Saturday, January 12, 2008

Market Outlook NDX for Jan 14th '08

Dominant TF: Daily
Swings: DN-DN-DN (from DN-DN-DN)
Cycles (DomTF): somewhat unreliable in this market
Market Direction (Daily): volatile with a down bias
Position (60mins):
Short: nothing wrong with taking profits
Flat: wise
Long: betting on a recovery is very risky

Since i closed my short position (too) early), i leave the position indication for those who haven't. I bet on a bottom coming soon, but admittedly this is not in the chart yet.

60mins: continuation of price erosion
It is not possible to say at this stage whether NDX will remain in a trading range or try and test support level. The fall stopped on Jan 9 on MM stall level which has been tested again.
We can also notice that significance level is also declining.

Daily: congestion to erosion
Unsurprisingly NDX resumed south as MTFS and Entropy do still point down. One shall notice that the MTFS white line is tempting an upturn. We should however not expect any significant recovery to expect here. On the contrary, unless volatility brings new surprises, NDX should remain in current trading range [high 1800s - low 1900s] until the negative pressure is exhausted. We shall look closely at MTFS lines joining and Entropy bottoming out over the next few days.

Weekly: definite down bias, check Fib and MM levels
As mentioned recently, bull mode is over and we are now in correction mode (not bear mode yet though), and one can notice that the Swing indicator has been relatively hesitant at this level. I recommend taking cues from MM and Fib levels at this stage. The Swing indicator is way too steep to be stable (~ 3 times the natural angle of repose), so we know we have to wait for volatility to calm down a bit.

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.