Wednesday, March 12, 2008

Market Snapshot for RUT - Mar 11th 2008

cf. NDX post below

Market Snapshot for SPY - Mar 12th 2008

cf. NDX post below

Market Outlook NDX for Mar 12th '08

Dominant TF: 60mins, then Daily
Swings: UP-DN-DN
Market Direction (Daily): no frantic buy just yet
Cycles: high noise level
Position (60mins): same March condor until expiration.

Remember yesterday: I said not to give in to much gloom and doom aand watch levels carefully. However, such turnaround is always amazing. It seems market nowadays have a volatility potential never seen before.

What lesson can we draw from yesterday? Well, first a nice 4% up move comes in the top 3% of daily log returns in the last 15 years. We have the odd occurrence now and then, however not a rare event. For instance, we've had a similar move on Nov 13th last year (yes, it was also a tuesday, but i'll let the esoteric stuff to other web sites...). That up day halted the fall until early Jan, so we may again have a reprieve if not a recovery now, i.e. we should have a change in market dynamics, so let's analyse carefully what kind of pattern will now emerge going forward.

60mins: wait and see...
3 trading days ago, i was saying: "(let's) if/how buyers react on and close to the strong support level". Now we know... Having said that, it is only if 1750 is passed again that we may have a recovery. 1750 is a far more important test level.
MTFS is certainly looking better, but it also does not show a clear recovery pattern just yet.

Daily: so what...
A great day yesterday and what change does it provide to the chart? Actually very little: the only difference is the bar turning yellow. It shows that we need to see further price stabilisation to turn bullish again. However, as mentioned above, the fall may actually be over (at least for now), so while a number of traders will jump in at lower time frames, on this daily chart, we'll remain cautious until a new pattern develops. Until then, congestion is the most likely scenario.

Weekly: still bearish, so we'll take heed at the 1750 level.
Here again, it's good to see the bar turning yellow as well. We shall however remain VERY cautious as MTFS and Entropy are still quite bearish.
I've been repeating over and over that 1750 is the last defense line and that it would be fought ferociously, so we need a bounce that is strong enough to confirm this support level. Congestion is here again the best looking scenario, as again the patterns can complete merely through the passage of time, and do not necessarily need a new fall (price-time equilibrium).