cf. SPY post below for guidance
Wednesday, May 07, 2008
Market Outlook SPY for May 7th '08
Dominant TF: weekly and daily charts. MTFS tuned up a bit on 60mins.
Swings: UP-UP-UP
Cycles: totally unreliable
Market Direction (daily): congestion to upper bias
Position (60mins): flat to long (quite volatile at this time frame)
MTFS on the 60mins chart has been tuned up a bit as divergence was really growing making significance level abysmally low.
Last post on SPY was conservative yet about correct. SPY is volatile and (only) retraced to below 140 before picking up a bit. Volatility is here to stay on the 60mins time frame.
60mins: attraction to strong resistance MM level
The Swing indicator is UP but unstable (gradient is too high). MTFS also shows a low significance level (even after a minor tune-up), so we'll remain careful on this time frame. Shorter intraday time frames are easier to read, and show an even clearer upper bias with a resistance level at 142.2.
Daily: congestion potential with same upper bias for now.
The upper bias has been stronger than anticipated, hence delaying the necessary retracement or profit taking. Fed news last week may be the cause for this continued rise. The conditions remain the same though. MTFS is bullish at least until the white line clearly peaks or pattern completion. It seems the target is higher still so one may reach 150 before seeing a serious retracement.
EntBin is high so a pause seems inevitable, and we shall not discard a possible testing of pivot level (137.50) before aiming at 150 again. Like I said on the last post, the road to 150 is probably going to be a little bumpy.
Weekly: aiming higher but retracement is likely at first
We have noticed that the Swing indicator is now UP, and it is not quite clear where the down MTFS pattern will actually complete (with a line crossover near or at oversold level).
It is still likely that a retracement will occur to allow a consolidation and a start of a new pattern. We will therefore remain conservative over the medium term, and will keep a close eye on Fib levels for turning points.
Tuesday, May 06, 2008
Market Outlook ER2 (RUT) for May 6th '08
Dominant TF: weekly chart, then daily. 60mins had to be retuned
Swings: DN-UP-UP (weekly swing still hesitant)
Cycles: average fit, and long cycle detected.
Market Direction: upper bias
Position (60mins): undecisive.
Options (RUT):
Short May780 Calls, Long May790 Calls,
Long May550 Puts, Short May560 Puts
RUT (ER2) has unsurprisingly moved relatively erratically for over a week. It is certainly not a problem for options traders who are cashing in on theta. Directional traders should maybe move to smaller time frames.
We will also follow EURUSD and QM closely.
60mins: directionless
No improvement since last ER2 post, and MTFS is still not giving us the best looking pattern. MTFS points towards some erosion to the low 720s. With significance level dropping, we will favour moving to either shorter intraday frames or stick to the dominant time frames.
Daily: same upper bias, but a retracement or at least some congestion will be necessary.
We are again at range highs (year to date), and MTFS looks overbought with little chance of going higher. A congestion or some moderate retracement is more than likely.
Weekly: congestion, possible retracement
No change since last post:
The worst certainly seems over, and the upper bias is still there, so ER2 has been trying to pass Fib PR1 yet with some difficulty. To be on the safe side though, we will wait for the MTFS pattern to complete shortly (line crossover). Until then we have to consider the remaining downward pressure which will slowly dissipate.
ER2 can also possibly reach the very strong 750 resistance level before retracing/congesting but the most likely scenario for the time being is the same [690-730] trading range. Retracement would be slow and moderate. On the other hand, levels above 750 are quite unlikely over the prediction range (3 to 5 bars).
Monday, May 05, 2008
Market Outlook NDX for May 5th '08
Dominant TF: Daily
Swings: UP-UP-DN
Market Direction (Daily): up overall, but volatile still.
Cycles: unreliable
Position (60mins): long but target in sight
NDX has been overbought for a while, and we kept being surprised by the continued rise, like an irresistible attraction to the 2000 level. I admittedly expected a pause on the way to the resistance level which didn't happen. Now let's have a look at the current situation now that we have reached that level already.
60mins: overbought, but the bias is still UP
NDX is overbought but is attracted artificially by the 2000 level, cancelling all potential retracement attempts. NDX could hit 2000 again, even several times, but a pause is now likely at this level. We will keep an eye on shorter time frames (15 and 30mins) as well as on EURUSD, and until then the bias remains UP.
Daily: up but congestion is likely around 2000
Again, no major change since last post. We now have to wait for the MTFS pattern to complete when lines meet. Entropy is very high so point for some minor retracement or even just some congestion as MTFS lines are quite bullish.
Weekly: Resistance level around 2000
The Swing is still down, in agreement with MTFS which is still only in an upward retracement mode.
This confirms the scenario whereby the 2000 area should remain a strong resistance level (Fib + MM).
A (moderate) retracement would not suprise us before passing the 2000 level later on, as this would allow the MTFS pattern to complete and the Swing indicator to toggle up.
Thursday, May 01, 2008
Market Snapshot for NDX - May 1st 2008
cf. SPY post below for guidance.
NOTE: there will be no Market Snapshot tomorrow Friday 2nd
Market Outlook SPY for May 1st '08
Dominant TF: weekly and daily charts.
Swings: DN-UP-DN
Cycles: unreliable
Market Direction (daily): congestion to upper bias
Position (60mins): flat (too volatile at this time frame)
SPY reacted negatively to the Fed announcement, and this may trigger the profit taking we anticipated lately. We will also keep an eye on 1.5625 on EURUSD.
NOTE: there will be no Market Snapshot tomorrow Friday 2nd
60mins: directionless, erosion is likely
We have the most erratic MTFS behaviour, so we'll stay away from this time frame (sig. level is low anyway). It is likely that SPY will go lower and test 137.50 again.
Daily: congestion with upper bias
Last post was correct but it seems we are now closer to some profit taking. We shall notice the high EntBin (=4) and a peaking white line on MTFS. Since the other lines are about mid way and pointing up still, a retracement should be limited. We will therefore check the 137.50 levels as well as other possible Fib levels ans channel lows.
As said last time, the way to 150 should be a little bumpy...
Weekly: aiming higher but retracement is likely at first
No change from last post:
MTFS lines are certainly pointing higher but the pattern itself is not a recovery pattern. In most cases, this kind of pattern announces a retracement at some point. Now that the PR1 Fib level seems passed, this may happen on the 50% Fib level or higher, and looking at previous support levels, testing 137.50 could set a strong base going forward.
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