Thursday, January 10, 2008

Market Outlook RUT for Jan 10th '08

Dominant TF: 60mins & Daily
Swings: UP-DN-DN (from DN-DN-DN)
Cycles: unreliable
Market Direction: recovery needs confirmation
Short: would have taken profit, but exit point around 700 is still possible
Long: way too early

60mins: fall may be over, but no strong recovery just yet
RUT about hit its target on MM level and recovered a bit. EntBin is very low, which certainly indicates a possible bounce, so reaching 732 again cannot be discarded. MTFS is not quite the best looking pattern for recovery though, so no real recovery in the short term.
NB: the Swing indicator is a very early indicator, but ALWAYS needs confirmation. It may turn back down, hence indicate more an end to the current fall than a real recovery.

Daily: congestion to down
The Fib target (~688) has been hit quicker than i thought. Entropy indicates a possible bounce, but like for the equally significant 60mins chart, MTFS lines are too steep to indicate a strong recovery. Bears may want to try and test lows again, or at least the low 700s.

Weekly: congestion to down
RUT has always bounced on PR2 (61.8% Fib retracement) but this time didn't. This confirms RUT is definitely in correction mode at least to previous lows around 670 - 680. We may also find guidance on Fib levels from 2005 or before.

Market Outlook SPY for Jan 10th '08

Dominant TF: Daily & 60 mins
Swings: UP-DN-DN (from DN-DN-DN)
Cycles: unreliable
Market Direction: probably lower still
Short: would have exited conservatively, but a good exit point around 138 is still possible
Long: too early...

60mins: fall may be over, but no strong recovery just yet
Exact same configuration as for RUT today

Daily: congestion to down
Like with NDX and RUT, SPY had to hit its target, and remains a little bearish. Negative pressure will take some time to exhaust, so MM support or the Fib target should be tested again.
One should wait for MTFS to show a clearer pattern with crossover and Entropy to bottom out first to consider the fall to be finally over.

Weekly: congestion to down
MTFS is a bit out of sync, but we can obviously notice lows being tested. SPY could remain in the low 140s for a short while.

Market Outlook NDX for Jan 10th '08

Dominant TF: 60mins & Daily
Swings: DN-DN-UP (from DN-DN-DN)
Cycles (DomTF): have been turned off as too unreliable in this market
Market Direction (Daily): congestion
Position (60mins):
Short: would be looking for an exit point in the low 1900s
Long: not quite yet

NDX is now looking for support.

60mins: possible congestion
Is the fall over? Well, one must always take MM stall levels seriously (half way between MM white dots and strong MM support at 1875). That level is around 1906.
MTFS is not indicating a real recovery at this stage, but the fall may be over. In such circumstances, NDX could retrace up to PR1 (~1989) but this is unlikely. Bears won't give up without a good fight, so NDX should be contained within a trading range around the low to mid 1900s

Daily: support level must be tested
NDX hit its Fib target, then recovered a bit, yet MTFS and Entropy still point downward. If 1886 proved to be a support level it will have to be tested again. Bears may go softer now though.

Weekly: definite down bias, check Fib and MM levels
It seems the bull run is now over so we may need to enter a correction mode (not bear mode yet though). One can notice that the Swing indicator is hesitant at this level (down yesterday, up today).
Note: this proprietary Swing algorithm differs from conventional algorithms which always toggle in lower time frames first. We are in this instance probably close to a key level at this time frame.