cf. SPY post below for guidance
Tuesday, March 25, 2008
Market Outlook SPY for Mar 25th '08
Dominant TF: Weekly followed by 60mins.
Swings: UP-UP-DN
Cycles: upturn indeed but very low signal to noise ratio
Market Direction: Upper bias, and more indication that fall may be over, but no substantial recovery in sight just yet.
Position: Contrarians and aggressive traders would be long, bears would be flat, and all others would have a iron condor in place.
Last post on SPY on Mar 19th was correct. We've indeed seen SPY now hovering in the upper half of the same trading range since mid January. What can we read now?
60mins: upper bias until resistance level
The 'wavy' MTFS is representative of the current volatility and hesitation, so now that the upper bias is there, we shall reach the MM resistance level at 137.50. We have a Fib target around current levels and a little higher, so difficult to say whether SPY will pull back a little before getting there.
Daily: no recovery potential just yet
MTFS is not showing enough strength to go higher than current range highs, so we'll have to look at SPY behaviour around those highs. As said on last post, and confirming the 60mins scenario, SPY should remain within the higher part of the same range since January, i.e. more or less within the [132-138] range.
Weekly: are we out of the woods?
No major change since last post, except that the anticipated bounce occured.
MTFS is still quite bearish, so is Entropy. Obviously, with EntBin at -4 (min is -5) a bounce was in the cards, taking SPY a little higher and thus alleviating pressure on MTFS. All in all, we would then see completion of the MTFS pattern within 4 to 6 weeks, and be in a better position to go higher then.
Level-wise, it is quite clear that the test level will be 137.50 support last year, then resistance earlier this year. It would be good to see it passed then tested as support again. It could however take a while.
Again and again, for the time being, patience and caution must be both exercised.
Friday, March 21, 2008
Market Snapshot for EURUSD - Mar 24th 2008
A EURUSD chart is now posted once or twice a week first to observe that the same TS environment can also be applied to forex, but also to see possible change in dynamics in quasi realtime for this forex pair.
Market Outlook RUT for Mar 24th '08
Dominant TF: weekly and 60mins charts
Swings: UP-DN-DN
Cycles: looks good but still unreliable (low signal/noise ratio)
Market Direction: same trading range. 688 is key level.
Position (60mins): long but target in sight, congestion otherwise.
Options:
Short Apr760 Calls, Long Apr770 Calls,
Long Apr570 Puts, Short Apr580 Puts
The outlook given 3 trading days ago was correct. Support was indeed found near range lows. The Fed cut then pushed RUT higher but only back to range highs. What can we now expect?
60mins: upper bias
RUT is trying to engage in higher gear now but doesn't show much energy just yet. MTFS and Entropy are pointing slightly higher but it will take more to pass the 688 resistance level, either exogenous (economic news) or endogenous (breakout).
Daily: bounce on MM stall level
The MM stall level is indeed half-way between the white dots and the strong MM support level (cyan dots), and seems to have halted the fall. The MTFS white line divergence and Entropy bottoming out a couple of days ago confirm the situation. However, the other 2 MTFS lines are still very low indicating a possible bell shape pattern going forward, i.e. a failed recovery pattern again. Swing is also down still, so going long is reserved to lower time frames.
Weekly: congestion to down bias
A bounce around 655 was very much in the cards, yet there is still no change in underlying dynamics. We obviously have a white line above the brown line and a very Entropy (EntBin = -4) to mitigate a bearish scenario, so a bounce is quite possible if not likely, indicating that the completion of the MTFS pattern may happen through time rather than with a further fall. Again as a reminder, negative pressure can dissipate slowly through the passage of time particularly on strong support levels, here Fib + MM stall level. We just have to be patient, and if bears come back to the charge, be prepared to see 625 being tested.
Thursday, March 20, 2008
Market Outlook NDX for Mar 20th '08
Dominant TF: 60mins then Daily. Weekly chart coming back too.
Swings: DN-DN-DN
Market Direction (Daily): congestion to down
Cycles: high noise level
Position (60mins): neutral to negative delta. short.
Three trading days agao, i said: "The trend is still down, and technically the incapacity to pass 1750 does not bode well for the next few days and weeks". It seems to apply again today, yet we'll give a chance to recent measures like the Fed cut to sieve through the economy and markets.
We'll keep a look at other correlated market as well as EURUSD. The € is at last showing signs of abating a bit.
60mins: trading range for now
The Entropy gave us a good indication again, along with the reversal of MTFS. NDX indeed did find have momentum to break the strong MM level (1750) and the first Fib target (1755). NDX could find support at the bottom of the range, although most probably higher.
We notice Swing legs being quite steep, so those interested in swing trading should move to a lower time frame, always keeping in mind the context provided by higher time frames, i.e. dominant down trend.
Daily: down, but looking for support
It is always risky to read too much into charts, but MTFS is trying to point upward and Entropy is showing less negative pressure. It may not be enough to build a support level just yet though.
I would suggest taking cues from other time frames for the time being, keeping in mind the bias is still down.
Weekly: again and again, it is bearish...
It is almost a pity this is not the dominant time frame, as this is certainly the easiest to read: trend is down.
To mitigate this scenario though, one can see that Entropy is extremely low (EntBin = -5) so a bounce is quite possible in the near future. We may have to wait for ENtropy to finally bottom out and then for the completion of the MTFS pattern. Until then, the bias is certainly down.
Wednesday, March 19, 2008
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