cf. NDX post below for guidance
Friday, May 16, 2008
Market Outlook NDX for May 16th '08
Dominant TF: Daily
Swings: UP-UP-UP
Cycles: unreliable
Position (60mins): long
Market Direction (Daily): up
The market shot up through the 2000 mark. It is a bit of a surprise as we expected more of a resistance at this level. 2000 has even been tested for support, so it can indeed go higher now. Having said that, there are adjustments triggered by derivatives expiry.
60mins: up
MTFS is bullish yet Entropy is not so strong so we may have a quieter end of the week. We do notice however that the trading range seems to have shifted upward, so we can assume (at this time frame) that 2000 is now a support level.
Daily: up
Bars are blue, MM resistance level moved up, so it seems that 2000 will soon be history. There is feeling the market can indeed go higher now with MTFS on a steady bullish pattern. We'll just follow MTFS lines until they join in oversold territory. Lines are only moderately bullish so there is very little chance we see a runaway bull trend back to former highs. The market should pause at a MM/Fib level we shall determine over the next few days.
Weekly: moderately up
This is not our dominant time frame, but we'll still read that the MTFS pattern points towards a peak probably at a MM/Fib level. We could also say that the Swing gradient is too steep (twice the natural angle of repose) so there is volatility affecting significance level at this level. A pause of retracement would therefore be healthy going forward.
What we've seen lately can maybe only a test of MM (2000) and Fib (2011) levels, so we may see a slowdown going forward. For the time being the bias is however still up. We'll just be a little cautious not to be too bullish too soon.
Thursday, May 15, 2008
Market Snapshot for NDX - May 15th 2008
We'll keep a close look at the 2000 resistance level on NDX as it could impact the overall market. Otherwice cf. SPY post below for details.
Market Outlook SPY for May 15th '08
Dominant TF: 60mins, but also weekly and daily charts.
Swings: UP-DN-UP
Cycles: still unreliable
Market Direction (daily): congestion/retracement but upper bias still overall
Position (60mins): flat (too quite volatile at this time frame)
On last post, i again warned about volatility and poor visibility. The road to 150 is certainly going to be bumpy, so we'll stick to longer time frames or cautiously stay flat for now.
60mins: volatile
MTFS has turned around but SPY is very hesitant around current highs. On account of options and futures expiry, we'll remain cautious about short term positions. We should not have any major retracement though.
Daily: volatile, with minor upward bias.
MTFS is almost out of steam, so volatility could kick in. There is a remaining upward bias, but at the same time a minor retracement cannot be discarded. We shall remain cautious even if fluctuations should remain constrained to a fairly narrow trading range. Over the medium term, we're still looking at the 150 target. It is quite possible that intermarket resistances are playing a role at the moment (besides witching day). For instance, we'll keep an eye on NDX's behaviour around 2000.
Weekly: recovery pausing 'naturally'
No change from last post:
Despite the Swing indicator now being Up, we still have a MTFS pattern waiting to complete, and the Swing gradient a little too steep anyway. If we now also add to the picture that entropy is just about balanced, it is clear that SPY will be now looking to consolidate. That's why we'll keep a close eye at possible support levels on the daily chart.
To avoid reading too much in the chart right now, we'll also take into account that consolidations sometimes fail... In such case the Fib (expansion) pattern would start south from last pivot point just above 142. We should obviously know more about it over the next few weeks.
Wednesday, May 14, 2008
Market Snapshot for SPY - May 14th 2008
cf. ER2 post below for guidance.
NOTE: there might be no snapshot tomorrow May 15th
Market Snapshot for NDX - May 14th 2008
cf. ER2 post below for guidance.
NOTE: there might be no snapshot tomorrow May 15th.
Market Outlook ER2 (RUT) for May 14th '08
Dominant TF: all 3 !
Swings: UP-UP-UP (weekly swing still hesitant)
Cycles: unreliable
Market Direction: minor upper bias.
Position (60mins): profit-taking, some would stay long.
Options (RUT):
Short May780 Calls, Long May790 Calls, Long May550 Puts, Short May560 Puts.
Short Jun790 Calls, Long Jun800 Calls, Long Jun610 Puts, Short Jun620 Puts.
We saw yesterday that 2000 is still quite strong, yet we know it should break out soon.
Now, on ER2, I was right on May 8th to predict that 711 would hold, but the recovery to the 7530s level was a little surprising at this level. This is why I recommended to switch to lower time frames to better follow the evolution of market dynamics.
NOTE: I cannot assure there will be market snapshots tomorrow.
60mins: congestion to upper bias
ER2 should break the 60mins resistance level to allow it to reach the psychological 750 level. MTFS looks a little tired and Entropy is also weakening, so another round of congestion could happen.
At the same time, there could be increased volatility close to expiration day.
Daily: congestion to minor upper bias
We can all notice that 750 turned to strong resistance and that ER2 is now sitting at stall level. MTFS is certainly confirming the current hesitation. We will still give the current upper bias a chance, but it is quite unlikely that we reach and pass 750 over the next few days. Again volatility could cause the 750 resistance level to turn into a temporary price magnet, but congestion around current levels looks like the most plausible scenario.
Weekly: congestion, possible retracement
Upper bias still confirmed, and congestion may happen a little higher than previously anticipated. We do not have a high energy environment so prices can be pushed much higher without some consolidation. Having said that, ER2 could reach 750 sooner than we first thought.
Again, we'll wait for the completion of the MTFS pattern to gauge whether ER2 is capable to return to a bullish trend, and reach 2007 highs again. We have to be a little more patient...
Tuesday, May 13, 2008
Market Outlook ER2 (RUT) for May 13th '08
cf. NDX post below for guidance.
Current options positions:
Short May780 Calls, Long May790 Calls, Long May550 Puts, Short May560 Puts.
Short Jun790 Calls, Long Jun800 Calls, Long Jun610 Puts, Short Jun620 Puts.
Market Outlook NDX for May 13th '08
Dominant TF: Daily
Swings: UP-UP-UP
Market Direction (Daily): congestion/peak
Cycles: quite unreliable
Position (60mins): upper bias but quite volatile (check lower time frames)
I estimated yesterday that bearishness was temporary and support would be found soon ("from current lows to possibly 137.50"). While i was about right that previous day's lows would hold, I admittedly was surprised by such a good looking bounce (natural attraction to key levels).
Now, back to NDX which found support in the high 1940s, which incidently were stall level on lower intraday time frames (way more significant than the 60mins time frame). Yet, despite the high volatility environment has remained positive over the last few days. We'll however remain very cautious at this key level.
60mins: close to the 2000 mark again.
Significance level is not great and Entropy may peak again around the 2000 resistance level. We'll take cues from lower time frames which do look bullish, so penetrating (at least temporarily) the resistance level is possible.
Daily: likely congestion at test level
Again, MTFS points towards a congestion or minor upper bias at this high level. If resistance holds, a minor retracement is also possible without affecting the overall up trend.
Weekly: Caution - Resistance level around 2000
The Swing is UP again as we approach the key 2000 level (Fib + MM). It should technically hover on that level or a little higher (Fib level is around 2010), as it is probably too early to digest the financial crisis we've experienced.
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