cf. ER2 post below for guidance.
Thursday, April 17, 2008
Market Outlook ER2 (RUT) for Apr 17th '08
Dominant TF: weekly then 60mins charts
Swings: UP-UP-DN
Cycles: good fit but very unreliable (low signal/noise ratio)
Market Direction: up
Position (60mins): long but looking at taking profits
Options (RUT):
Short Apr760 Calls, Long Apr770 Calls,
Long Apr570 Puts, Short Apr580 Puts
Short May780 Calls, Long May790 Calls,
Long May550 Puts, Short May560 Puts
Since last post, MM levels have changed on the 60mins chart, indicating a potential rebound on strong support level. Having said that, we have all been quite surprised by the reaction to earnings announcement. Yet, we're again in the same trading range still.
60mins:
ER2 (RUT) is now again back to range highs. It closed on stall level yesterday, so some profit taking is always possible, yet, MTFS and Entropy both indicate higher prices. 720 is a strong resistance level though.
Daily: same upper half of the same trading range
The 688 Fib support level held, which is understandable as the lower part of the trading range early March was prior to the "Fed boost". However, the earnings announcement came as a surprise still, and we don't see on our chart any reason to believe in a substantial change in dynamics in the short term. Looking at prices, the upper bias seems obvious, but MTFS and Entropy do not indicate ER2 passing the upper range boundary just yet.
Until we see evidence of a range breakout, the likely scenario remains congestion in the [700-720] range.
Weekly: congestion to down bias
I repeatedly said that we have to wait for the MTFS pattern to complete, and until then the downward pressure is dissipated, the current negative bias will prevail.
ER2 (RUT) should consolidate at this low level and a line crossover may occur soon. We'll see how a new pattern then develops. We'll also keep an eye on Fib retracement levels. In the very worst case scenario, the 625 support level would be hit, but would certainly hold. On the up side, 750 seems quite safe for our condors (Fib + MM).
Wednesday, April 16, 2008
Market Snapshot for EURUSD - Apr 16th 2008
Here is an update on EURUSD. The bias is obviously still up, but we'll check levels carefully for a possible breakout.
Market Outlook NDX for Apr 16th '08
Dominant TF: 60mins. As mentioned last time, some may want to shift the set of time frames (TFS) down (30mn, 60mn, 240mn)
Swings: DN-DN-DN
Market Direction (Daily): erosion
Cycles: unreliable
Position (60mins): flat to short
I was admittedly too conservative last time (3 trading days ago), but the situation became clearer since, so those who switched to a lower time frame as recommended will have shorted NDX.
60mins: erosion overall but bounce is likely at first.
Classic head&shoulder followed by Fib development. There is still a mild erosion potential which could take NDX down to 1750. If we stick to the current chart situation though, MTFS and Entropy are the contrary pointly very slightly up. NDX could therefore reach 1810 again in the short term. We may even have a new 30mins Fib pattern developing at the same time.
Daily: retracement looking for support.
NDX has bounced on the 50% retracement level, but MTFS is clearly indicating a lower bias, so PR2 (61.8%) (+MM) is a more likely support level. MTFS also indicates higher lows, so NDX could well go higher later on.
Weekly: patience...
We certainly see MTFS looking better, accelerating the dissipation of the negative pressure we've had for a few months. There is no substantial recovery potential right now but bars are blue, so we may see some kind of a cupd&handle formation and NDX finally going up in a few weeks. The exact bottom cannot be determined here, so we'll follow shorter time frames for decision points. In the longer term, the 2000 level will be the major test level determining direction for the rest of the year probably.
Tuesday, April 15, 2008
Market Outlook SPY for Apr 15th '08
Dominant TF: 60mins followed by the weekly chart.
Swings: DN-DN-DN
Cycles: unreliable
Market Direction: unclear, lower bias
Position (60mins): still short, tightening stops
Shorting SPY following the 60mins chart was a good move indeed, which move maybe surprised us by its strength.
60mins: looking for support
SPY is trying to find support on current levels, yet it could well test stall level around 132. We do indeed notice new MM levels with a narrower range (higher support level). This may mean that 131.25 will ultimately hold if tested again. MTFS is still somewhat bearish, so this should translate in a soft landing around these low levels.
Daily: looking for support
Last time, i anticipated a moderate retracement, but such retracement may take SPY a little lower, so we'll check for Fib levels for possible support.
MTFS seems to indicate the retracement should be contained though. Significance level being lower at this time frame, we won't read too much here and rather concentrate on concordance of likely support levels (~131).
Weekly: again, no significant change yet.
After hitting PR1 (38.2% retracement), SPY is nw consolidating, again until the negative pressure eventually dissipates over time.
The MTFS pattern does not show any recovery potential just yet, but any possible down move going forward should now be cushioned (~131 support also?).
Monday, April 14, 2008
Market Outlook ER2 (RUT) for Apr 14th '08
Dominant TF: 60mins and weekly charts
Swings: DN-DN-DN
Cycles: very good fit but very unreliable (low signal/noise ratio)
Market Direction: down
Position (60mins): short
Options (RUT):
Short Apr760 Calls, Long Apr770 Calls,
Long Apr570 Puts, Short Apr580 Puts
Short May780 Calls, Long May790 Calls,
Long May550 Puts, Short May560 Puts
We have no RUT data, so we swapped for ER2.
We have pointed out how strong the resistance level at the upper boundary of the trading range. We're now halfway down and we'll watch for a possible further deterioration to levels prior to the Fed's bold move. As we said over and over, it will take more time to dissipate the negative prssure.
Options positions are however still looking fine.
On the forex front, despite the current volatility, we'll still keep an eye on EURUSD key level : 1.5625
60mins:
Interpretation has now to be adjusted a little with ER2 which is a little more volatile. Our last report on RUT was correct in direction, but admittedly did not fully anticipate the snowballing effect we've seen.
We here see levels moved downward with a strong support level back to 688, and at a same time the overall range being reduced. At first sight, 688 looks pretty strong, but MTFS is still quite bearish, so we'll also consider the next support level at 670. Entropy is still average, which surprisingly is more indicative of erosion than an actual downward pressure. This would confirm a continuation of current situation.
Daily: looking for support
Not surprisingly, Fib levels are about the same as on the 60mins chart, and 670 looks a plausible target. The weakening of the MTFS is not incompatible with this scenario.
At this point in time, there is no indication that March lows would be hit again.
Weekly: congestion to down bias
I repeatedly said that we have to wait for the MTFS pattern to complete, and until then the downward pressure is dissipated, the current negative bias will prevail. ER2 (RUT) should consolidate at this low level and a line crossover may occur soon. We'll see how a new pattern then develops. In the very worst case scenario, the 625 support level would be hit, but would certainly hold.
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