Friday, June 06, 2008

Market Snapshot for NDX - Jun 6th 2008

cf. ER2 post below for guidance.

There will be no post for SPY today, due to bad data near day close, not yet corrected at time of posting, and obviously affecting calculations.

Market Outlook ER2 (RUT) for Jun 6th '08

Dominant TF: daily, weekly, with 60mins lagging a bit
Swings: UP-UP-UP
Market Direction: up
Position (60mins): long
Options (RUT):
risky, but should be OK
Short Jun790 Calls, Long Jun800 Calls (spread value 3.8 on May 5th)
Safe (if moved as earlier mentioned with small profit)
Short Jun830 Calls, Long Jun840 Calls

Wrong data on SPY (TradeStation) so we'll comment ER2 again today

The 750 breakout did surprise us in terms of timing and volatility, even if the direction has been UP for a while.
You will notice that a clear word of warning was given yesterday in the 60mins section.

60mins: resistance level
We switched to lower TFs yesterday to realise 765.60 is now the strong resistance level since 11AM, this leaving room to the upward move we've seen. The mid 760s are also fib targets so while there is a remaining positive bias, we should see a slowdown today. We notice an inverted MTFS which is a sign of spurrious volatility. Again, we should either trade shorter time frames in the direction of the dominant TF (daily).

Daily: up trend but no runaway rally just yet
Again, we warned about this breakout. However there is no indication of a change in dynamics with a MTFS pattern in "creeping" mode and an Entropy that remains fairly weak. We shall therefore only consider the 750 level as being penetrated and the up channel being the main driver for now. A slowdown is likely with a possible test of 750 as support later on.

on EURUSD, we gave the right target on 1.5381, but admittedly were surprised by the bounce on that level (however visible on oil prices hitting their channel lows)

Weekly: still up... where is the resistance level!?,
Yesterday's post was full of question on this crucial test level. A consolidation seems necessary but we surprisingly haven't seen it yet. This at least tells us that the reversal scenario is now remote.
I however reiterate that this MTFS pattern is not indicative of a straight path to last year's highs.