cf. NDX post below for guidance.
Thursday, May 08, 2008
Market Outlook NDX for May 8th '08
Dominant TF: Daily
Swings: DN-UP-DN
Market Direction (Daily): congestion to retracement
Cycles: quite unreliable
Position (60mins): flat to short
NDX needed to hit 2000 to trigger significant selling. We all anticipated that, it is however still always amazing to see. We now have to see whether the market consolidates soon or not. The bias remains up overall.
60mins: looking for support
Despite the sudden profit taking session yesterday, we have no indication of a continuation of the fall. Significance level is low so we'll favour channel lows and Fib/MM levels for possible support (including current level).
NB: Intraday time frames give great charts with a support level at 1938.
Daily: congestion to minor retracement
MTFS points towards a congestion at this high level but a minor retracement is possible without affecting the ongoing recovery overall. Like on the 60mins chart, we will look closely at Fib/MM levels even more so since significance level is high. In case of retracement, we will look for support around 1910 then 1880.
Weekly: Resistance level around 2000
No significant change from last post:
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).
Now we have to see how a retracement accelerates the completion of the MTFS pattern.
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.
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