Friday, October 19, 2007

Market Outlook RUT for Oct 19th '07

Dominant TF: 60 mins & Daily (15mins time frames too). Weekly influence declining.
Swings: UP-DN-UP
Market direction: congestion to down initially. Overall trend is still up, but support must be found first.

60mins: Congestion to mildly down, but probably at a slow pace.

We've had a bit of a bounce, which could technically reach PR1 close to 830, but MTFS (AdStoK) is giving a pattern that is more indicative of a trading range so it may not get there any time soon.
On the down side, the same support levels are valid: 820 then 813 later on.

Daily: Down, til support is found.
No new information:
MTFS (formerly AdStoK) is weaker, lines have crossed, bars are red, all indicating a definite slowdown. 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 pivot level.

Weekly: mildly up until...
Significance level is lower, but the overall "U shape" MTFS pattern is still there, and strong MM resistance remains 875.
One must check significance level (divergence) which could invalidate the pattern. Lower time frames will soon provide us with clues (support level and return to the dominant trend).

Market Outlook SPY for Oct 19th '07

Dominant TF: Daily and 60mins Swings: UP-DN-UP Market direction: Congestion. Upward bias still valid overall despite some profit taking.
60mins: Congestion to mildly down. Erosion of SPY should continue. The 153.13 pivot level was tested, and will be tested again. Congestion or a shallow bounce on 153 is a likely scenario at first.
Daily: Profit taking until support is found (150??) AdStoK is so overbought with a white line declining, bars turning red and Entropy losing steam: SPY can only go lower. This is however not indicative of any strong retracement in the near term, so profit taking should continue at a slow pace, possibly to the 150 MM + Fib level.
Weekly: mildly UP, but caution: significance level is ridiculously low. The Swing indicator is up, but the key swing price level is still close at this time frame, so the indicator could turn around again. For the time being, everything points upward. We can however see some divergence in AdStoK and a very low significance level at this time frame (divergence?), so this is at best only a background information at the moment, and one should certainly focus on lower time frames (60mins and daily).


Here also is a commented audio soundtrack (8m25s) to complement this SPY chart. The purpose is to teach traders how simple it can be to read charts using this TradeStation technique. Please note that these indicators can be used unchanged on various symbols and time frames.
The technique was designed to remain as simple as possible so that decision making remains quick and as unambiguous as possible. It must also be noted that all indicators feed an API allowing developers to build their own rule set to contribute to even easier decision making.

Market Outlook NDX for Oct 19th '07

Dominant TF: Daily and low time frames (15mins)
Swings: UP-UP-UP
Market direction: Probable Congestion. Watch 2188 key level, particularly on 15mins chart, for clues on forthcoming direction.

Note: A variation to the MTFS (or AdStoK) white line is plotted (test). It provides a slightly higher memory effect in the indicator.

60mins: Congestion with some remaining upward bias.

As said yesterday, we've had a continuation of the upward bias within a [2156-2188] trading range, and we now reached the high end of that range. The pattern is completed and it is more difficult to gauge what is coming next. Behaviour around this level will determine forthcoming direction, and lower time frames do provide higher significance level and trading opportunities.

Daily: Congestion - Upward bias is still technically there but NDX is very overbought, so lower time frames must be watched carefully.
No new information:
MTFS and Entropy are now showing more signs of weakness. There is however still substantial 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 (same [2150-2200]range).
One cannot discard a development of a new pattern which in this high volatility environment could take just a few days to materialize.
Note: the new MTFS (AdStoK) White Line variation is higher, hence down-plays the effect of the current profit taking event.

Weekly: Mildly UP until resistance is found

Current congestion in lower time frames can slow down or stall the upward bias we still have.
Note that significance level on this time frame is falling, due to indicator divergence.