cf. NDX post below for guidance.
Current options positions:
Short May780 Calls, Long May790 Calls, Long May550 Puts, Short May560 Puts.
Short Jun790 Calls, Long Jun800 Calls, Long Jun610 Puts, Short Jun620 Puts.
Tuesday, May 13, 2008
Market Outlook ER2 (RUT) for May 13th '08
Market Outlook NDX for May 13th '08
Dominant TF: Daily
Swings: UP-UP-UP
Market Direction (Daily): congestion/peak
Cycles: quite unreliable
Position (60mins): upper bias but quite volatile (check lower time frames)
I estimated yesterday that bearishness was temporary and support would be found soon ("from current lows to possibly 137.50"). While i was about right that previous day's lows would hold, I admittedly was surprised by such a good looking bounce (natural attraction to key levels).
Now, back to NDX which found support in the high 1940s, which incidently were stall level on lower intraday time frames (way more significant than the 60mins time frame). Yet, despite the high volatility environment has remained positive over the last few days. We'll however remain very cautious at this key level.
60mins: close to the 2000 mark again.
Significance level is not great and Entropy may peak again around the 2000 resistance level. We'll take cues from lower time frames which do look bullish, so penetrating (at least temporarily) the resistance level is possible.
Daily: likely congestion at test level
Again, MTFS points towards a congestion or minor upper bias at this high level. If resistance holds, a minor retracement is also possible without affecting the overall up trend.
Weekly: Caution - Resistance level around 2000
The Swing is UP again as we approach the key 2000 level (Fib + MM). It should technically hover on that level or a little higher (Fib level is around 2010), as it is probably too early to digest the financial crisis we've experienced.
Saturday, May 10, 2008
Market Outlook SPY for May 12th '08
Dominant TF: weekly and daily charts. 60mins coming back strongly.
Swings: DN-UP-UP
Cycles: still unreliable
Market Direction (daily): congestion/retracement but upper bias still overall
Position (60mins): flat to short (and quite volatile at this time frame)
On last post, i warned about volatility and poor visibility on the 60mins chart. Picture has so far been clearer on longer time frames, and the congestion was anticipated there.
60mins: down, looking for support (137.5?)
MTFS is bearish although it is likely that a support will be found soon, from current lows to possibly 137.50.
Daily: profit taking should be limited.
The obvious retracement has started as mentioned on last post. SPY will now be looking for support without affecting significantly the current recovery. 137.50 looks like a reasonable support level, but Fib levels will also be considered. MTFS certainly does not point for anything more than a moderate pullback. 150 remains the target over the medium term, even if again the road last year's highs looks bumpy, and maybe full of surprises...
Weekly: recovery pausing 'naturally'
Despite the Swing indicator now being Up, we still have a MTFS pattern waiting to complete, and the Swing gradient a little too steep anyway. If we now also add to the picture that entropy is just about balanced, it is clear that SPY will be now looking to consolidate. That's why we'll keep a close eye at possible support levels on the daily chart.
To avoid reading too much in the chart right now, we'll also take into account that consolidations sometimes fail... In such case the Fib (expansion) pattern would start south from last pivot point just above 142. We should obviously know more about it over the next few weeks.
Friday, May 09, 2008
Market Outlook ER2 (RUT) for May 9th '08
Dominant TF: weekly chart, then daily. 60mins coming back
Swings: DN-UP-UP (weekly swing still hesitant)
Cycles: poor fit, but long cycle detected.
Market Direction: moderate congestion.
Position (60mins): flat to short.
Options (RUT):
Short May780 Calls, Long May790 Calls,
Long May550 Puts, Short May560 Puts
Despite the relatively high volatility on the 60mins chart, the retracement on range highs certainly didn't come as a surprise. Shorter intraday time frames give a good picture, but one should favour the dominant time frames providing they conform our trading style.
We will also follow EURUSD and QM closely.
60mins: congestion or possible continuation of erosion.
Last post was correct, and now that the MM pivot level seems penetrated, ER2 (RUT) could go slightly lower. MTFS however does not point for any serious retracement, and congestion is more likely (711 should hold). This is not the dominant time frame so we'll take cues from higher time frames unless needed.
Daily: expected retracement is here at last.
MTFS indicates a moderate retracement so we'll check for channel lows and Fib levels. For the time being, we'll aim at a support level above 700 (high 680s also possible).
Weekly: congestion, possible retracement
No major change since last post:
Fib PR1 seems to be a resistance strong enough to force ER2 to consolidate a little lower. MTFS is now close to completing its pattern. For the time being, we anticipate the some congestion range [690-730] to hold. Should support be found around 690, ER2 would spring back to 750 which would be the test level going forward.
Thursday, May 08, 2008
Market Outlook NDX for May 8th '08
Dominant TF: Daily
Swings: DN-UP-DN
Market Direction (Daily): congestion to retracement
Cycles: quite unreliable
Position (60mins): flat to short
NDX needed to hit 2000 to trigger significant selling. We all anticipated that, it is however still always amazing to see. We now have to see whether the market consolidates soon or not. The bias remains up overall.
60mins: looking for support
Despite the sudden profit taking session yesterday, we have no indication of a continuation of the fall. Significance level is low so we'll favour channel lows and Fib/MM levels for possible support (including current level).
NB: Intraday time frames give great charts with a support level at 1938.
Daily: congestion to minor retracement
MTFS points towards a congestion at this high level but a minor retracement is possible without affecting the ongoing recovery overall. Like on the 60mins chart, we will look closely at Fib/MM levels even more so since significance level is high. In case of retracement, we will look for support around 1910 then 1880.
Weekly: Resistance level around 2000
No significant change from last post:
The Swing is still down, in agreement with MTFS which is still only in an upward retracement mode.
This confirms the scenario whereby the 2000 area should remain a strong resistance level (Fib + MM).
Now we have to see how a retracement accelerates the completion of the MTFS pattern.
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