cf. ER2 post below for guidance
Thursday, June 19, 2008
Market Outlook ER2 (RUT) for Jun 19th '08
Dominant TF: weekly, 60mins, with Daily declining
Swings: DN-DN-UP (from UP-UP-UP)
Market Direction(daily): congestion at first
Position (60mins): flat
Options (RUT):
June positions can be closed or left to expire gracefully.
July condor positions are similar with 830/840 calls.
Yesterday's post on SPY proved correct. We should actually SPY going lower still. On ER2, no real surprise either even if the recovery broke our 734 resistance momentarily to reach a slightly higher Fib target.
With derivatives expiring, a forthcoming Fed meeting and expected interventions of central banks to try and push the US$ higher, there is increased uncertainty in the market, so caution should be exercised at the moment. Having said that, let's now have a look at what the current charts are telling us.
60mins: congestion to lower bias but...
Technically, we see MTFS lines separating generally indicating divergence of forces hence possible congestion. However Entropy shows signs of bottoming up so we may end up in a up Fib expansion pattern (bounce on 61.8% PR2 retracement yesterday).
Daily: same trading range
ER2 remains undecisive in the same [719:750] trading range itself split in 2 halves. With significance level declining, one could be tempted to take cues from lower intraday time frames. My advice however would be to stay non directional or stay cautiously on the side line for the time being.
Weekly: up recovery is now quite weaker
Similarly to the Daily TF, ER2 is here slowing down near resistance level. As mentioned on other symbols, the eventuality of a pivot level around last highs (765) makes this configuration crucial as a Fib pattern can develop both ways in the coming months. For the time being, the current situation is fine for theta players and the bearish scenario is still remote.
Wednesday, June 18, 2008
Market Outlook SPY for Jun 18th '08
Dominant TF: weekly and... intraday TFs (10mins!)
Swings: DN-DN-UP (from DN-DN-DN)
Market Direction (daily): retracement
Position (60mins): short
Taking a look at the last SPY post on June 10th, I see myself mentioning NDX finding support around 1908, and indeed it bounced at 1909. Not too bad I would say...
It seems that tech stocks led the way, hence SPY followed suit and recovered before reaching the lower target i gave. However this may just be a small timing glitch. Let's see where SPY is going now.
Note: EURUSD is in a trading range, with a slight lower bias. Shorter time frames are recommended.
60mins: lower bias, looking for support around 134.3
It is a pity that significance level is coming down because we have a classic bearish MTFS formation which could take SPY back to recent lows. Lower intraday time frames are not helping at the moment, so a trading range with a lower bias, i.e. SPY drifting a bit is our only scenario right now.
Daily: trading range
Like on the 60mins chart, SPY seems constrained in a [133:137.50] trading range with a lower bias. Entropy is weak and MTFS is also not indicating more than a drifting situation. The market is maybe waiting for triple witching and the next Fed meeting to find a direction.
Weekly: crucial time...
No major change from last post except that a retracement is now in place and we are eagerly waiting to see where the support level is...
This is indeed a crucial configuration as the last pivot point (144.30) could well develop a down Fib pattern for which we would then have a 125 target level.
No panic however as we certainly have only little indication of bearishness in MTFS and Entropy, so this is only little more than a congestion period at this level still, also visible from the Swing indicator hesitating around current levels. We still favour a return to bullish mode over the medium term, but as said above, new information will be needed to determine direction.
Tuesday, June 17, 2008
Market Outlook NDX for Jun 17th '08
Dominant TF: 60mins and lower intraday TFs also
Swings: UP-DN-UP (from DN-DN-UP)
Position (60mins): long, target in sight
Market Direction (Daily): congestion to down
Yesterday ER2 broke the 734 resistance level we gave. While the direction was correct, the MM-Fib combination gave 734 more weight, yet it is true that 738 was also a possibility.
About NDX, I admittedly didn't give enough credit to the bounce potential (hence my advice to look at lower intraday TFs), but this does not change our scenario.
60mins: up, target in sight.
On last post, we noticed MM levels shifting south, and NDX bounced quickly to Fib PR1 also close to a moderate MM level. NDX since crept higher and is now on its way to 2000 (also Fib PR2). MTFS shows a relatively straight path to that target. At this point in time, Entropy is up yet not too strong, so we see the 2000 target level and resistance holding.
Daily: congestion, and then...
Despite the last few retracement days, there is little change from last post. MTFS is still pointing down with only the white going flat, and Entropy is also indicating a minor lower bias.
So, after bouncing on Fib level, NDX should remain in a trading range with a lower bias. We also notice a lower significance level so entry/exit points must be found on lower intraday time frames.
Weekly: Congestion at key level, minor upper bias remaining.
Despite current volatility, we see no major change at this level. We're now entering a congestion phase around the key 2000 level. MTFS and Entropy seem to resist for the time being, yet we do notice the MTFS white line weakening and Entropy peaking though. Significance level being lower, we'll take the current picture with a pinch of salt and concentrate on pure price formations. On such crucial test level, Fib patterns can develop both ways here, even if a downturn still looks unlikely.
Pivot number 4 (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 3 to 4 weeks. Since this is not the dominant time frames, clues will certainly arise from lower time frame indicators.
Sunday, June 15, 2008
Market Outlook ER2 (RUT) for Jun 16th '08
We've seen some waves of buying over the last few days, so one may want to switch to lower time frames should one wish to catch optimal entry/exit points.
Dominant TF: all 3
Swings: UP-UP-UP
Market Direction(daily): up, congestion at first
Position (60mins): flat to long
Options (RUT):
Short Jun790 Calls, Long Jun800 Calls OR
Short Jun830 Calls, Long Jun840 Calls for those who opted for safety 2 weeks ago
Over the last few days, we've seen the 719 MM pivot level acting as support. The bounce was even strong enough to quickly reach Fib PR1.
As a note: some have misunderstood Friday's comments on SPY "We've seen some waves of buying over the last few days, so one may want to switch to lower time frames should one wish to catch optimal entry/exit points." Even if the bounce was stronger than anticipated, the point was to go to lower time frame to catch a decision point. Some would have bought at that lower time frame, some would however try and get a better short re-entry point. Exact entry/exit signals would go beyond the scope of this blog. Please contact me for more info.
60mins: mild upward retracement
ER2 has almost hit Fib PR1 after bouncing on MM level. MTFS could indicate ER2 creeping a little higher but this is unlikely. We'll keep an eye on a shorter time frame (10mins) where 734 is a strong MM resistance level which will certainly be tested vigorously but should hold.
Daily: entering a trading range
Despite the up day on friday, ER2 remains slightly bearish so a congestion or trading range is likely. Such trading range is [719:750] itself split in 2 halves. MTFS and a mild negative Entropy indicate that ER2 should remain in the lower part [719:734].
We correctly mentioned last time that the 719 support level hold and we still think so.
Weekly: up recovery is still valid for the time being
Similarly to the Daily TF, ER2 is here slowing down near resistance level. As mentioned on other symbols, the eventuality of a pivot level around last highs (765) makes this configuration crucial as a Fib pattern can develop both ways in the coming months. For the time being, the current situation is fine for theta players and the bearish scenario is still quite remote.
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