Dominant TF: all 3
Swings: DN-DN-DN (weekly Swing hesitation)
Market Direction (daily): correction
Position (60mins): short to flat (flat to long in shorter intraday time frames)
We haven't taken a look at SPY in a while on account of a bad data quote last week. It seems that last post was correct and those who went short with a 137.50 target made some profit and are possibly still in.
About NDX yesterday, spot on again as we indeed saw a support near recent lows in the morning to then resume the fall to stall level in the 1950s.
EURUSD: soft landing in the short term, but could erode a little more. Direction obviously correlated to oil futures.
60mins: lower, possible congestion
MTFS is indicating a first attempt to stop the fall, but this is probably shortsellers squaring positions near day close. One should see the major 137.50 support tested as resistance or SPY eventually just resuming the fall. In any case, the direction over the medium term seems clear enough. To mitigate this scenario though, only a shift in MM levels will confirm a new battleground, and we'll have to see how 137.50 resists first.
Daily: looking for support
We warned about being careful on key 137.50 level, and we see now the channel being broken and MTFS indicating more erosion, so support level will be found lower, probably near 133. We'll remain very cautious over the medium term even though we don't seem to be back into bearish mode just yet.
Weekly: caution but no panic
The anticipated congestion is now turning into retracement. Like on the daily chart, we will be looking for the same support level keeping in mind this is a crucial configuration as the next pivot level could well develop a down Fib pattern. We would then have a 125 target level.
No panic just yet as we certainly have no indication of bearishness in MTFS and Entropy, so this is only little more than a congestion period at this level still.
We still favour a return to bullish mode over the medium term.
Tuesday, June 10, 2008
Market Outlook SPY for Jun 10th '08
Monday, June 09, 2008
Market Outlook NDX for Jun 9th '08
Dominant TF: 60mins and daily (lower intraday TFs also)
Swings: DN-DN-UP (from DN-DN-UP)
Position (60mins): short
Market Direction (Daily): congestion - trading range
A lot of volatility lately, hence my recommendation to move to lower time frames in my last NDX post. Again, directional traders are recommended to switch to lower time frames. Nothing wrong with staying on the side line either until the picture gets clearer.
60mins: lower, but beware of spurrious volatility
MTFS is obviously bearish, so is Entropy. NDX is likely to hit recent lows again (~1980) where it will hopefully find support... NDX could actually fall further (stall level ~1955, and strong support at 1938).
We will again follow EURUSD and oil prices for clues on direction and levels.
Daily: congestion to possible channel breakout on the downside
No major change from last NDX post: NDX is in a congestion phase with a remaining slight upward bias. We will also be cautious about this indecision by checking channel lows. In case of a breakout, NDX could find support near 1950, i.e. close to possible support levels found on the 60mins chart. Since NDX could also bounce, we will remain cautious or switch to lower time frames.
Weekly: Congestion at key level, upper bias remaining.
No major change at this level:
The Fib/MM levels (2000-2021) have been slowing down the seemingly irresistible ascension back to former highs. MTFS is still somewhat bullish and Entropy has not peaked yet. NDX may eventually keep hovering in a [1950:2050] range for a while, but until MTFS and Entropy actually confirm the slowdown, we will assume a "cautious" positive bias going forward.
Again, i wish to emphacise this is a key level as Fib patterns can develop both ways here, even if a downturn definitely looks unlikely.
Pivot number 3 (2050) could indeed turn into a full downward Fib pattern (target 1700), or could still be erased to take NDX back to last year's highs (>2200). Again the cautiously bullish scenario is still favoured for now and confirmation should come within weeks. Since this is not the dominant time frames, clues will certainly arise from lower time frame indicators.
Friday, June 06, 2008
Market Snapshot for NDX - Jun 6th 2008
cf. ER2 post below for guidance.
There will be no post for SPY today, due to bad data near day close, not yet corrected at time of posting, and obviously affecting calculations.
Market Outlook ER2 (RUT) for Jun 6th '08
Dominant TF: daily, weekly, with 60mins lagging a bit
Swings: UP-UP-UP
Market Direction: up
Position (60mins): long
Options (RUT):
risky, but should be OK
Short Jun790 Calls, Long Jun800 Calls (spread value 3.8 on May 5th)
Safe (if moved as earlier mentioned with small profit)
Short Jun830 Calls, Long Jun840 Calls
Wrong data on SPY (TradeStation) so we'll comment ER2 again today
The 750 breakout did surprise us in terms of timing and volatility, even if the direction has been UP for a while.
You will notice that a clear word of warning was given yesterday in the 60mins section.
60mins: resistance level
We switched to lower TFs yesterday to realise 765.60 is now the strong resistance level since 11AM, this leaving room to the upward move we've seen. The mid 760s are also fib targets so while there is a remaining positive bias, we should see a slowdown today. We notice an inverted MTFS which is a sign of spurrious volatility. Again, we should either trade shorter time frames in the direction of the dominant TF (daily).
Daily: up trend but no runaway rally just yet
Again, we warned about this breakout. However there is no indication of a change in dynamics with a MTFS pattern in "creeping" mode and an Entropy that remains fairly weak. We shall therefore only consider the 750 level as being penetrated and the up channel being the main driver for now. A slowdown is likely with a possible test of 750 as support later on.
on EURUSD, we gave the right target on 1.5381, but admittedly were surprised by the bounce on that level (however visible on oil prices hitting their channel lows)
Weekly: still up... where is the resistance level!?,
Yesterday's post was full of question on this crucial test level. A consolidation seems necessary but we surprisingly haven't seen it yet. This at least tells us that the reversal scenario is now remote.
I however reiterate that this MTFS pattern is not indicative of a straight path to last year's highs.
Thursday, June 05, 2008
Market Snapshot for SPY - Jun 5th 2008
cf. ER2 post below for guidance.
However, trading range here is [137.50:140.35] and bias is a little more bearish.
Market Outlook ER2 (RUT) for Jun 5th '08
Dominant TF: all 3, daily TF leading
Swings: UP-UP-UP
Market Direction: upper bias, possible congestion on resistance level
Position (60mins): staying flat, or moving to shorter TFs
Options (RUT): no change, but one could consider moving calls up a bit for safety.
Short Jun790 Calls, Long Jun800 Calls, Long Jun610 Puts, Short Jun620 Puts.
ER2 reached and stalled on 750 again as anticipated. Theta is on our side and this expected congestion should lead to another straightforward profitable trade.
60mins: congestion on resistance level
No change in the short to medium term. In absence of economic news or external shock (oil, $/€) the same trading range [725:750] should continue.
No clear pattern to read on this time frame. Directional traders are therefore recommended to switch to a lower TF and trade in the direction of the dominant TF (daily).
Daily: congestion, but upper trend still valid.
No major change either at this time frame.
MTFS remains relatively undecisive with an upward bias. Entropy is also very weak.
On last post, i anticipated further testing of the crucial 750 level, and this may occur again so we will watch it very carefully.
At the moment a moderate retracement is the favoured scenario but new energy would certainly pour into ER2 in case of a breakout.
on EURUSD, we'll check 1.5381 then 1.5364 target levels.
Weekly: still up, but crucial test level right here.
No change from last post:
Week after week, blue bar after blue bar, the recovery has been steady to current resistance level (Fib + MM) in the 750s. MTFS has so far failed to complete its pattern and lines still haven't crossed.
While the bias is still up, the most logical scenario at this point is a slow down and possible moderate retracement. A consolidation phase would allow completion of the MTFS pattern, and let ER2 go higher later on.
We'll keep into consideration that this is a crucial phase as the pattern can reverse and on the contrary turn back to bearishness, test of last lows etc. We'll obviously have to first wait for the next pivot point and then the subsequent support level, and this can take up to a couple of months.
Wednesday, June 04, 2008
Market Outlook NDX for Jun 4th '08
Dominant TF: 60mins (and lower TFs!)
Swings: DN-DN-UP (from UP-UP-UP)
Position (60mins): short to flat (profit taking)
Market Direction (Daily): congestion - trading range
Readers will notice i gave the right direction and support level on SPY yesterday. On EURUSD, shorter time frames are recommended and are very easy to read.
About NDX, i warned of a stall situation 3 days ago. I admittedly didn't venture into a specific scenario, which proved to be a little erratic yet tradable on a 30mins TF.
A lower time frame is again recommended for directional traders.
60mins: lower bias
MTFS is now turning into a down drifting situation. It seems the 2000 level while being a pivot has lost some of its significance and we may now see a trading range. NDX may develop a Fib pattern, however easier to read on a 30mins chart. To mitigate that scenario however, we will notice that Entropy is relatively weak, indicating possible congestion or a slow down drift.
Daily: congestion
No change from last NDX post: NDX is in a congestion phase with a remaining slight upward bias. We will also be cautious about this indecision by checking the channel lows.
Weekly: Congestion at key level, upper bias remaining.
No major change at this level:
The Fib/MM levels have been slowing down the seemingly irresistible ascension back to former highs. MTFS is still somewhat bullish and Entropy has not peaked yet. NDX may eventually keep hovering around the 2000 / 2010 level for a while, but until MTFS and Entropy actually confirm the slowdown, we will assume a "cautious" positive bias going forward.
Again, i wish to emphacise this is a key level as Fib patterns can develop both ways here, even if a downturn definitely looks unlikely.
Pivot number 5 (2050) could indeed turn into a full downward Fib pattern (target 1700), or could still be erased to take NDX back to last year's highs (>2200). Again the cautiously bullish scenario is still favoured for now and confirmation should come within weeks. Since this is not the dominant time frames, clues will certainly arise from lower time frame indicators.
