Wednesday, December 19, 2007

Market Outlook RUT for Dec 19th '07

Dominant TF: Daily, 60mins as well as lower time frames
Swings: UP-DN-DN (from DN-DN-DN)
Cycles: up - average fit - low significance
Market Direction: congestion with a lower bias, but caution on this key 740 level

Similar situation as SPY.

60 mins: Key level [740-750] needs to be confirmed
The market did not allow RUT to venture dangerously below 740, and then a good recovery late in the day after Entropy bottomed out.
Like for SPY, the MTFS crossover is not too exciting, so one would need a support level like 750 to be confirmed first.

daily: trading range is likely, but support must be confirmed.
No change from yesterday:
MTFS and Entropy are again weakening further. We have the final confirmation of the failed recovery pattern mentioned about 2 weeks ago. There are no signs of a recovery so RUT should fluctuate within the lower part of the [750-780] trading range. Should volatility increase, the range can be [740-790]

weekly: Same trading range [750-875] with lower bias. Caution must be exercised on key level.
Swing is down and MTFS and Entropy are certainly not looking too good. 740 is Fib PR2 (61.8%). RUT has always bounced on PR2 in the last 2 years, but one should remain VERY cautious still.

Market Outlook SPY for Dec 19th '07

Dominant TF: 60mins & Daily
Swing: UP-DN-UP (from DN-DN-DN)
Cycles: up - average fit - low significance
Market Direction: No change in overall direction just yet, but a support must be found soon

Swings turned up on 60mins and weekly charts, indicating a key level nearby.

60mins: congestion to only moderatly up
Like NDX, bears aimed at testing 143.75 and almost got there. The Low EntBin at the bottom gives good recovery potential but the MTFS crossowver is messy, indicating there could be a slowdown before going higher.

Daily: support has been hit but congestion is likely, no excessive optimism just yet.
Bar is still red, MTFS and Entropy are not looking fantastic, so we have to wait for the support to be confirmed. MTFS lines being in median territory, there should be any major pressure either way, direction coming from line gradients.

Weekly: Congestion & Volatility
MTFS is unreadable because of the low significance level, hence one should not pay too much attention to the lines down gradients.
Swing is oscillating again indicating we might be close to a key level at this point in time.

Market Outlook NDX for Dec 19th '07

Dominant TF: 60mins (and lower)
Swings: UP-DN-UP (from DN-DN-UP)
Cycles: long cycle turning up - low to avg significance level
Market Direction: No strong rebound on 2000

Again, it is more fun on 5 and 10mins time frames. Users of the technique generally select 2 or 3 time frames among 6 to determine the best trading environment.

60mins: No strong rebound on 2000.
After testing stall level early in the day, traders pushed the market down to 2000. However bears momentarily left their position after a quick skirmish on support level.
EntBin was at -3 at the bottom on 2000 but MTFS lines didn't cross in a "clean" way. NDX should stay in the same range and possibly test a support level again (2016?)

2000 has been hit, but what next...? I'm afraid we have to wait a few more days (i.e. after triple witching). Like for the 60mins chart, we cannot expect any strong rebound.

Weekly: Check channel boundary
While significance level is low, this mostly affects MTFS. We can still notice that NDX is touching the lower part of its channel, and the weekly bar is red. Caution should be exercised at these levels.