Wednesday, May 14, 2008

Market Snapshot for SPY - May 14th 2008

cf. ER2 post below for guidance.

NOTE: there might be no snapshot tomorrow May 15th

Market Snapshot for NDX - May 14th 2008

cf. ER2 post below for guidance.

NOTE: there might be no snapshot tomorrow May 15th.

Market Outlook ER2 (RUT) for May 14th '08

Dominant TF: all 3 !
Swings: UP-UP-UP (weekly swing still hesitant)
Cycles: unreliable
Market Direction: minor upper bias.
Position (60mins): profit-taking, some would stay long.
Options (RUT):
Short May780 Calls, Long May790 Calls, Long May550 Puts, Short May560 Puts.
Short Jun790 Calls, Long Jun800 Calls, Long Jun610 Puts, Short Jun620 Puts.

We saw yesterday that 2000 is still quite strong, yet we know it should break out soon.
Now, on ER2, I was right on May 8th to predict that 711 would hold, but the recovery to the 7530s level was a little surprising at this level. This is why I recommended to switch to lower time frames to better follow the evolution of market dynamics.

NOTE: I cannot assure there will be market snapshots tomorrow.

60mins: congestion to upper bias
ER2 should break the 60mins resistance level to allow it to reach the psychological 750 level. MTFS looks a little tired and Entropy is also weakening, so another round of congestion could happen.
At the same time, there could be increased volatility close to expiration day.

Daily: congestion to minor upper bias
We can all notice that 750 turned to strong resistance and that ER2 is now sitting at stall level. MTFS is certainly confirming the current hesitation. We will still give the current upper bias a chance, but it is quite unlikely that we reach and pass 750 over the next few days. Again volatility could cause the 750 resistance level to turn into a temporary price magnet, but congestion around current levels looks like the most plausible scenario.

Weekly: congestion, possible retracement
Upper bias still confirmed, and congestion may happen a little higher than previously anticipated. We do not have a high energy environment so prices can be pushed much higher without some consolidation. Having said that, ER2 could reach 750 sooner than we first thought.
Again, we'll wait for the completion of the MTFS pattern to gauge whether ER2 is capable to return to a bullish trend, and reach 2007 highs again. We have to be a little more patient...