Monday, March 10, 2008

Market Snapshot for SPY - Mar 10th 2008

cf. RUT post below (check for agreements in Fib/MM levels)

Market Snapshot for NDX - Mar 10th 2008

cf. RUT post below. (check for agreements in MM/Fib levels)

Market Outlook RUT for Mar 10th '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: down, but support may and even should hold
Position (60mins): some could take profits here.
Options: March iron condor (1.5 week left). April in place:
Short Mar790 Calls, Long Mar800 Calls, Long Mar600 Puts, Short Mar610 Puts
Short Apr760 Calls, Long Apr770 Calls,
Long Apr570 Puts, Short Apr580 Puts
(again one could also be negative delta)

We saw MM resistance levels capping any possible recovery, then support level dropping on Thursday, so RUT was irremediably attracted to the strong support level at 656. Sometimes, markets are indeed very predictable.
We will have to analyse the 3 correlated markets carefully to better assess support levels.
Now, my 2 cents to those who keep asking me "is it time to buy?". Well, we're all different, and I honestly can't tell contrarians what to do (they often wouldn't listen to me). All I can say is that there is no short term recovery, so the question we've been asking ourselves has been: should we exit short? should we be more delta neutral? There again, it is up to each and everyone.

60mins: 656 could hold
RUT has reached its target, so one may have some congestion at this low level or even a short term bounce. No rejoicing though as there is not the slightest sign of a recovery.

Daily: back to lows
Like on the 60mins chart, MTFS and Entropy do not indicate any recovery. However, LEntBin is only at -1, hence this is still the same ongoing price erosion more than a meltdown. In other words, it is likely to be an absence of buyers than sellers pushing the market down.

Weekly: congestion to down
We're now back to the previous lows, i.e. a level we had clearly anticipated. It is Fibonacci PR1 which may act as a support level here confirming the 60mins MM level. MTFS still looks bearish here, but as mentioned over and over on this blog, the negative pressure can also dissipate through the passage of time.
Here again, we have NO sign of recovery, but the conditions could emerge if 656 holds. We just have to be patient.