NDX Daily Finding Support

Today the NDX found some support at the bottom of it's current uptrend channel on the Daily Chart and on the top of the Channel from the Weekly Chart. The two trendlines intersected to provide some strong support today. We'll see what tomorrow brings as we have lots of economic data before market open which could either send us higher, lower of sideways for the day.

Key RUT Levels to Watch this Week

After a 9% (79 point) tumble last week we wonder if the elevator is going to stop or just keep on going down. I spent a lot of time going over my charts this weekend on various time frames to look at other historical down moves and to gauge some possible support levels. Below you'll find some charts and my notes as to how I see things. I am by no means trying to predict anything, just looking at levels that may act as support.

RUT 10 Year / Monthly Chart



Of note on the 10 year Monthly Chart is the support that the 20MA has offered since it popped to the upside of the 20MA in May 2003. Since that time there has only been one time that the Monthly bar has closed on the 20MA and there has never been a month where it closed below. The Channel shown on the chart is sitting right on top of the 20MA so we have both trendline and 20MA support at about the 770 level on the monthly.

Possible Support Levels on the Monthly Chart
Support 1: 770 - Trendline + 20 Day MA (Moving Average)
Support 2: 726 - Fib 23.6%
Support 3: 720 - 30 Day MA (Hasn't even touched the 30MA since it crossed over to upside in May 2003)

RUT 5 Year / Weekly Chart



On the Weekly Chart we have the same 770 trendline support as on the Monthly Chart and we also have 100MA support at 747.

Possible support levels on the Weekly Chart
Support 1: 770 - Trendline Support
Support 2: 747 - 100MA
Support 3: 668 - 200MA

RUT 2 Year / Daily Chart



On the 2 Year Daily Chart we can see that the down move we had last week is very similar in size to some others we've had in the past 2 years. The largest single move down in the last 2 years was 88 points May 06. This down move was followed by a 46 point retracement (dead cat bounce) before falling back down another 73 points in June 06. The Feb 27th 07 down move was only 68 points in total so we've already eclipsed that number.

It is probable that we will get a relief rally this week, but that's only a possibility. We may continue in a very ugly correction that could equal that of the dot com bust where in June 02 the RUT lost 23%. To put everything in context here is a list of some large corrections I noted on the Russell 2000 over the past 10 years

-19% - Aug 98 - 82 points
-20% - Sept 01 - 99 points (Sept 11)
-23% - July 02 - 108 (Dot.com bust)
-11% - May 06 - 88 points
- 9% - July 07 - 79 points... so far

I wouldn't even want to predict how far we may go down this month, but those are the historical numbers so the probabilities are going to be somewhere between a 9% and 23% correction. I would lean on the smaller side, but this market has been very good lately at moving in very unpredictable and over zealous ways so be prepared for anything. Key is preparation!

Possible Support Levels on the Daily Chart
Support 1: 770 - Trendline Support
Support 2: 765 - 38.2% Fib
Support 3: 736 - 50% Fib

RUT Levels to Watch

Today we saw heavy selling on the Russell 2000 and it didn't hold on to the 100MA as we talked about earlier this morning. The next support level to watch will be in the 800 area. The markets are extremely volatile right now with very mixed earnings, subprime concerns and a host of other concerns that the market seems to care about now. (It didn't care about any of these in the last few months when it was in rally mode). In any case, be careful out there as it will likely be a very volatile month ahead.

RUT Daily Chart

RUT Showing More Relative Weakness

After the weakness we saw yesterday and the trendline break, it gapped down this morning and is trying to hold onto the 100MA after bouncing on some horizontal support at 820. Next support levels are at 815 and 810.

RUT Daily Chart (Click Chart for Full Screen View)

RUT Showing Some Weakness

Despite spending most of the day in positive territory, the Russell 2000 finished the day with a weak close that ended up below the trendline we've been watching the last few weeks. The next key level to watch will be the 830 area. If we get a close tomorrow below 830 it would indicate some addition weakness and a failure of the recent uptrend. The overall sentiment is still bullish so lets watch to see if we get some more positive earnings this week and/or we get some more merger news to lift the market.

Reminder that the Fed's Beige Book comes out on Wednesday at 11:00 Pacific Time -- this moved the market up swiftly last time it came out so be aware that it can be a market mover... (no way of telling how the data will be taken until the market reacts to it so just be conscious of it)

RUT Daily Chart Showing Break of Upward Trendline (Click Chart for Full Screen View)

RUT Outlook for August

In July we watched the RUT trend sideways in a pattern that was wildly applauded by those who had on Iron Condor positions. The July settlement price was not that far off of Junes, so some very nice sidways movement. In the bigger picture this could be construed as bullish since we are in an uptrend and the RUT is consolidating sideways. Yesterday we had even estabished a higher low on the daily chart. The aggressive selling today, although ugly, still held the uptrend (see the green dot). The tail on today's candle technically negates yesterday's higher low, but since we're still in an uptrend the bias is still to the upside. Next week we'll be watching the trendline very carefully. A break below might signal some more sideways consolidation before another move up. A close below the 820 area might signal the start of a larger move downward as this would break below June's lows.

Despite today's selling, keep in mind that the market to this point has been very resiliant and continues to rally back after these little pull backs. In the bigger picture this is still a bullish market and with the length of consolidation we've had in the RUT the past few months it's entirely possible that we have a large move to the upside once we break above the 855 level (this happened in the NDX after it's consolidation). As Index Iron Condor traders we must always manage the risks on both sides of our trades regardless of the trend or what we think "should" happen.

RUT 1 Yr / Daily Chart



RUT 5 Yr / Weekly Chart

Note that on the 5 Year / Weekly Chart that we are currently in the middle of the range and consolidating. On a longer term perspective this would construded as bullish, but be concious too that since we're in the middle of the range we can easily drift up or down and still remain in channel in this longer time frame. Note too that the 760/750 strikes are below this channel trendline that has remained intact for the last 4 years. That being said, also remember that a few weeks ago NDX broke through the top of a Weekly Channel that had remained intact for 2 1/2 years (until it was breached 2 weeks ago). These levels of support and resistance are no garantees of anything, but instead give us areas that we should be conscious of as we protect our positions and continue being good risk managers.

NDX Blast Higher Continues

Looking at the 2yr Chart, I just wanted to remind everyone that the NDX does NOT have to come down. As you can see it can be quite comfortable moving straight up for long periods of time as seen from Aug to November of last year.

The trend is your friend

NDX 2yr / Daily Chart

RUT Assending Triangle?

With higher highs and some horizontal resistance at the 855 area we have what looks like an assending triangle forming on the daily chart. This could be construed as bullish with a possible upside breakout if the RUT can break and hold above the 855 level.

RUT Daily Chart

RUT Minding the Channel

Yesterday the RUT fell in the morning, found some trendline support at the bottom of our Channel (green dot) on the Daily Chart and rallied in the afternoon to create a bottoming tail. Trend and Channel are still intact.

RUT Daily Chart

SPX Pullback

Today the SPX pulled back and found some support at the 38.2% Fib and 200MA on the 15m Chart. More earnings to come so we'll watch to see which may the market decides to run.

SPX 10 Day / 15m Chart (Click chart to see full screen view)

Futures Down Prior to Wednesday's Open

Futures were down significantly prior to today's open on disappointing earnings from Intel, Yahoo and others. We'll put up a chart on the sessions first hour once we get rolling here.

DOW 14,000 & Fib Resistance

The DOW hit 14,000 intraday this morning and is in a 261.8% Fibonacci area right now. We'll need to watch and see if it takes a break to consolidate sideways and continue it's path upward or if it decides to pull back. Although overextended it technically still looks very strong.

DOW 15 Minute Chart (click for full screen chart)

SPX Consolidation

In the morning session we continue to see a 3 day consolidation around the 1550 area. Key your eyes out for a breakout to either side. There should be some horizontal support at 1540 should the SPX head down.

SPX Daily Chart

NDX Channel on the Daily

As we finish up Monday's trading session we can see that we made a slight bounce off the top of the channel (blue dotted line) that's been forming on the daily chart. We have already broken out of the channel of the weekly chart (green dotted line) so it's up in the air for direction right now. Should be a big news week later this week so be on the lookout for some more volatility.

NDX 6mo / Daily Chart

SPX Still on the Rise

Monday morning's trading session is still showing strength as we see the SPX on the rise again. No sign of a pull back yet...

SPX 1yr / Daily Chart

RUT Remains Relatively Tame

The Russell 2000 gained 15 points today but still shows some relative weakness when compared to the DOW and Nasdaq. This is great for those using the RUT for Iron Condors. Lets watch carefully to see if the RUT can break and hold above it's current resistance level (about where it is now). It could start to act hyper to try and keep up with it's brothers so keep a keen eye on.

RUT 1yr / Daily

NDX Goes Ballistic - Again!

The Nasdaq 100 made another move up today showing it's continued strength by break out even further above the long term channel we can see on the 3yr Weekly Chart. Note too how it's had this same type of "sustained" growth in prior years as well -- it trends good when it's trending.

NDX 3yr / Weekly Chart
Very possible this one could keep going up for a while based on it's past patterns.

Dow Crashes UP! Next Stop 14137?

Todays incredible move up in the middle of summer and in the midst of a sluggish economy is one of those wonderful surprises that the market can give us. Technically we started to form a higher low yesterday and today we completed that as well as create a higher high. Based on the Fibs from the Feb drop, our next fib level of 161.8% will be in the 14137 range. Now lets see how quickly it can jump up to hit it!

DOW 1yr / Daily Chart
(Notice that yesterdays bounce had multiple support levels of trendline and Moving Average consolidation)

SPX continues Sideways Pattern

The SPX has been in a 50pt channel between 1490 and 1550 for just over 2 months now. The price is trying to hang on to the green upward trendline, and despite the strength in the Tech Sector that's help fuel the Nasdaq, the broad market S&P 500 Index just hasn't seen the same optimism. If we're looking for gauge of the overall markets, this is the best index to look at, and the price action to this point continues to show consolidation in this range. Of note is a possible double top on the Daily Chart which to this point has seemed to fail. The one caveat to it's potential failure is that it was done on a holiday week in the summer with VERY light volume. Friday will likely have very light volume again as we go into the weekend so we'll see what news comes out Friday AM to either ignite the market to new highs or punch it another leg down... the 3 possibility is some boring chop sideways.

Earnings announcements start on Monday with Alcoa (AA) so keep your ears open for any earnings "warnings" as that may start to paint the real sentiment for the summer market direction. Although it doesn't seem plausable, I wouldn't be a bit surprised if everyone had great earnings and the market goes on another tear higher. Nothing surprises me anymore and it shouldn't surprise you either. Remember that the market is very good at disappointing those who try to trade based on logic.

SPX 1 yr / Daily Chart

RUT Holding the Uptrend

The Russell 2000 continues to hold the uptrend, and broke above the short-term downtrend channel that had started about 4 weeks ago. The key wiil be to continue holding above this level. The RUT found support at the top of that line today and finished up strong in the 850 area which has some horizontal resistance.

RUT 1 yr / Daily Chart

We have a nice sideways pattern playing out on the RUT right now --

NDX Strength

With the light volume in trading this holiday week, the techs got a nice boost with strength coming from strong Apple iPhones sales and the announcement that RIMM has been cleared by the Chinese government to sell Blackberries into China. Those items were cited for the gains in AAPL and RIMM today that further ignited the Nasdaq 100.

Looking at the Charts we can see that the NDX has broken above it's channel on the weekly chart.

NDX 5yr / Weekly Chart

Note that this upward channel line has held for over 2 1/2 years



NDX 20 day / 15 min Chart

Notice how we paused awhile today at the 161.8% fib, but then closed above at the end of the day.

SPX Trendline Resistance Revisited

Today's price action on the SPX found resistance again under the upward trendline. We'll see what tomorrow brings.

SPX Monday 20day 15m Chart

RUT at Trendline Resistance Again

The RUT hit it's head on the downward channel trendline again today but is holding well at that level. Tomorrow we'll want to see if it can pop and hold above which if confirmed might turn out to be a nice move to the upside.

RUT 20day / 15m Chart

SPX Lines

Keep an eye on the SPX today as it may try to close above the upward trendline that's been acting as resistance for the past few days. Notice today's bar is close to touching so far, but the rest of the days action will tell the real story.

SPX Daily Chart

RUT at Pivotal Juncture

The Russell will be at a pivotal juncture this week as we'll see if it finds support on it's long term uptrend line or if it finally breaks trend and embarks on it's continued downward channel. Currently we have both an uptrend and short term downtrend channel intact as it's been trading in a tighter and tighter pattern. On Thursday and Friday the RUT hit it's head on the downward channel resistance line (Red Circle) and found support on Friday afternoon at the 50MA of the Daily Chart. For Monday and Tuesday we'll want to watch carefully to see if it can hold above the 826 level to keep the uptrend intact. If not, it is very likely that it will fall to the 815 area where it should find both horizontal, fib and trendline support. The past 6 weeks have formed a wedge-like pattern on the daily chart so keep a close eye on the breakout of this pattern.

RUT 1yr Daily Chart



RUT 30day 60m Chart
Here's a close up of the downtrend channel that the RUT has started to form