Tuesday, April 01, 2008

Market Snapshot for NDX - Apr 1st 2008

cf RUT post below for guidance. Chart reading is similar.

Market Snapshot for SPY - Apr 1st 2008

cf RUT post below for guidance. Chart reading is quite similar.

Market Outlook RUT for Apr 1st '08

Dominant TF: weekly and 60mins charts
Swings: DN-DN-DN
Cycles: looks good but still unreliable (low signal/noise ratio)
Market Direction: same trading range. 688 is key level.
Position (60mins): flat, delta neutral
Short Apr760 Calls, Long Apr770 Calls,
Long Apr570 Puts, Short Apr580 Puts

RUT came back to the MM pivot level where it's been trying to bounce. Downward pressure is still strong though...

60mins: testing pivot level again
RUT has difficulties going higher. Despite showing an upper bias, MTFS is giving us an helping hand. We'll have to see whether the pivot level holds or not. RUT could eventually reach highs again (Fib target at 719), yet, looking at higher time frames this isn't our preferred scenario. The weekly chart remains the dominant time frame.
If this key MM pivot breaks, the positive effect of the rate cut may be wiped out, and lows could be tested again.

Daily: down bias
Despite the UP swing (rate cut), we have lower highs, and a bearish MTFS pattern. The white line has finished its excursion and may fall again. We can also see that Entropy reached a significant high and could also pull back.
Having said that, we have a trading range split in two with a half way support/resistance level (or pivot level). This pattern is obviously due to the Fed cut. We'll therefore keep an eye on the low to mid 680s for direction going forward.

Weekly: congestion to down bias
The weekly chart is certainly slower and market outlook at this level only needs to be touched up a bit from the previous post.
Again we have to wait for completion of the MTFS pattern, and this could take up to 4 to 6 weeks. Entropy could still bode for a bounce, but certainly no significant recovery in sight any time soon.
In the best case scenario, RUT would climb up to Fib PR1 i.e. 724. The most likely scenario is that negative pressure will dissipate through the passage of time, and RUT would remain within the current range, eventually hitting the strong MM support should the financial sector unravel more bad news.