Saturday, February 23, 2008

Market Snapshot for RUT - Feb 25th 2008

cf NDX post below

Market Snapshot for NDX - Feb 25th 2008

cf NDX post below

Market Outlook NDX for Feb 25th '08

Dominant TF: 60mins, then Daily
Swings: UP-DN-DN
Market Direction (Daily): wait for bounce confirmation on 60mins before rejoicing...
Position (60mins): could reinforce March put spreads around 1640 if 1750 level holds

60mins: nice bounce but...
what's coming next now that 1750 has been tested all day on Friday? The target was most obvious and most would have taken profits on such strong support level. If you look at previous posts, this is the last defense line before a bear market, and buyers have been waiting there, hence the late recovery.
Does this change the market configuration? Not quite. MTFS is not showing a crossover in oversold territory that would be indicative of a recovery. Entropy is picking up indeed but still has a bit of bearish tone to it.
One should not expect much more of a recovery once the momentum of such sudden impulse has evaporated.

NB: the Up swing is generally not stable when the angle is over twice the natural angle of repose, yet this is a leading indicator, so one shall look for confirmation, and its angle may come to a more natural rise by then.

Daily: nothing new really...
MTFS and Entropy do still point towards a congestion at this low level. Obviously, a market pattern may be forming (pennant) so one will watch for a possible breakout over the next few days. One cannot discard an upward breakout, since 1750 is so strong.

Weekly: (copy/paste from last post:) again decidedly bearish for now, but support could hold
Indeed no reason to be optimistic right now, but one shall always check MM and Fib levels carefully, and one should not discard that there is always a chance that 1750 will hold if things slow down a little *, particularly if the white line reaches oversold level, where NDX could bounce at least momentarily.
1750 is the last defense line before we enter a bear market. Next support level would then be 1640.

* MTFS has some built-in momentum and can reach oversold level as time simply goes by, instead of only following price action. This means that a congestion at this low level may complete the pattern more or less the same way as a market fall would.