Wednesday, March 19, 2008

Market Snapshot for RUT - Mar 19th 2008

cf. SPY post below

Market Snapshot for NDX - Mar 19th 2008

cf. SPY post below

Market Outlook SPY for Mar 19th '08

Dominant TF: Weekly followed by 60mins.
Swings: UP-UP-DN
Cycles: upturn indeed but doubtful reliability
Market Direction: Upper bias, and more indication that fall may be over, but no substantial recovery in sight just yet.

The Fed's massive rate cut certainly had an immediate effect but cautious optimism must still be exercised among bulls and contrarians. At the same time, bears may want to tally their profits and take it a little easier now. Being greedy could eventually prove costly.

60mins: nice bounce indeed
We do notice that the turnaround happened on Fib target as wll as MM stall level... The Fed cut, or any positive news certainly has a stronger impact when the conditions are right like on Monday afternoon.
MTFS and Entropy certainly are looking good, but SPY is only at range high and EntBin already culminates at 5, so profit taking is quite likely. In such case, we would have a range shift, i.e. SPY tesing pivot level to try and stay in the higher part of the MM range now (i.e. pivot to strong reistance further up).

Daily: no recovery but watch out
Reaction to the Fed cut induced a MTFS divergence. Entropy also bottomed on Monday already. The recovery is however not comfirmed yet, and as on the 60mins chart, SPY may just jump to the higher part of the sam erange since January, i.e. more or less within the [132-138] range.

Weekly: are we out of the woods?
Any move away from the nerve-wrecking 125-127 test levels is good, but too early to say that the worst is behind us. So, no rejoicing just yet. MTFS is still quite bearish, so is Entropy. Obviously, with EntBin at -4 (min is -5) one tends to think a bounce is in the cards, so SPY could go higher and alleviate pressure on MTFS. All in all, we would then see completion of the MTFS pattern within 4 to 6 weeks, and be in a better position to go higher then.
Level-wise, it is quite clear that the test level will be 137.50 support last year, then resistance earlier this year. It would be good to see it passed then tested as support again. It could however take a while.
Again and again, for the time being, patience and caution must be both exercised.