Thursday, June 05, 2008

Market Snapshot for NDX - Jun 5th 2008

cf. ER2 post below for guidance.

Market Snapshot for SPY - Jun 5th 2008

cf. ER2 post below for guidance.
However, trading range here is [137.50:140.35] and bias is a little more bearish.

Market Outlook ER2 (RUT) for Jun 5th '08

Dominant TF: all 3, daily TF leading
Swings: UP-UP-UP
Market Direction: upper bias, possible congestion on resistance level
Position (60mins): staying flat, or moving to shorter TFs
Options (RUT): no change, but one could consider moving calls up a bit for safety.
Short Jun790 Calls, Long Jun800 Calls, Long Jun610 Puts, Short Jun620 Puts.

ER2 reached and stalled on 750 again as anticipated. Theta is on our side and this expected congestion should lead to another straightforward profitable trade.

60mins: congestion on resistance level
No change in the short to medium term. In absence of economic news or external shock (oil, $/€) the same trading range [725:750] should continue.
No clear pattern to read on this time frame. Directional traders are therefore recommended to switch to a lower TF and trade in the direction of the dominant TF (daily).

Daily: congestion, but upper trend still valid.
No major change either at this time frame.
MTFS remains relatively undecisive with an upward bias. Entropy is also very weak.
On last post, i anticipated further testing of the crucial 750 level, and this may occur again so we will watch it very carefully.
At the moment a moderate retracement is the favoured scenario but new energy would certainly pour into ER2 in case of a breakout.

on EURUSD, we'll check 1.5381 then 1.5364 target levels.

Weekly: still up, but crucial test level right here.
No change from last post:
Week after week, blue bar after blue bar, the recovery has been steady to current resistance level (Fib + MM) in the 750s. MTFS has so far failed to complete its pattern and lines still haven't crossed.
While the bias is still up, the most logical scenario at this point is a slow down and possible moderate retracement. A consolidation phase would allow completion of the MTFS pattern, and let ER2 go higher later on.

We'll keep into consideration that this is a crucial phase as the pattern can reverse and on the contrary turn back to bearishness, test of last lows etc. We'll obviously have to first wait for the next pivot point and then the subsequent support level, and this can take up to a couple of months.