Tuesday, December 04, 2007

Market Outlook RUT for Dec 4th '07

Dominant TF: 60mins & Daily.
Swings: DN-DN-DN (from UP-UP-DN)
Market direction: Congestion.

Like other symbols, RUT is also drifting down.

60mins: Congestion.

Again, MTFS points towards a congestion with lower bias, but now that PR1 seems broken, there may be some acceleration to the next support level, close to 757 or even 750.

Daily: congestion
This early MTFS crossover is very seldom conducive to a definite change in direction (typical failed recovery pattern). A congestion is likely, and RUT should try and find a stronger base for support.
RUT indeed seems to show evidence of a cycle turning point, so any retracement should be limited (757, and 750 in the worst scenario).
Note: the cycle detection also gives us a dual frequency with a momentary congestion due to phase opposition.

Weekly: return to the trading range, but lower bias still.

We're now back in our [750-875] range, and still pretty much directionless. It seems that the 'double top' scenario is now a little more remote, but we should wait for the bar to at least change colour first. Until then the bias remains down.

Market Outlook SPY for Dec 4th '07

Dominant TF: 60mins & Daily
Swings: DN-UP-DN (from DN-UP-DN)
Market direction: congestion.

SPY is hovering between levels, and only has lost all positive energy, hence is drifting.

60mins: congestion to mildly down

One can only anticipate the same moderate price erosion until support is found. Despite being the dominant time frame, there isn't much to read in MTFS and Entropy except there isn't much downward pressure either.

Daily: congestion to mildly up
Similar situation as yesterday:
With now both 60mins and daily chart with equivalent significance levels, and a MTFS pattern that is typical of a failed recovery, it is not easy to make head or tail of this market. Entropy on both charts also aim at different directions.
We now have to wait for a pattern to develop, possibly a cup & handle formation. There is however no downward pressure right now, so difficult to estimate where a stronger support level will be found. At the same time, we also have to reach 150 again soon otherwise the 'failed recovery' pattern will become a more likely possibility.

Weekly: congestion - 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 downward bias. Failure to pass the 150 strong resistance level would become alarming if significance level wasn't so low.

Market Outlook NDX for Dec 4th '07

Dominant TF: 60mins, but 15 mins charts
Swings: DN-UP-UP (from UP-UP-DN)
Market direction: Good recovery potential but lack of energy in the short term.

Not far off yesterday, and a retracement of 1% can be be seen as moderate when it comes to NDX.

60mins: congestion to mild retracement.

Continuation of price erosion until a support is found. Despite closing at 2067, 2070 may hold, otherwise a little lower to next MM/Fib level. There is however no real downward pressure.

Daily: mildly up
Similar analysis:
The daily chart shows the clearest pattern of all 3, but unfortunately isn't the most significant time frame, so may find it difficult to reach its target in the short term. Again this pattern only has a limited upward potential because of the low green line. It is only if/once 2125 is passed that NDX will likely return to the overall bullish trend and reach Fib targets (2140 first), with 2250 being very significant (strong MM resistance as well).
Note: a pivot 5 is being detected on 2125, so failure to reach 2125 may soon translate into a down swing.

Weekly: trading range
NDX is firmly back in its channel. However current movements are too fast for this time frame at the moment, explaining the low significance level (53%).