Tuesday, October 16, 2007

Market Outlook RUT for Oct 16th '07

Dominant TF: Daily & Weekly
Swings: DN-UP-UP
Market direction: congestion, possibly mildly Up after support level is found.

60mins: Down, or a bit of roller-coaster at best.

We undoubtedly saw it coming from a distance and the situation is about the same as for SPY, except maybe that we are on stronger support or pivot levels. AdStoK and Entropy certainly point lower, so we should maybe look for a lower support level.

Daily: Congestion to down at first. Overall direction unchanged yet but new support will have to be found.
AdStoK is weaker and lines are crossing, indicating a definite slowdown. The red bar confirms also the diagnostic. We could certainly look for support between 808 (Fib) and 812 (MM) in the next few days.
The high volatility environment seems to accelerate movements in either direction, however Entropy is still fairly high so this down move should be fairly controlled. No reason just yet to believe it will go lower than those levels... unless some economic news shock the system of course.

Weekly: mildly up until...
It was clear RUT would hit 851 (highs + Fib) but what is now coming next? AdStoK and Entropy do not point lower, so one should not panic just yet. RUT is likely to hold or even possibly go higher. Strong MM resistance is still 875.

Market Outlook SPY for Oct 16th '07

Dominant TF: Daily (and 15mins)
Swings: DN-UP-UP
Market direction: Congestion. Upward bias still valid overall despite some profit taking.

60mins: Congestion to mildly down.

Our word of warning proved to be correct. As for NDX, we clearly had a classic pattern forming. Now, what's next?
The late recovery cames mostly from day traders squaring off positions on day close, but SPX should go lower. Watch 153.4 (Fib) or even 153.1 (MM) in the near term, as it is likely that AdStoK lines will now go lower to cross in oversold territory.

Daily: Profit taking, but not change in overall direction yet.

AdStoK is so overbought with a white line declining, but Entropy is still holding fairly well. This is not indicative of any strong retracement in the near term.
We however now have a red bar, so profit taking could continue at a slow pace, possibly to 150 which would be tested for support and is a Fib PR1 level.
It is certainly too early right now, but one should keep it in mind.

Weekly: mildly UP.
The Swing indicator is now more firmly up, but the key swing price level is still close at this time frame.
Entropy is also looking better and the trend should remain mildly up for the time being as AdStoK lines are close to crossing with a strong up gradient.
We can however see some divergence in AdStoK and a low significance level at this time frame, so this is only background information at the moment, and one should focus on lower time frames (15mins and daily).

Market Outlook NDX for Oct 16th '07

Dominant TF: Daily and low time frames (15mins)
Swings: DN-UP-UP
Market direction: Congestion - Up bias still valid.

60mins: 2156 is pivot level. NDX should go slightly lower.

Couldn't have been more right yesterday. We were in presence of a classic pattern, which turned into a textbook Fib expansion to 2143. As the pattern is now complete, we only have a few clues about what is coming next. A negative bias is still in the market, but energy is not high enough to carry NDX much lower right now.
Levels to watch: around 2120 (Fib at 2117 and MM at 2125). 2156 is pivot in lower time frames, so one may also see some seemingly congestion at this time frame while lower time frames test this level up or down.
The 15mins chart is the most significant right now.

Daily: Up until...
AdStoK and Entropy are now showing some early signs of weakness and significance level is still the highest of all 3 on this chart.
There is however so much accumulated energy (in Entropy) that one cannot imagine a serious retracement right now, but one could certainly have a pause with some congestion and profit taking. This high volatility environment can also obviously accelerate movements in either direction, but that would take a few days to materialize.
For the time being, i would recommend keeping an eye on the formation of a clearer pattern (H&S, DT, or breakout) in intraday time frames.

Weekly: Mildly UP until resistance is found
AdStoK lines have now crossed over so NDX may be a little ahead of itself, but significance level is so low at this time frame (divergence) that we should not jump to conclusions.
A crossover is very often a decision point, but we shall draw more information from lower time frames for now.