Saturday, May 10, 2008

Market Snapshot for ER2 (RUT) - May 12th 2008

cf. SPY post below for guidance.

Market Snapshot for NDX - May 12th 2008

cf. SPY post below for guidance.

Market Outlook SPY for May 12th '08

Dominant TF: weekly and daily charts. 60mins coming back strongly.
Swings: DN-UP-UP
Cycles: still unreliable
Market Direction (daily): congestion/retracement but upper bias still overall
Position (60mins): flat to short (and quite volatile at this time frame)

On last post, i warned about volatility and poor visibility on the 60mins chart. Picture has so far been clearer on longer time frames, and the congestion was anticipated there.

60mins: down, looking for support (137.5?)
MTFS is bearish although it is likely that a support will be found soon, from current lows to possibly 137.50.

Daily: profit taking should be limited.
The obvious retracement has started as mentioned on last post. SPY will now be looking for support without affecting significantly the current recovery. 137.50 looks like a reasonable support level, but Fib levels will also be considered. MTFS certainly does not point for anything more than a moderate pullback. 150 remains the target over the medium term, even if again the road last year's highs looks bumpy, and maybe full of surprises...

Weekly: recovery pausing 'naturally'
Despite the Swing indicator now being Up, we still have a MTFS pattern waiting to complete, and the Swing gradient a little too steep anyway. If we now also add to the picture that entropy is just about balanced, it is clear that SPY will be now looking to consolidate. That's why we'll keep a close eye at possible support levels on the daily chart.
To avoid reading too much in the chart right now, we'll also take into account that consolidations sometimes fail... In such case the Fib (expansion) pattern would start south from last pivot point just above 142. We should obviously know more about it over the next few weeks.