full downward Fib pattern (target 1700), or could still be erased to take NDX back to last year's highs (>2200).
Again we will remain very cautious until a pattern is confirmed over the next 3 to 6 weeks. Since this is not the dominant time frames, clues will certainly arise from lower time frame indicators.
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