Wednesday, March 26, 2008

Market Snapshot for RUT - Mar 26th 2008

cf. NDX post below for guidance

Market Snapshot for SPY - Mar 26th 2008

cf. NDX post below for guidance

Market Outlook NDX for Mar 26th '08

Dominant TF: 60mins then Daily. Weekly chart coming back too.
Swings: UP-UP-DN
Market Direction (Daily): moderately up
Cycles: high noise level, so unreliable
Position (60mins): long but maybe looking at taking profits soon.

Even if the scenario depicted three trading days ago was correct for that day, the recovery that came later on was not properly anticipated. Partly my mistake but this is also due to the snapshot frequency. Users of the technique will have watched the patterns develop daily if not hourly.

There is still a chance of seeing a change in dynamics in the EURUSD shortly.

60mins: looking for a target
After taking some profit the day after the rate cut, it seems the market chose to aim higher, and we've seen a classic Fib pattern developing. We have a target close to current levels, and a Fib XOP target around 1881, very close to the MM resistance level of 1875.
MTFS is quite bullish on this time frame, with only the white line doing an early crossover, here indicating the hesitation between the two target levels. This is a common situation, but in this case, the most likely scenario is aiming at the high target, or at least at stall level, half-way so around 1844.
Entropy is losing steam so we shall only be moderately bullish at this stage.

Daily: hesitation for now
Swing is UP now, and we had not seen that for a while.
I had placed a trendline to check out for a breakout situation which indeed happened Monday morning.
Entropy is now also looking a little better, yet MTFS is not giving us a recovery pattern, so NDX will probably have to consolidate a stronger base to go higher later on.
This may sound too conservative for some, but while the worst is maybe over, we're not back to bullish mode quite yet.

Weekly: caution...
Three trading days ago, i warned that the trend is still down, however clearly stated a bounce was about to come (EntBin = -5). Volatility nowadays should not surprise us, yet the bounce was pretty strong indeed.
Now the scenario hasn't changed much despite bears taking profits or being short-squeezed. We do notice that a Fib retracement level around 1886 corroborates a possible target on the 60mins chart, so we'll give recovery a chance even if there is still quite some negative pressure in the market.
It should take quite a while to return to a bull trend though.