cf. RUT post below for guidance
Friday, April 04, 2008
Market Outlook RUT for Apr 4th '08
Dominant TF: weekly and 60mins charts
Swings: DN-UP-DN
Cycles: very unreliable (low signal/noise ratio)
Market Direction: same trading range. 688 is key level.
Position (60mins): long, looking at possible profit target.
Options:
Short Apr760 Calls, Long Apr770 Calls,
Long Apr570 Puts, Short Apr580 Puts
The 688 pivot level indeed proved to be a key level, and with the help of portfolio adjustments on new quarter, RUT went higher, hovering on stall level.
We'll also keep an eye on EURUSD key level : 1.5625
60mins: Resistance level around the corner
This time frame is only second to the weekly one, so we won't try to read too much into the MTFS here, which is not giving us a clear pattern. Lines are high and pointing slightly up and Entropy is about flat, so we can only anticipate an upper bias to the resistance level around 719 (MM + Fib target).
Daily: looking better
As we said in previous posts, RUT has climbed back to the upper half of its trading range, same since early january.
Now despite a low significance level, MTFS looks positive at least to the upper range boundary.
Line separation would indicate profit taking or retracement going forward, so we'll watch how the MTFS pattern develops over the next few days. In the best scenario, a breakout would occur to take RUT back to 750.
Weekly: congestion to down bias
No change from last post.
The weekly chart is certainly slower and market outlook at this level only needs to be touched up a bit from the previous post.
Again we have to wait for completion of the MTFS pattern, and this could take up to 4 to 6 weeks. Entropy could still bode for a bounce, but certainly no significant recovery in sight any time soon.
In the best case scenario, RUT would climb up to Fib PR1 i.e. 724 (we do notice the low 720s being key level going forward) . The most likely scenario is that negative pressure will dissipate through the passage of time, and RUT would remain within the current range, eventually hitting the strong MM support should the financial sector unravel more bad news.
Thursday, April 03, 2008
Market Snapshot for EURUSD - Apr 3rd 2008
For a couple fo weeks, a EURUSD snapshot is also published to keep a record of a possible change in dynamics in this forex pair, as it has consequences on other indices and symbols such as @QM (oil).
We'll watch the 1.5625 key level very carefully for forthcoming direction.
Market Outlook NDX for Apr 3rd '08
Dominant TF: 60mins then Daily. Weekly chart coming back too.
Swings: UP-UP-DN
Market Direction (Daily): up, but test level in sight
Cycles: unreliable
Position (60mins): long, but possible profit taking to re-enter later on
I was maybe a little conservative on last post on Mar 31st, as NDX has since managed to complete the Fib pattern to strong MM resistance level. While it was a possibility (bounce on Fib level), it wasn't quite yet visible last week.
Again, we shall watch for clues in correlated markets and keep an eye on EURUSD.
60mins: hesitation on target level.
NDX has reached its target level is now visibly abating (MTFS + weaker Entropy). Target level could be tested again.
Daily: upper bias for now
It was interesting to see that the MTFS recovery pattern finally made it despite some uncertainty last week. Difficult to know whether squaring out positions on quarter end, and adjustments on new quarter had an impact, but outlook looks much better.
However, we'll have to keep in mind that the daily time frame is not our dominant time frame at the moment.
Profit taking could occur within a couple of days (EntBin is high and MTFS white line separating)
Weekly: caution...
The Swing indicator is hesitating, but is still DOWN. MTFS is still moderately bearish despite the bounce in the last 2 to 3 weeks. Again, we have to see completion of the MTFS pattern and dissipation of negative pressure in the market.
NDX should reach PR1 (~1880) but it is too early to go higher. NDX could then pull back a little again, but as mentioned previously, put spreads should be quite safe now, i.e. the worst seems to be over.
Wednesday, April 02, 2008
Market Outlook SPY for Apr 2nd '08
Dominant TF: Weekly followed by 60mins.
Swings: UP-UP-DN
Cycles: not quite reliable
Market Direction: price erosion
Position: cautiously long until target
Last SPY post 3 trading ago was correct. SPY came back down to MM pivot level. Portfolio managers and financial institutions surprised us with some window-dressing yesterday (new quarter), which we will watch carefully
60mins: target in sight
We have a Fib target at 137 and a strong MM resistance at 137.50, which could be tested today. MTFS is certainly also bullish, but Entropy could peak already.
We should therefore wait to check SPY's behaviour on those target levels. Since yesterday's buying spree was only justified by technical adjustments, we need to wait for some settling down, with possible profit taking. Lower time frames may be recommended for entry/exit points.
Daily: back to upper range boundary, but caution still...
As mentioned previously, the Fed rate cut pushed RUT and SPY back to the upper half of the range. We now have a moderate bullish bias, however MTFS isn't convincing, and Entropymay be peaking already. One should therefore not jump too quickly into conclusions that we are back to a bullish trend even if the worst may be over and Swing finally turned up again. Swing is still very much hesitant.
Weekly: no significant change
Bounce on the very low EntBin (-4) could eventually push SPY up to PR1 (137 - 138). This time frame is however our dominant time frame still and the MTFS pattern is still fairly bearish. The MTFS pattern should complete through passage of time, hence congestion in the low to mid 130s is a likely scenario until the negative pressure has fully dissipated.
Tuesday, April 01, 2008
Market Snapshot for SPY - Apr 1st 2008
cf RUT post below for guidance. Chart reading is quite similar.
Market Outlook RUT for Apr 1st '08
Dominant TF: weekly and 60mins charts
Swings: DN-DN-DN
Cycles: looks good but still unreliable (low signal/noise ratio)
Market Direction: same trading range. 688 is key level.
Position (60mins): flat, delta neutral
Options:
Short Apr760 Calls, Long Apr770 Calls,
Long Apr570 Puts, Short Apr580 Puts
RUT came back to the MM pivot level where it's been trying to bounce. Downward pressure is still strong though...
60mins: testing pivot level again
RUT has difficulties going higher. Despite showing an upper bias, MTFS is giving us an helping hand. We'll have to see whether the pivot level holds or not. RUT could eventually reach highs again (Fib target at 719), yet, looking at higher time frames this isn't our preferred scenario. The weekly chart remains the dominant time frame.
If this key MM pivot breaks, the positive effect of the rate cut may be wiped out, and lows could be tested again.
Daily: down bias
Despite the UP swing (rate cut), we have lower highs, and a bearish MTFS pattern. The white line has finished its excursion and may fall again. We can also see that Entropy reached a significant high and could also pull back.
Having said that, we have a trading range split in two with a half way support/resistance level (or pivot level). This pattern is obviously due to the Fed cut. We'll therefore keep an eye on the low to mid 680s for direction going forward.
Weekly: congestion to down bias
The weekly chart is certainly slower and market outlook at this level only needs to be touched up a bit from the previous post.
Again we have to wait for completion of the MTFS pattern, and this could take up to 4 to 6 weeks. Entropy could still bode for a bounce, but certainly no significant recovery in sight any time soon.
In the best case scenario, RUT would climb up to Fib PR1 i.e. 724. The most likely scenario is that negative pressure will dissipate through the passage of time, and RUT would remain within the current range, eventually hitting the strong MM support should the financial sector unravel more bad news.
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