Wednesday, May 21, 2008

Market Snapshot for ER2 (RUT) - May 21st 2008

cf. NDX post below for guidance

Market Snapshot for SPY - May 21st 2008

cf. NDX post below for guidance

Market Outlook NDX for May 21st '08

Dominant TF: Daily & 60mins
Swings: DN-UP-UP
Cycles: unreliable
Position (60mins): short to flat
Market Direction (Daily): congestion

The market retraced a little bit lower than anticipated to close more or less where expected (~142 for SPY). It is clear that the €/$ rate and oil prices are impacting the markets again.

60mins: support may be found lower
The 2000 level should be strong enough to hold, yet NDX could also test 1985. MTFS and Entropy are not the easiest to read at the moment, so we may enter a period of congestion until the situation clears up.

Daily: congestion to moderately up
Despite the obvious slowdown on current levels, MTFS only indicates congestion right now. The retracement potential is limited for the time being. Having said that, once the MTFS pattern is completed, the congestion could turn into moderate retracement to Fib level as EntBin is high and generally points to a turnaround.

Weekly: moderately up, possibly peaking
No change from last post:
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 or 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 somewhat up. We'll just be a little cautious not to be too bullish too soon.