Tuesday, November 27, 2007

Market Outlook RUT for Nov 27th '07

Dominant TF: Daily, and 15mins (not shown).
Swings: DN-DN-DN (from DN-DN-DN)
Market direction: DOWN, but support may be found in the low 730s
Same situation, so market commentary is quite similar today
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).Note that there is no recovery potential in the short term.

Daily: down...
Bearish MTFS lines have quite negative gradients indicating RUT going lower, thus pushing support level also lower (730?). The white line is stabilising indicating there could be a congestion at this low level... but certainly no chance of a recovery in the short term. The next Fib level is around 731 (close to August lows). 730 will be a key level. Since MTFS has to complete its pattern, even a recovery would take a few days to exhaust the negative pressure.
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 27th '07

Dominant TF: 60 mins & Daily
Swings: DN-DN-DN (from DN-DN-DN)
Market direction: down

Unlike NDX, the daily time frame gives us a very good picture.

60mins: Down, but possible congestion on current levels
Entropy and MTFS both still point toward continuation of price erosion with a possible congestion (140.6 is a support level on lower time frames). No real recovery potential in the short term until MTFS lines join.
Daily: Down.
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).While it is certainly too early, AutoFib has detected a recovery pattern. The last pivot (no4) should however first stabilise to consider it seriously.

Weekly: congestion to 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. The lower end of the range could be tested again.

Market Outlook NDX for Nov 27th '07

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

Again, 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 91% and point decidedly south.

60mins: congestion to down - low significance level due to congestion
2000 has been broken, but lower time frames show a 1989 support level anyway, and those times frames are more significant at the moment. MTFS and Entropy do not point towards a fall so 1989 should hold in the short term.

Daily: congestion to down
MTFS and Entropy still look bearish but the 2000 cannot be regarded as broken just yet. 2000 (or 1989?) is still key level, and a bounce is possible in the next few days. Since the overall mood is bearish such rebound can very much take place a little lower for instance at PR2 (1970). We shall obviously remain careful until the MTFS pattern is completed. One cannot discard a recovery at this level. The AutoFib gives a potential recovery to levels we have seen recently (COP ~ 2250).
Note: the lower significance level indicates that MTFS will adapt a little late, so recovery (if any) should detected on a 15mins chart.
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 a potential 1935 PR1 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 (PR2 = 1750 ...) but no panic just yet. 2000 is still holding...