Friday, May 16, 2008

Market Outlook ER2 (RUT) for May 16th '08

cf. NDX post below for guidance

Market Snapshot for SPY - May 16th 2008

cf. NDX post below for guidance

Market Outlook NDX for May 16th '08

Dominant TF: Daily
Swings: UP-UP-UP
Cycles: unreliable
Position (60mins): long
Market Direction (Daily): up

The market shot up through the 2000 mark. It is a bit of a surprise as we expected more of a resistance at this level. 2000 has even been tested for support, so it can indeed go higher now. Having said that, there are adjustments triggered by derivatives expiry.

60mins: up
MTFS is bullish yet Entropy is not so strong so we may have a quieter end of the week. We do notice however that the trading range seems to have shifted upward, so we can assume (at this time frame) that 2000 is now a support level.

Daily: up
Bars are blue, MM resistance level moved up, so it seems that 2000 will soon be history. There is feeling the market can indeed go higher now with MTFS on a steady bullish pattern. We'll just follow MTFS lines until they join in oversold territory. Lines are only moderately bullish so there is very little chance we see a runaway bull trend back to former highs. The market should pause at a MM/Fib level we shall determine over the next few days.

Weekly: moderately up
This is not our dominant time frame, but we'll still read that the MTFS pattern points towards a peak probably at a MM/Fib level. We could also say that the Swing gradient is too steep (twice the natural angle of repose) so there is volatility affecting significance level at this level. A pause of retracement would therefore be healthy going forward.
What we've seen lately can maybe only a test of MM (2000) and Fib (2011) levels, so we may see a slowdown going forward. For the time being the bias is however still up. We'll just be a little cautious not to be too bullish too soon.