Friday, February 29, 2008

Market Snapshot for NDX - Feb 29th 2008

cf. RUT post below

Market Snapshot for SPY - Feb 29th 2008

cf. RUT post below

Market Outlook RUT for Feb 29th '08

Dominant TF: 60mins and weekly charts
Swings: DN-DN-DN
Cycles: not quite reliable (good turning points but low signal-to-noise ratio)
Market Direction: none, lower bias still
Position (60mins): flat - delta neutral
Options: March iron condor in place
Short Mar790 Calls, Long Mar800 Calls, Long Mar600 Puts, Short Mar610 Puts (one could also be negative delta)

Again RUT is behaving like a charm, went up to MM pivot level and is retracing a bit. Uncertainty in the market keeps it in a trading range for the time being, with a few short term buyers and still a lot of long term sellers.

60mins: modest retracement. check levels at 702 & possibly lower
RUT's retracement is just the continuation of the same trading range. Cycles are actually giving us good turning points, but we shall remain cautious with them since there is a lot of noise in prices at the moment. The MTFS shape does not indicate RUT going much lower for now, but Entropy is steadily down. We will look at fib retracement levels for possible support.
For those of you trading the 60mins chart, i would be short with particular caution on fib levels and cycle turning point. The noise level would probably make me switch to a 30mins chart or lower (10 and 15mins charts look great).

Daily: same trading range, but slight upper bias emerging
Significance level remains fairly low at this time frame. MTFS remains flat and Entropy is not helping us either. There is no reason to be particularly bullish right now, as RUT could still go either way. Despite the last 2 down days, the bias remains slightly up, yet not strong enough to toggle the Swing indicator to UP.
In absence of a market shock (exogenous factor impacting the market) it could take at least another few days for a new pattern to materialise. Until then RUT should fluctuate within a possible range: [688-719] to max [680-730].

Weekly: congestion - possible pause in current down move
As mentioned last time, we are now having a pause in this bear market, with the MTFS white line hooking up. It should not be strong enough to justify a strong recovery but the white/brown lines crossover may indicate an interruption of the fall.
625 was a strong support (688 in lower dominant time frame), as 1750 was on NDX, so the market is probably showing willingness to stay above those levels. Having said that, we have to see the end of the pattern now with the green line joining the party close to oversold levels, either after a further drop (less likely now) or just through the passage of time (higher probability).