Thursday, November 22, 2007

Market Outlook RUT for Nov 23rd '07

Dominant TF: Daily, and 10mins (not shown).
Swings: DN-DN-DN (from DN-DN-DN)
Market direction: DOWN, but support may be found in the low 730s

60mins: Down, but probable congestion on strong support level

MTFS and Entropy look bearish, with congestion potential around the [730-750] trading range now that 750 is 'history'. RUT will try and stop its fall on 734.5, then 730 (would take more than a day though)

Daily: down...
Bearish MTFS lines have quite negative gradients indicating RUT going lower, thus pushing support level also lower (730?). Definitely no chance of a recovery in the short term. The next Fib level is around 731 (close to August lows), but one should not panic just yet... at least not until 730 breaks as well... We have to wait for the MTFS pattern to complete to get a better picture.

Weekly: caution but no panic
At first sight it looks like we had the anticipated double top. However, one should not jump to conclusions just yet, as we may also remain in a broad [750-875] trading range with a lower bias (MTFS lines). The 750 level has indeed turned from pivot to strong support level. In addition, we have a PR2 Fib level around 740 and RUT has in the last 2 years always bounced back on PR2, so there is no reason it will behave differently this time.

Market Outlook SPY for Nov 23rd '07

Dominant TF: 60 mins & Daily
Swings: DN-DN-UP (from DN-DN-DN, weekly swing is hesitant)
Market direction: down

60mins: Down, but possible congestion

Entropy and MTFS both still point down but the MTFS white line holding above shows congestion potential. MTFS lines will now probably meet lower. No real recovery potential in the short term.

Daily: Down, but check for support level.

MTFS and Entropy do not look good and at this stage it is likely that the fall will continue until MTFS lines meet. SPY could eventually fall further to 141 (Fib) or even 137.50 (MM). However the current fall in Entropy is not too alarming (see LEntBin), so congestion may happen on this support level.

AutoFib already gives some potential recovery levels (L1 to L5) if current swing pivot holds (this is however too early).

Weekly: congestion to mildly down - very low significance level.

This time frame has such a low significance level it is almost pointless reading it. We can only rely on the Swing indicator as well as MM and Fib levels. For the time being, it is safe to say that we are in a broad trading range with a down bias.
Caution: One shall note that 143.75 has broken, Swing indicator is hesitant at this level indicating we are close to a key level. One should also check for a possible channel breakout.

Market Outlook NDX for Nov 23rd '07

Dominant TF: Daily, but mostly 10 and 15 mins charts
Swings: DN-DN-UP (from UP-DN-UP)
Market direction: Congestion to down. Behaviour on 2000 will be key.

Dominant time frames are now shorter intraday time frames, so obviously only users of the TS technique can fully appreciate current dynamics. Reading the 15 mins chart is very simple with a significance level of 82%

Interpretation very similar as yesterday's

60mins: more or less same trading range [2000-2030] with lower bias
More congestion ahead. Bias remains down, so behaviour on 2000 is obviously key.

Daily: Possible trading range with lower bias.
MTFS and Entropy both look fairly bearish but 2000 is defended ferociously. The MTFS white line has started showing stabilisation, so there will be more congestion and fighting on the 2000 support level. There is however a potential to go somewhat lower, at least until MTFS lines meet. Further down the line: If 2000 breaks, we have a possible 1935 target later on. On the other hand, should the latest pivot point hold which is quite possible since 2000 is now strong support, we have our AutoFib showing a potential recovery to levels we have seen recently (target levels displayed on picture).

Weekly: congestion to mildly down - low significance level.
We knew we had to watch for that growing divergence, and Entropy peaking. Now, there is still no overall change in direction and this profit taking is only healthy after such a bull run. We have recurrence of the 1935 retracement level, so it could certainly come a little more down. In such case one cannot ignore that breaking the current channel would accelerate into serious selling pressure, but no panic just yet. 2000 is still holding...