cf. NDX post below for guidance
Wednesday, May 21, 2008
Market Outlook NDX for May 21st '08
Dominant TF: Daily & 60mins
Swings: DN-UP-UP
Cycles: unreliable
Position (60mins): short to flat
Market Direction (Daily): congestion
The market retraced a little bit lower than anticipated to close more or less where expected (~142 for SPY). It is clear that the €/$ rate and oil prices are impacting the markets again.
60mins: support may be found lower
The 2000 level should be strong enough to hold, yet NDX could also test 1985. MTFS and Entropy are not the easiest to read at the moment, so we may enter a period of congestion until the situation clears up.
Daily: congestion to moderately up
Despite the obvious slowdown on current levels, MTFS only indicates congestion right now. The retracement potential is limited for the time being. Having said that, once the MTFS pattern is completed, the congestion could turn into moderate retracement to Fib level as EntBin is high and generally points to a turnaround.
Weekly: moderately up, possibly peaking
No change from last post:
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 or 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 somewhat up. We'll just be a little cautious not to be too bullish too soon.
Tuesday, May 20, 2008
Market Outlook SPY for May 20th '08
Dominant TF: 60mins and daily, closely followed by the weekly chart.
Swings: UP-UP-UP (hesitation at 60mins level)
Cycles: still unreliable
Market Direction (daily): upper bias overall but volatile.
Position (60mins): flat (too volatile at this time frame). Some will try and enter long on pullbacks around channel lows.
I warned about volatility and the bumpy road to 150, and this comment seems valid still. SPY hit the strong resistance level to then retrace a little.
60mins: volatile
MTFS is calling for a pause at this time frame, so a retracement to lower 142s is possible. Such retracement looks limited anyhow, and we may just see some congestion in the short to medium term.
Daily: upward bias.
MTFS was losing steam at the time of last post, but buyers came back after expiry day and MTFS looks like lines could finally reach overbought levels. SPY should reach 145/146 i.e. stall level in the medium term, and probably 150 later on, but again the volatility could make it a bumpy road.
Weekly: recovery looking for resistance level
Last post was too conservative on this time frame. Blue bars, increasing Entropy and positive MTFS line gradients should indeed indicate that resistance level will be a little higher. We should be now looking at PR2 (61.8%) level or maybe even 150 (less likely). Over the longer term there is no evidence of a straight path to last year's highs.
Sunday, May 18, 2008
Market Outlook ER2 (RUT) for May 19th '08
Dominant TF: all 3 !
Swings: UP-UP-UP (60mins swing unstable)
Cycles: unreliable
Market Direction: minor upper bias.
Position (60mins): flat, some would stay long, or move to lower time frames.
Options (RUT):
Short Jun790 Calls, Long Jun800 Calls, Long Jun610 Puts, Short Jun620 Puts.
I warned last time about short term volatility and
indeed the 60mins chart has proved to be a little erratic, even if the trading range has been constrained. Options have expired with a profit without adjusting a single ime. While we think June positions are safe, some may want to shift calls up a little.
Note: apologies for the typing mistakes on last ER2 post.
60mins: congestion to upper bias
No major difference from last post: ER2 should remain a little volatile even if May options are now history. We may again have another round or congestion or finally aim higher at 750. Stall level in high 740s has so far stopped ER2 from testing the major 750 resistance level, and while there is little energy in the market right now 734 has proved to be a strong support level.
Portfolio adjustments or economic news may finally make the market test 750.
Daily: congestion to minor upper bias
750 looks so close yet also looks so predictable that there could be significant program selling on or close to that level. There is some energy left in the market, therefore the resistance level is bound to be hit this week. We however do not have
the most bullish situation showing in MTFS so only ER2's behaviour on 750 can tell us how the pattern develops. For now it seems the resistance level will hold.
Weekly: congestion, possible retracement
While the upper bias is now obivous, the market is looking at pausing soon not only to better complete the MTFS pattern but to consolidate to eventually go higher later on. We will therefore keep a close eye on MM/Fib levels particularly the combination of the two in the lower 750s. Like in lower time frames, the MTFS pattern and the Entropy do not point for a return to the bullish trend yet, so again, it is likely that a retracement or consolidation will be necessary.
We'll keep into consideration that this is a crucial phase as the pattern can reverse and on the contrary turn back to bearishness, test of last lows etc. We'll obviously have to first wait for the next pivot point and then the subsequent support level, and this can take up to a couple of months. We'll have plenty of time to come back to this in future posts.
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.
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