Tuesday, December 11, 2007

Market Outlook RUT for Dec 11th '07

Dominant TF: Daily, 60mins
Swings: UP-UP-DN (from UP-UP-UP)
Market Direction: Upper bias, but volatility ahead.

Read previous general comments on SPY and NDX. Patterns are different, but dynamics are correlated.
One shall note that Swing on weekly chart has turned down again. This may mean like for SPY that RUT is sitting on a key level.

60 mins: congestion
We have a little bit of energy left to eventually bring RUT a little higher, but MTFS certainly looks congested. Targets are just around the corner anyway: 795 Fib target + 797 MM level.

daily: up & bumpy
Virtually no change since yesterday:
We have seen the recovery pattern actually materialising after RUT tested 750 again to bounce quickly to current levels. Again this type of recovery is seldom stable, and it would be surprising to see it going higher without some retracement, so there could be more volatility ahead.
A pivot no4 now appears, so let's see how RUT behaves on 795.

weekly: Directionless for the time being
Same situation: range [750-875]
Swing turned back down indicating RUT is not out of the woods just yet. RUT is certainly on a key level but the blue bar is reassuring, so a weekly up bar would confirm a safe return to the trading range.

Market Outlook SPY for Dec 11th '07

Dominant TF: Daily
Swing: UP-UP-UP (from UP-UP-DN)
Cycle: Daily 128: Avg
Market Direction: Upper bias but possible congestion

Similar comments as NDX.
Swing turned up on weekly chart indicating this could be a key level.

60mins: Congestion to slight upper bias.
Virtually no change:
Significance level is coming down, ahead of MTFS pattern completion. We would prefer a crossover in overbought territory, but looking at current line gradients, that may just not happen. Entropy is still positive so MTFS can still crawl slightly upward in the short term. Testing 150 for support would be a good sign for bulls. A significant retracement is unlikely at this point in time (i.e. currently in price dynamics).

Daily: technically up, but behaviour on 151 must be still watched very carefully.
We unfortunately have little more to say today:
SPY now hit PR2 (61.8% Fib retracement) and hovered there. MTFS is however bullish now so SPY could well reach next Fib target (just above 153).
We must however as always remain very cautious. Continuation of congestion or even a retracement are quite possible in the short term.

Weekly: Upper bias
MTFS is unreadable because of the low significance level, hence one should not pay too much attention to the lines down gradients.
For the time being, higher highs and higher lows are bullish signs, with due caution that moves in the last 6 months have been way too fast for this time frame.

Market Outlook NDX for Dec 11th '07

Dominant TF: 60mins (and lower)
Swings: UP-UP-UP (from UP-UP-UP)
Market Direction: Moderately up but watch 2140 level

Market not expected to move much ahead of Fed announcement and forthcoming triple witching day. Dominant time frame is around 15 to 30mins, so users of the technique will better appreciate current dynamics.

60mins: congestion to upper bias
MTFS is not showing a clear pattern yet, and we can only hope lines will join soon. In the meantime, one can only anticipate the continuation of the current congestion with an upper bias.

Daily: Up, but first fib target has been hit on 2140
MTFS and Entropy point towards going higher to 2185 and 2250 but a resistance has been hit at 2140. We could therefore see a little bit more congestion ahead, but certainly no retracement in sight just yet. Should congestion linger on, we'll have to watch Entropy potentially peaking though (LEntBin=4) over the next few days. In other words, behaviour on 2140 will determine forthcoming direction.

Weekly: up...
NDX is half-way in its channel again, and the bar has not turned blue. Significance level has fallen to 44% which is understandable as current moves are way too fast for this time frame.
One shall note that around 2125 the swing indicator oscillates between UP and DN.