Thursday, April 17, 2008

Market Snapshot for SPY - Apr 17th 2008

cf. ER2 post below for guidance.

Market Snapshot for NDX - Apr 17th 2008

cf. ER2 post below for guidance.

Market Outlook ER2 (RUT) for Apr 17th '08

Dominant TF: weekly then 60mins charts
Swings: UP-UP-DN
Cycles: good fit but very unreliable (low signal/noise ratio)
Market Direction: up
Position (60mins): long but looking at taking profits
Options (RUT):
Short Apr760 Calls, Long Apr770 Calls,
Long Apr570 Puts, Short Apr580 Puts
Short May780 Calls, Long May790 Calls,
Long May550 Puts, Short May560 Puts

Since last post, MM levels have changed on the 60mins chart, indicating a potential rebound on strong support level. Having said that, we have all been quite surprised by the reaction to earnings announcement. Yet, we're again in the same trading range still.

ER2 (RUT) is now again back to range highs. It closed on stall level yesterday, so some profit taking is always possible, yet, MTFS and Entropy both indicate higher prices. 720 is a strong resistance level though.

Daily: same upper half of the same trading range
The 688 Fib support level held, which is understandable as the lower part of the trading range early March was prior to the "Fed boost". However, the earnings announcement came as a surprise still, and we don't see on our chart any reason to believe in a substantial change in dynamics in the short term. Looking at prices, the upper bias seems obvious, but MTFS and Entropy do not indicate ER2 passing the upper range boundary just yet.
Until we see evidence of a range breakout, the likely scenario remains congestion in the [700-720] range.

Weekly: congestion to down bias
I repeatedly said that we have to wait for the MTFS pattern to complete, and until then the downward pressure is dissipated, the current negative bias will prevail.
ER2 (RUT) should consolidate at this low level and a line crossover may occur soon. We'll see how a new pattern then develops. We'll also keep an eye on Fib retracement levels. In the very worst case scenario, the 625 support level would be hit, but would certainly hold. On the up side, 750 seems quite safe for our condors (Fib + MM).