A SPY commented chart has been posted over the weekend on the other ts-trading-technique blog: http://ts-trading-technique.blogspot.com/2008/01/are-we-close-to-bottom-on-spy.html
Now, there is no need to analyze market direction, so let's just try and find where support levels will be found:
SPY: 125 first, but Entropy will be SO STRONG on the down side, and has potential to rapidly draw prices to the next weekly support levels (117, 108). 125 is however QUITE STRONG ALSO, so while it can (and probably will) be penetrated momentarily, one should not panic: it could very well hold for now. Let's update the scenario once the initial shock has been absorbed later today.
RUT: Despite being a broader index, RUT has been hit badly by the current volatility (exposure to rates, credit crunch etc). Now support level is somewhat lower at 625, with a possible (yet unlikely) pause at MM stall level around 655.
NDX: Like other indices, NDX now targets 1750.
Again, we have to first see the reaction on those levels, either a strong reaction to try and short-squeeze the bears, or more likely the 'hangover effect', i.e. the market being a little groggy...
Monday, January 21, 2008
Market "Correction"
Friday, January 18, 2008
Market Outlook NDX for Jan 18th '08
Dominant TF: Daily
Swings: DN-DN-DN
Cycles (DomTF): pointing down, but somewhat unreliable in this market
Market Direction (Daily): obvious
Position (60mins):
Short: definitely
Flat: wise
Long: short intraday time frames only
We have noticed on Jan 16th that support level turned lower, so a renetry short on the 1st red bar (here 1871 but effectively earlier and higher on lower time frame charts).
60mins: lower
As mentioned in earlier posts, polar bears are having a 2nd Christmas here. It is fairly common to see price acceleration when important levels break. There is no change in dynamics so one can only anticipate a slowdown on current Fib target ~1840 (low time frames), but more likely lower (stall level ~1812).
Daily: lower until pattern completion
MTFS is obviously bearish and nothing seems to be able to stop the fall until the pattern is complete with a line crossover in oversold territory, and with a better looking gradient. It could take a few days... and until then, NDX could well shed a few more points. MM support level is now 1750, with a stall level just above 1800.
Weekly: definite down bias, check Fib and MM levels
We incidently have a support level around 1800 (last lows) coinciding with a possible target on the daily chart.
We can also check Fib retracement levels, with 50% retracement right here (which could be penetrated to 1800 actually), then PR2 (61.8%) at 1750, which is also a possible target.
Until then, no panic... this is just a market correction which we may have forgotten but which happens from time to time.
Thursday, January 17, 2008
Market Outlook SPY for Jan 17th '08
Dominant TF: Daily
Swings: DN-DN-DN
Cycles: unreliable
Market Direction (Daily): check behaviour on support level
Position (60mins):
Short: exited (short re-entry in lower time frames)
Flat: wise
Long: no way!
SPY certainly looks a little bearish, so the million dollar question now is: is the 137.5 level breaking...? Should we look a little lower for support? Has the market over-reacted?
60mins: a bit of fighting on support level
MTFS has shown attempts to take off over the last week, but we know siginificance level is too low (divergence) to follow them. Entropy may have bottomed, and volatility is so high that SPY can penetrate support level without breaking.
Should we be optimistic though...? No. Just follow shorter time frames for a possible entry, otherwise stay on the sideline until bears get tired.
Daily: congestion to down - but no panic: support can hold!
Last commentary a few days ago is still valid, with an additional information now: MTFS crossover is quite bearish.
Support level can hold obviously if bulls are prepared to go for a bit of fighting. Equilibrium may be found around 136. It is not uncommon to see hesitations between near support levels (MM & Fib).
Weekly: congestion to down
Like on the daily chart, take cues from Fib and MM levels. There is support potential even if the mood is certainly moderately bearish (MTFS and Entropy). I insist on "moderately" as a recovery is still possible.
Wednesday, January 16, 2008
Market Outlook RUT for Jan 16th '08
Dominant TF: Daily
Swings: DN-DN-DN (from DN-DN-DN)
Cycles: unreliable (too trendy)
Market Direction: support level in sight
Position:
Short: exited
Flat: wise
Long: follow lower time frames
Bears are having a feast since Christmas, and nobody seems to want to spoil their fun.
I announced an exit short (a little conservative maybe), based on the daily chart as usual.
MM Support level around 688 will be hit.
60mins: congestion to lower until support level is confirmed
No major change. We're still waiting for reaction on support level. We have some indication of an interesting Gartley pattern in lower time frames. We should have an interesting trading day :)
Daily: congestion
Same congestion with a lower bias (688 is now quite close). We have to wait for Entropy to bounce but it is so low (EntBin = -5) that it may happen soon. Despite the volatile environment we're going through, MTFS does not indicate a market fall
Weekly: congestion to down
More worrisome maybe is the increased degradation of the long term environment. The MTFS green line is still relatively high, so no panic just yet, but caution should certainly be exercised. If 688 is broken, check MM and Fib levels for support.
Tuesday, January 15, 2008
Market Snapshot for SPY - Jan 15th 2008
Regrettably, from now on, only one chart will be commented each day on this blog. I shall alternate between SPY, RUT and NDX, and the other 2 snapshots will be posted uncommented. Fortunately, those 3 symbols are fairly correlated.
The forthcoming release of the TS toolset, the few additions still in the pipeline the training and support involved etc etc do not allow me to offer more for free every single day of the week. I certainly enjoy helping traders, but some bombard me with beginners' questions, some rip the toolset apart to only keep the free indicators in it... so i end up looking like a fool...
I shall think of another way of providing this service to those who really appreciate it.
Regards to all, and happy trading...
