Monday, July 28, 2008

Weeky Outlook on ES 28th July to 1st Aug '08

Dominant TF: All three, with 60mins still a little behind
Swings: DN-UP-DN (from UP-UP-DN)
Market Direction(daily): long (lighten position) or flat to reenter later

Please read the ER2 post also. Both symbols are undoubtedly correlated yet each has its specificities.

ES went up to 1291 (for a 1295 target and now is retracing to 1250 and possibly below. So, all in all we've had a very easy week for ES.

60mins: will 1250 hold?
MTFS certainly follows price action therefore indicates a lower support. Entropy however is not so bearish hence ES may congest around 1250 or slightly lower without breaking that level (1246).
The Swing indicator announces a possible reversal with a first Fib target back to latest highs. We shall obviously wait for for the indicator to toggle up to confirm such scenario. This would be in line with some congestion at higher time frames.

Daily: slowdown, possible congestion
Again, following a ECO (early MTFS crossover) we knew there was little chance to see the recovery carrying through to higher levels and the 1st Fib retracement proved to be a profit taking level. IT would now make sense to test 1250 to be tested more firmly to go higher later on. We have however remain careful if this daily bar turns red. If we look at Entropy now, it seems that negative energy has almost dissipated. We don't however see ES bounce straight away but a Fib pattern may form later on this week.

Weekly: Caution must be exercised.
No change really... Bars are still red, MTFS still fairly bearish and Entropy has not bottomed yet! It is therefore far too early to rejoice so we'll remain cautious and check on support levels. We can still assume that 1230 will hold.
Next Fib level is way down at 1100 but we'll avoid falling into pessimism and wait for a possible yellow bar and maybe a pivot coming in the next few weeks. In any case, no recovery potential in sight in the short term.

Weeky Outlook on ER2 28th July to 1st Aug '08

Dominant TF: Daily, Weekly, with 60 mins falling
Swings: DN-UP-DN (from DN-UP-DN)
Market Direction(daily): flat or short
Options (RUT): no change in outlook for August, i.e. condor outside the 625-750 range.

On ER2, last weekly post mentioned tightening stops on the long which incidently reached target at 725 (Fib, just above SR).
Most would have tried a short which may take a little longer to materialise. We do notice that the 60mins is no longer a significant time frame, so we'll switch to a lower time frame to follow our trade while keeping in mind the daily and weekly contradictory charts.

EURUSD: No major change: there will only be a chance of significant recovery if the US$ passes 1.5625. Prices have been contained in a trading range.

60mins: congestion with lower bias
Prices left SR to reach 700 so to our surprise a little higher than Fib PR1. We have kept an eye on EURUSD which almost hit the target 1.5625 level (mentioned several times on previous posts), but we do notice correlation is not as clear as it used to be.
MTFS lines seem to ge their own way indicating possible congestion and Entropy is not helping either. We will therefore limit our analysis to pure price patterns and follow a likely Fib pattern to 700 and lower. No significant drop to expect, unless volatility increases on account of lower volumes.

Daily: peaking...
ER2 reached clear Fib targets (719 for the retracement, 725 for the previous Fib expansion), and looking now at taking a breather. The early MTFS crossover (ECO) and peaking Entropy should normally allow ER2 to retrace to the 790s. No indication at this stage that ER2 will retrace lower yet 688 is also a possible target.

Weekly: congestion to a little bearish
For the 2rd time now, MM stall level seems to have broken the fall, and one might think that a reversal is in the cards. Yet, MTFS and Entropy look if not bearish at least congestive so one should certainly not expect a strong rebound before the negative pressure is dissipated. Further to what was said last week, the last bounce looks like it was short-lived and last lows (stall level) or the Fib target around 625 can still be hit within a few weeks and without any significant exogenous shock to the market. One shall therefore remain fairly cautious as one should always be when Swings are in a DN-UP-DN configuration.

AdMarkAn Week 21-25 July 08

Last week was fairly classic and unsurprising with ES rising very close to our target then retracing back to major support.

For details, a copy of last week's AdMarkAn posts is now available on request.

Today's report will be posted shortly.