Wednesday, June 25, 2008

Market Snapshot for ER2 (RUT) - Jun 25th 2008

cf. NDX post below for guidance

Market Snapshot for SPY - Jun 25th 2008

cf. NDX post below for guidance

Market Outlook NDX for Jun 25th '08

Dominant TF: none really... 60mins at best otherwise switch to 30mins and lower intraday time frames
Swings: DN-DN-DN (from UP-DN-UP)
Position (60mins): short
Market Direction (Daily): drifting down

Yesterday's forecast for ER2 was again pretty accurate with a definite continuation of the lower move with some buying pressure during the course of the day only to resume its course south to the mid 700s. with indeed some congestion early in the day and then the development of an upward Fib expansion pattern.
Now back to NDX, last post insisted on switching to lower time frames to capture the change in dynamics. NDX indeed failed to reach 2000 (on stall level at lower time frames). The question now is: where are we going to find support and sufficient energy to reach last year's highs again?

NB: I invite readers to always consult posts for all three symbols for a better long term outlook as all three are quite correlated, yet also provide interesting information when analysed individually.

60mins: short term support may be found.
NDX yesterday bounced on the 30mins stall level (1890) which is also a Fib target hence some support at that level. MTFS is however not indicating any strength so we should see continuation of price erosion like seen on the last 2 bars of the day. NDX could therefore hit 1890 again and even go a little lower. However congestion with a lower bias remains our favourite scenario for now.

Daily: some price erosion looking for a support level.
The cyan support trendline drawn the other day has proved correct and we may be entering a down channel. Despite lower signinficance level, we also notice MTFS drifting and Entropy being slightly negative. We'll be looking at pure price patterns for a support level which could be a little lower.

Weekly: Congestion at key level
It seems the buyers are waiting for a support level to get back into the market. Bars have turned red, the Swing indicator toggled back to Down and Entropy has peaked. However MTFS is not indicative of a market fall, but only of a congestion with a now lower bias. Obviously, MTFS patterns sometimes fail to complete or fail altogether hence our reading method from several angles.
On last post, we noticed: MTFS and Entropy seem to be resilient for the time being, yet we also do notice the MTFS white line weakening and Entropy peaking though.
While we have some divergence forming we shall again keep in mind the lat high around 2050 could indeed turn into a full downward Fib pattern (target 1700), or could still be erased to take NDX back to last year's highs (>2200).
Again we will remain very cautious until a pattern is confirmed over the next 3 to 6 weeks. Since this is not the dominant time frames, clues will certainly arise from lower time frame indicators.