Wednesday, December 05, 2007

Market Outlook RUT for Dec 5th '07

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

Similar to SPY, RUT is also drifting down. Yet, a stronger support is near at 750.

60mins: Congestion.

Same as yesterday, except RUT now has to deal with the 750 - 752 support level. MTFS seems to still point a little downward, so behaviour on this key level will be interesting to watch. It is likely that RUT will remain fairly direction less on that level.

Daily: congestion
As explained a couple of days ago, we have had a typical failed recovery pattern, so we now have to see how it develops (double bottom, cup & handle, or ... downright fall!). For the time being, there is not enough energy for any scenario to develop fast.
Note: the cycle detection also gives us a dual frequency possibly causing a momentary congestion due to (near) phase opposition.

Weekly: return to the trading range, but lower bias still.
We're now back in our [750-875] range, with a lower bias. One can only hope that 750 will hold...

Market Outlook SPY for Dec 5th '07

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

Yesterday's anticipation proved right, and today's scenario is about the same. Market readability is however not improving due to opposite information emanating from both dominant time frames.

60mins: congestion to moderately down

Pattern is unclear. Same mild downward bias until some support is found (Fib PR1?).
Note: Rate of decline is close to the natural angle of repose.

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 (new pivot no4 has been detected).

Weekly: congestion to moderately 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 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 5th '07

Dominant TF: 60mins
Swings: DN-UP-UP (from DN-UP-UP)
Market direction: recovery potential weakening but the recovery pattern is still there.

NDX came down a bit as expected, and is hovering around 2054 50% Fib level and 2062 MM level.

60mins: congestion to mild retracement.

Very similar to yesterday:
Continuation of price erosion until a support is found possibly around current levels but probably a little lower to next MM/Fib level (2054, then 2040) . There should be no serious downward acceleration though.

Daily: congestion to slightly up
Similar analysis:
The recovery pattern is weakening a bit indicating difficulty in reaching its Fib target. The dominant time frame being 60mins, one must be more cautious, so again the 60mins support level will have to be watched. It is essential that 2125 is passed so that NDX returns to the overall bullish trend and reaches Fib targets (2140 first), with 2250 being very significant (strong MM resistance as well).
Note: a new pivot (no5) is being detected on 2125, so failure to reach 2125 might soon translate into a down swing.

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