Saturday, October 06, 2007

Market Outlook RUT for Oct 8th '07

Dominant TF: Weekly and Daily
Swings: UP-UP-DN
Market direction: Up until...

Reaction on jobs data was exuberant to say the least and took us by surprise, not in direction but in strength.
Note that SPY is the leading symbol in our selection of 3 indices.

60mins: Up, but pivot level then July highs must be tested.

843 was reached as expected, but certainly faster than anticipated. AdStoK and Entropy are bullish, although the AdStoK white line may show first signs of weakness soon and Entropy is statistically high above 2.
It will take at least a few bars, maybe over a day to release the accumulated energy, while possibly remaining close to this pivot level.
Note that the significance level at this time frame has dropped, so one should take cues from the daily chart for now.

Daily: UP.
AdStoK is still bullish and should carry on its bumpy ride to higher levels. The white line is now seriously overbought, so a minor retracement is possible without affecting the overall trend... until lines join...
Current resistance level at 843 is fairly strong then 860 and ultimately 875.
AdStoK's green line grows at a rate of 5% per day at the moment, so it could take at least a week before it reaches overbought level and some slowing down. The white line may however retrace and provide some relief in the meantime.

Weekly: UP
Entropy and AdStoK now show more clearly the way up to 851, 860 then maybe 875 over the next couple of weeks. The Swing indicator should also turn around any time now. The indicator has remained due to the high volatility environment we've had in the last few months.

Market Outlook SPY for Oct 8th '07

Dominant TF: Daily
Swings: UP-UP-UP
Market direction: UP until...

Note that SPY is the leading symbol in our index selection (S&P500, NDX and RUT).

60mins: Up until 156.25, then possible slowdown when accumulated energy is evacuated.

The seemingly tamed SPY in a narrow trading range reacted strongly to the news and quickly broke the 154.50 resistance to almost reach the 156.25 resistance which was already visible at the close of the day. We could not however anticipate the strength of the breakout.
AdStok is very strong but could peak soon (check white line) and Entropy is historically very very high. Having said that, it will take at least a few bars to release the accumulated energy, so again we have to see how SPY reacts around the 156.25 resistance level (Fib + MM). A slowdown is more than likely.

Daily: mildly UP until resistance is tested.
Entropy is still quite high, and only slowly declining. AdStoK is giving a last bout to reach very overbought level without lines crossing just yet. This is a bullish situation and one can only expect its continuation i.e. slow steady increase, at least until AdStoK lines cross. We now have to watch how the market attacks this strong resistance level (July highs + MM + FIB (60mins)).

Weekly: mildly UP until resistance is tested.
The Swing indicator is now more firmly up, but the key swing price level is still close at this time frame.
Entropy is slowly looking better, and the AdStoK white line is clearly showing the "U" shape indicating recovery at least until lines cross.
So, for the time being, no visible change in market dynamics coming (despite expectations of a bumpy October).
One will have to check where lines cross, as there is a chance of divergence in this indicator with lines joining at a lower level than prices (double top coming?).

Market Outlook NDX for Oct 8th '07

Dominant TF: Daily
Swings: UP-UP-UP
Market direction: UP ...

Reaction on jobs data was exuberant to say the least and took us by surprise, not in direction but in strength.

60mins: Up, but very overbought.

NDX flew through the strong MM resistance level at 2125. This sometimes happens when the market first halts on the 'stall' level invalidating the upcoming resistance level.
AdStoK is very bullish but also very overbought, and Entropy at a level of 2 is historically very high. We have to wait for a pause, either now sitting on 2141, or around the next intermediate level at 2056.

Daily: Crazy, i.e. still up. A slowdown would be salutary though, maybe around 2150.
Entropy is historically very high and AdStoK is so overbought that we have to see which resistance level will now hold. There is a Fib + (minor) MM level around 2150 we'll have to watch now.

Weekly: UP until resistance is found
AdStoK lines should soon meet, but significance level is so low at this time frame, so this is nothing more than a background information.