cf. NDX post below for guidance
Wednesday, June 25, 2008
Market Outlook NDX for Jun 25th '08
Dominant TF: none really... 60mins at best otherwise switch to 30mins and lower intraday time frames
Swings: DN-DN-DN (from UP-DN-UP)
Position (60mins): short
Market Direction (Daily): drifting down
Yesterday's forecast for ER2 was again pretty accurate with a definite continuation of the lower move with some buying pressure during the course of the day only to resume its course south to the mid 700s. with indeed some congestion early in the day and then the development of an upward Fib expansion pattern.
Now back to NDX, last post insisted on switching to lower time frames to capture the change in dynamics. NDX indeed failed to reach 2000 (on stall level at lower time frames). The question now is: where are we going to find support and sufficient energy to reach last year's highs again?
NB: I invite readers to always consult posts for all three symbols for a better long term outlook as all three are quite correlated, yet also provide interesting information when analysed individually.
60mins: short term support may be found.
NDX yesterday bounced on the 30mins stall level (1890) which is also a Fib target hence some support at that level. MTFS is however not indicating any strength so we should see continuation of price erosion like seen on the last 2 bars of the day. NDX could therefore hit 1890 again and even go a little lower. However congestion with a lower bias remains our favourite scenario for now.
Daily: some price erosion looking for a support level.
The cyan support trendline drawn the other day has proved correct and we may be entering a down channel. Despite lower signinficance level, we also notice MTFS drifting and Entropy being slightly negative. We'll be looking at pure price patterns for a support level which could be a little lower.
Weekly: Congestion at key level
It seems the buyers are waiting for a support level to get back into the market. Bars have turned red, the Swing indicator toggled back to Down and Entropy has peaked. However MTFS is not indicative of a market fall, but only of a congestion with a now lower bias. Obviously, MTFS patterns sometimes fail to complete or fail altogether hence our reading method from several angles.
On last post, we noticed: MTFS and Entropy seem to be resilient for the time being, yet we also do notice the MTFS white line weakening and Entropy peaking though.
While we have some divergence forming we shall again keep in mind the lat high around 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 we will remain very cautious until a pattern is confirmed over the next 3 to 6 weeks. Since this is not the dominant time frames, clues will certainly arise from lower time frame indicators.
Tuesday, June 24, 2008
Market Outlook ER2 (RUT) for Jun 24th '08
Dominant TF: weekly, 60mins, with Daily declining
Swings: DN-DN-DN (from DN-DN-UP)
Market Direction(daily): short to flat
Position (60mins): short
Options (RUT):
July: 830 is safe on the up side, 625 on the down side. Some will peg their puts lower.
Yesterday's post on SPY proved correct again with the continuation of the lwer bias while the strong 131 support level still holds. On ER2, I advised to move to lower time frames or stay flat for a short while, and direction indeed reversed on June 20th. I hope you also did.
60mins: lower
MTFS is certainly oversold and pointing down yet despite the bearish last 2 bars, 719 is a strong support level which should be fought still. Entropy is only moderately down, and we'll also watch for a possible lower Fib support also. Price erosion may continue in a series of waves with short-sellers buying back their positions and then selling again. Ultimately, support may be found as low as around 700s or slightly lower.
Daily: lower, but support levels must be checked.
MTFS and Entropy remain both relatively undecisive yet with a lower bias. We'll therefore watch pure price patterns such as this Fib/MM support. Should this strong 719 support level break, the next levels are around 702 and 689 with a stall level in between.
Weekly: lower for now... is the tide turning?
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. While remaining very cautious going forward, we still believe a support will be found to eventually take ER2 higher.
Saturday, June 21, 2008
Market Outlook SPY for Jun 23rd '08
Dominant TF: weekly and... intraday TFs (10mins!)
Swings: DN-DN-DN (from DN-DN-UP)
Market Direction (daily): retracement
Position (60mins): short
On my last SPY for June 20th, my position was short and it still is. Admittedly i did not expect more than price erosion, but derivatives expiry seems to have exacerbated volatility again. You will as a matter of fact also notice that i recommended staying on the side line yesterday for NDX. Obviously shorter intraday time frames provided the accurate picture.
Note on EURUSD: we'll keep an eye on 1.5625 key level. The Fed meeting next week may impact the €/$ rate. There are more and more rumours of central banks intervening too.
60mins: down, looking at possible short term target.
MTFS and Entropy both point for continuation of the down move to the next MM or Fib target level. MM support was hit intraday and will be tested again. The Auto Fib calculated the next target level (L3) at 129.71 yet one should not understimate the strength of the current MM support level which could hold at least over the next few bars.
Daily: lower
Our trading range has been broken on the down side, so we may hit MM stall level just above 128 pretty soon. We also have a Fib target in the same area. MTFS is now fairly bearish so this scenario has little chance to fail.
Weekly: crucial time...
No major change from last post except that a retracement is now in place with a Swing indicator now firmly down. We are therefore eagerly waiting to see where the support level will be...
This is indeed a crucial configuration as the last pivot point (144.30) is now developing into a full downward Fib pattern with a 125 target level at first.
MTFS looks more and more like a failed recovery pattern, confirming this scenario mentioned several times over the last couple of weeks.
Friday, June 20, 2008
Market Outlook NDX for Jun 20th '08
Dominant TF: none here! switch to 30mins and lower intraday time frames
Swings: UP-DN-UP (from DN-DN-UP)
Position (60mins): long, target in sight
Market Direction (Daily): congestion to down
Yesterday's forecast for ER2 was pretty accurate with indeed some congestion early in the day and then the development of an upward Fib expansion pattern.
Now back to NDX, last post brought about the new MM resistance level on 2000, which explains both the attraction and hesitation at that level. We also notice poor significance level indicating a necessity to switch to lower time frames for entry/exit points.
60mins: up, target in sight.
NDX is again trying to reach 2000 and may again fall a little short of that target. We do have a Fib pattern and a positive MTFS in favour of an upper bias, but we'll also take into account lower significance level and triple witching day today. A lot of traders will stay on the sideline today. So will we.
Daily: trading range for the time being
Despite yesterday's up day, MTFS is still only pointing towards some congestion or trading range, hesitating between an upper and a lower bias from one day to the next. There could obviously be new energy if 2000 is broken decisively but we are at this point in time more likely to see 2000 as a strong resistance level.
We will keep an eye on a down channel possibly forming soon.
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 be resilient for the time being, yet we also 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 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 3 to 6 weeks. Since this is not the dominant time frames, clues will certainly arise from lower time frame indicators.
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