Thursday, December 20, 2007

Market Outlook RUT for Dec 20th '07

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

We can see opposing MTFS patterns with the same significance level, indicating likely congestion

60 mins: up to Fib PR1, but then what...?
Some lethargic revovery which should crawl to Fib PR1 (almost hit it late in the day), but as we have seen recently, the MTFS crossover is indicative of a 'failing recovery' pattern. RUT should therefore not go much higher.
750 has been tested during the course of the day, and could tested again.

daily: trading range is likely, but support must be confirmed.
Again, 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 (except for the cycle indicator) so RUT should fluctuate within the lower part of the [750-780] trading range. Should volatility increase, the range can be [740-790] .
NB: Cycles are the least reliable indicators in our toolset, and can only help determining turning points when all indicators point in the same direction, which is not the case at the moment.

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. One should remain VERY cautious on these levels. A market fall on level breakout is a scenario which cannot be discarded.

Market Outlook SPY for Dec 20th '07

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

Swings oscillate a lot on all 3 charts, indicating a key level nearby.

60mins: congestion to only moderatly up
MTFS and Entropy indicate congestion to a trading range on this triple witching day. Slight upward bias.

Daily: support has been hit but congestion is likely, no excessive optimism just yet.
Same as the day before:
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. Caution should therefore be exercised.

Market Outlook NDX for Dec 20th '07

Dominant TF: 60mins (and lower)
Swings: UP-DN-UP (from DN-DN-UP)
Cycles: long cycle turning up - low significance level
Market Direction: No strong rebound on 2000... NDX could go either way...

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: directionless, slight upper bias
A priori nothing much to expect today but surprises are always possible on witching days.
After finding an intraday support at 2016, indicators point for a slight upward bias, aiming at crawling to Fib PR1.

Daily: congestion to down
We would like to be optimistic after 2000 has been hit, but swing is down, bars are red, MTFS and Entropy have negative gradients, so we'll have to wait a bit. 2000 looks strong enough for now, so congestion is likely.
One may also notice an MM octave (i.e. 8 sublevels between 2000 and 2125), so levels will be marked at 2131 and 2162.

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. We would be in trouble if 2000 would break...

A little break...

Not a bad time to take a break and enjoy quality time with the family.
There will therefore be no posting in the next 2 weeks unless some exceptional market move warrants it.

Please contact me however if you need an update or advice mailed to you.

cheers to all,