cf RUT post below for guidance. Chart reading is similar.
Tuesday, April 01, 2008
Market Snapshot for SPY - Apr 1st 2008
cf RUT post below for guidance. Chart reading is quite similar.
Market Outlook RUT for Apr 1st '08
Dominant TF: weekly and 60mins charts
Swings: DN-DN-DN
Cycles: looks good but still unreliable (low signal/noise ratio)
Market Direction: same trading range. 688 is key level.
Position (60mins): flat, delta neutral
Options:
Short Apr760 Calls, Long Apr770 Calls,
Long Apr570 Puts, Short Apr580 Puts
RUT came back to the MM pivot level where it's been trying to bounce. Downward pressure is still strong though...
60mins: testing pivot level again
RUT has difficulties going higher. Despite showing an upper bias, MTFS is giving us an helping hand. We'll have to see whether the pivot level holds or not. RUT could eventually reach highs again (Fib target at 719), yet, looking at higher time frames this isn't our preferred scenario. The weekly chart remains the dominant time frame.
If this key MM pivot breaks, the positive effect of the rate cut may be wiped out, and lows could be tested again.
Daily: down bias
Despite the UP swing (rate cut), we have lower highs, and a bearish MTFS pattern. The white line has finished its excursion and may fall again. We can also see that Entropy reached a significant high and could also pull back.
Having said that, we have a trading range split in two with a half way support/resistance level (or pivot level). This pattern is obviously due to the Fed cut. We'll therefore keep an eye on the low to mid 680s for direction going forward.
Weekly: congestion to down bias
The weekly chart is certainly slower and market outlook at this level only needs to be touched up a bit from the previous post.
Again we have to wait for completion of the MTFS pattern, and this could take up to 4 to 6 weeks. Entropy could still bode for a bounce, but certainly no significant recovery in sight any time soon.
In the best case scenario, RUT would climb up to Fib PR1 i.e. 724. The most likely scenario is that negative pressure will dissipate through the passage of time, and RUT would remain within the current range, eventually hitting the strong MM support should the financial sector unravel more bad news.
Saturday, March 29, 2008
Market Outlook NDX for Mar 31st '08
Dominant TF: 60mins then Daily. Weekly chart coming back too.
Swings: DN-UP-DN
Market Direction (Daily): none
Cycles: good fit, but high noise level, so unreliable
Position (60mins): short
Continuation of "price erosion" was the correct qualitative yesterday, and may apply again on Monday.
We shall also watch EURUSD for a possible change in dynamics.
60mins: price erosion, looking for support.
After the recent Fed measures, markets have been lifted, and should stay above 1750 in the foreseeable future.
If we look at possible support levels, 1750 is indeed a strong MMM and moderate Fib support levels. Should there be a volatility spike, NDX could even test Fib PR2 (61.8%). MTFS and Entropy indeed show a steady decline, so we'll keep an eye on those levels, as well as on same levels for our other symbols.
Daily: hesitation for now
On last NDX post, I said that "NDX will probably have to consolidate a stronger base to go higher later on". MTFS indeed gave us the right clue with the classic "failed recovery" pattern. Entropy has now turned positive without being really convincing, so NDX will most likely try and find a firmer support level and in the meantime will remain in the same trading range. Swing should stay UP.
Weekly: caution...
The well anticipated bounce was way too fast to justify Swing turning UP, but we may finally see the MTFS pattern slowly completing over the next few weeks. We will therefore watch for the next support level, probably 1750 again, and be patient until Swing turns UP. Patterns will be clearer on shorter time frames in the meantime.
We will however remain cautious: we are looking for a likely support, and until then we remain bearish overall.
For options traders, April puts placed below this year's lows (1625) will hold, so conservative April condors should still do OK in this market.
Friday, March 28, 2008
Market Snapshot for RUT - Mar 28th 2008
cf. SPY post below for guidance. RUT, SPY and NDX are highly correlated, so the above snapshot is given to adapt Fib and MM levels to this particular symbol.
Market Snapshot for NDX - Mar 28th 2008
cf. SPY post below for guidance. SPY, NDX and RUT are highly correlated, so the above snapshot is given to adapt Fib and MM levels to this particular symbol.
Market Outlook SPY for Mar 28th '08
Dominant TF: Weekly followed by 60mins.
Swings: DN-DN-DN
Cycles: peak indeed and slightly better signal to noise ratio
Market Direction: price erosion
Position: Bears would be flat or short, bulls would be flat, and all others would have a iron condor in place (adjusted for a slightly negative delta though).
My apologies again for yesterday's mishap...
Last post was again correct (see 60mins), and again no recovery in sight...
60mins: price erosion
SPY almost hit the 1st Fib target around current highs, but showed no energy to go higher. We're still in a bearish environment (Swings:DN-DN-DN) so we'll need a good looking MTFS pattern to have a convincing recovery.
We shall now look for support on Fib and MM levels. MTFS lines all show some negative gradient, so SPY could pull back to the MM pivot level or lower. It could however go higher later on.
Daily: no recovery potential just yet
MTFS shows a 2nd attempt of a recovery after lines crossed over. The 1st failed, and this 2nd should too, although higher lows indicate congestion rather than a further fall. SPY may even manage to creep up again later on (recoveries often take 2 or 3 attempts).
For the time being, same trading range in sight, with a likely support around 131.
Weekly: no change
The bounce we saw will probably not materialise into a significant recovery just yet. MTFS is still bearish, and again only Entropy may indicate the fall could be over. We again need some patience to see negative pressure dissipating over time.
Thursday, March 27, 2008
Market Snapshot for EURUSD - Mar 27th 2008
Snapshot of EURUSD to monitor possible change in behaviour in the coming days and weeks.
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