Morning Plan

Good Morning All,

A relatively good recovery overnight in the S&P500 but once again on woeful volume of less than 500m on the NYSE. As I said yesterday at Emini 1245, price is trading right in the middle of the range so there is no clear trade. Last nights bounce once again takes us to an interesting sell area. Given the time of year however, I would advise caution and only very small nimble positions.

S&P500 Emini 5mins:
Price has now rallied into the 61.8 and previous breakdown zone. Nimble traders could initiate shorts here with stops above 1260 or above 1265. There is a potential ABC move off the low but I would hold this count with suspicion given the volumes.

S&P500 Daily:

This really is the key chart to bear in mind. Price is "testing" against a number of overhead resistance levels in this zone. This really is a faders dream with the correct stops. Ultimately, we could be look at an ascending triangle here with a breakout either way come the middle of January.

I imagine trading in Australia will be very subdued. Yesterday I said "We are now approaching the low end of the range so it is time to lighten up shorts." Certainly the low of 4018 was not one of my cited levels but the strategy appears to be playing out given we are indicated at 4070. I think yesterday was a perfect example of when reading the tape is of central importance over technicals/levels etc. Indeed, when 4030 dropped, it looked like we were set for a breakdown into 4000. However, genuine size appeared on the bid at 4020 and 4018, by far the biggest number of contracts we had seen on the order book all day. Furthermore, the "breakdown" through the intraday lows occurred at midday, which has a high probability of failure given that volumes dry up at this time of day and there is a lack of conviction. All this aligned for a low and rally in the afternoon session. Reading the tape and understanding the character of the market is so essential in these moments. 


SPI Continuous 60mins:
This was my target zone yesterday and we have seen a good initial bounce. I really don't know if we have seen the swing low yet and I probability doubt it given the day of week and lack of volumes. Ultimately, the strategy remains to cover shorts in the low 4000s and turn more bullish if this market breaks 4150 to the upside and a higher high is made. The range and boundaries are clear.

My range today: 4045 to 4080. Outlier levels 4020 and 4095 


My day trading plan today: We are looking at a small gap up to 4070. Thus, the SPI is now re-testing the previous 4065 breakdown level. This is a great fade/short level straight up with tight risk. Thus I will be looking to SHORT early with stops above 4080. Any sell off should be capped at 4045/4050 today I believe given the lack of volumes and holiday season. I am not expecting any strong trends and will continue to scalp the cited levels appropriately.


SPI 5mins Day Session:
Retesting the previous breakdown zone of 4065/4070 thus got to short first thing. 

Morning Plan

Morning

Well it seems that the big boys are still away and they left the kids on the dealing desk to press the red sell buttons. The S&P500 hit the first resistance zone I talked about yesterday and sold off quite sharply although on woeful woeful volume: http://swingtradersedge.blogspot.com/2011/12/santa-did-his-job.html.

I think it is too early to jump to any strong conclusions. The chart below clearly shows the important short term boundaries for the S&P500. My plan was to fade the Eminis vs the clear resistance levels and this played out overnight leaving us right in the middle of the range. 1220 on the downside is key for the bulls and 1260 has now become the clear resistance level. We closed at 1245 on our lows so I would expect a bit more downside in the short term before any meaningful bounce.

Eminis 15mins:
The target I mentioned yesterday was nailed. We could be looking at a potential ABC move off the low which indicates new lows coming. However, focus on the key support levels of 1220. 

To Australia today. In yesterdays session we saw very bearish action straight from the open. The SPI futures are indicated at 4035 and thus we are looking at 30 point gap down on today's open. We are now approaching the low end of the range so it is time to lighten up shorts. The key levels are 4030 and 4000 as shown below. Given it is thursday and holiday season, I really don't expect a strong short term low to form so be quick and nimble if buying at these key support levels.

SPI March 15mins:
Yesterday we saw a strong bearish reversal right out of 4140s and the previous high. Now we are trading at the low end of the range at 4030.

SPI Continuous 60mins:

4030 and 4000 are the previous lows and the target for this move.

My range today: 3995 to 4050

My day trading plan today: We will open right on the previous lows at 4030 thus I am in no rush to short first thing. However, given yesterdays price action, looking for shorts is the right play at the right level. I will look to fade the 40s aggresively with stops above 4050. If 4030 drops, get short looking for a move down to 4000. This might be a big ask today. Potential scalp longs at 4030 and the low 4000s. I really don't think 4000s break today so this should be a low risk/high reward buy area.

Santa Did His Job

Morning All

Well it looks like the pre-Christmas ramp did its job. In my last post on 15th December I said:
 "For what its worth, I could see the market (S&P500) retest 1200/1205 and holding in the coming days". This certainly played out overseas. Call it what you want, but I see it time and time again at this time of year. End of year window dressing, performance chasing, quant algos exploiting low liquidity seasonal tendencies- the list can go on. For me, very simply, there were 2 main buy zones which were shown here on this blog ahead of time: http://swingtradersedge.blogspot.com/2011_12_14_archive.html.


The first buy setup at 1220 did not work and I was stopped out. Take the stop and move on. The next buy zone at 1200/1195 proved to be the low before a 50 to 60 point move. I continue to stress- it is all about identifying low risk/high reward trades. If you are a swing trader, you need to anticipate these turning points as it is where the money is made. Keep pursuing that low risk idea until the market tells you that you are wrong. 


S&P 500 Emini Continuous 15mins:
This is how the buy setup worked out. You could have traded the 1200s with a tight stop or you could have waited for confirm i.e. bullish reversal out of support and break of the downward trendline. We are now approaching the target for this move so bulls should be looking to get flat/tighten up. 

The ramp job did not play out to the same degree in Asia. Our markets continue to underperform the US and I can't see too much reason for this to change given the character of our trading and the underlying patterns. The Australian futures are capped at 4150/4160 and I would continue to sell against this level. Look for breakouts above.


SPI Continuous 15mins:
Potential base building under 4150 but I am only looking for long trades on a clear break above this zone. 

I thought I would finish with a few Daily charts to put the markets in perspective. I don't see a clear underlying theme but it does look like we are set for more weakness ahead as we come into January. 

ASX200 Daily:

Currently, price is stuck right in the middle of this range. I do think we are likely to see a breakdown given that each bounce is getting weaker and weaker. The market was so well offered at 4350/4400 with several reversal bearish candles. Use breaks of 4000 as confirmation of the next leg lower. 

Shanghai Composite Daily:

This market continues to trade lower. The bounce out of the horizontal support zone in October worked initially but ultimately there was no follow through. Quite simply, focus on this downtrend. There is a potential A=C relationship (or WXY if u want) coming in some way lower yet as well as a potential trend channel. I will only look for big picture buy setups if we can recapture that horizontal line. 

Hang Seng Weekly:

Price is consolidating under the support zone in what looks to be a pennant. This is a continuation pattern and thus I anticipate that the next likely move out of this is to the downside given the downtrend in place.  This is such a good trading pattern to exploit from a risk/reward perspective. Wait for the breakout either way and use the appropriate stop. Price action has been weak of late despite the bounce in overseas markets and this could be a telling lead indicator. 

S&P500

It is difficult to know what to make of this market currently. Certainly price is now "testing" a number of overhead res points and thus setting up for some good short fade trades. However, price has hit that 200ma 4 times and keeps popping up for more. If this was a weak market, we should have left this long behind but we haven't. It is resilient. Thus ultimately, we could be looking at an ascending triangle of some sort with a breakout to the upside further down the line. For now, I am looking at fading those res points. 

It is good to be back. I am really excited about the upcoming year and the opportunities ahead. As ever, I hope to relate my experiences and trades ideas through this blog. 

Austin

Stopped Out and Going Surfing!

Morning All

Well we have had a good run of late in this market, successfully negotiating a number of turns but my luck has finally run out overnight. The SPI successfully held the double bottom area of 4170 all day yesterday but there was no follow through above 4200 to the upside. The Eminis have subsequently broken through my 1220 level and thus negated my first buy zone. Take the stop and move on- it's that easy.

If I am honest, I don't have a clear view here now. I stressed that as long as the S&P500 remained above 1200, we should look for buy setups: http://swingtradersedge.blogspot.com/2011/12/little-present-from-santa.html. We have not broken through this yet but it is not looking promising. I really don't like this time of year for trading or for making any grand calls. You will find that there is a lot of window dressing and a lot of "funny" moves as we approach Christmas time/Year end. Thus, I really don't think we break down but I guess you just got to follow the price action.

For what its worth, I could see the market retest 1200/1205 and holding in the coming days. In Australia, the 61.8 Fib retracement comes in at 4125/4120 and I love trading this Fib number (note that these are DEC future levels; the front month is now MARCH)

Unfortunately, I am now off on holidays for a week surfing up the coast. As I said, I don't like this time of year for trading. I really hope you have been enjoying the new formats of late. In the New Year I really plan to dedicate more time and resources to this blog. I have been sent a number of emails of late asking for trading tips and advice. This is great and I value the interaction. My dream is really to reach out to short term traders and provide first rate analysis and education. I know how tough trading is and I know the journey that is needed. I wholeheartedly agree with Brett Steenbarger that Trading is a performance discipline, and trading performance can be cultivated through the same kind of training activities that generate expertise in such diverse domains as athletics, chess, and the performing arts etc. Expertise is the outcome of a process. It takes time and training. I hope to be a mere guide along that way.

Thanks and good luck next week
Austin

Is This Still A Buy?

Morning All,

Well last night everything was going to plan as I went to bed, with the SPI trading at 4220......and then Ben spoke. The market obviously didn't like what it heard and the S&P took a small tumble closing just off its lows. Commodities all joined in the rout. Quite crazy that this market is acting like a spoilt child, throwing toys out of the pram as we didn't get any beloved QE3 and more free money!

Does this invalidate my recent bullish outlook? On the contrary, I think we may have seen the final subdivisions for a genuine low. Last night volume was not indicative of a new leg lower with only 850m trading on the NYSE. Sure it may seem that all the catalysts have now been and gone, but these are often the exact conditions that lead to a turning point. If the crowd is all leaning bearish, be careful. Lets go to the charts and start with the S&P500.

Emini S&P500 15mins:
Price did rally nicely initially only to be capped at that downward sloping trendline. However, we are still very much in the buy zone/support zone. This is a confluence of the 38.2 retracement, the low end of a potential wedge, and an A=C move off the top.

Emini S&P500 5mins:
This shows the potential wedge pattern in more detail. Some would label this as complete with an E leg now in place. However, for me I see clear symmetry with A=C at 1220. This is such a great area for low risk buy entries with stops around 1215/1210.

Also note that volume has been anaemic of late. Sure we would expect this during Christmas, but equally this is not indicative of a new breakdown lower.

And so to Australia today. Yesterday the plan was to look for the double bottom trade and my 4170 level proved to be a great turning point initially with market bouncing strongly up to 4225. However, as mentioned, we were beaten down in line with US markets.

SPI 5mins:
Support area was perfectly tagged. Breakout of 4205/4210 thus confirming the setup. However there was no follow through and we are now right back down at the previous days lows.

Just as with the Emnis, I still think we should be looking to buy this zone as traders. The chart below shows a clear support zone fro 4150 to 4170. Sure this may not be a clean double bottom but this support zone is still valid. I do have a small concern given our weighting to the resources and gold. Nonetheless, the chart below shows the setup with a potential 5 wave move down to complete us this am.

SPI 15mins:

My range today: 4158 to 4200. Outlier levels 4125 (61.8 retracement) and 4150.

My plan today: I will look for any initial sell off into the Sycomm lows of 4157/4158 to get long with tight stops. This is a short term trade only. If we cant hold these 50s today, I fear that this bullish setup is invalidated, but for now focus on buying support until it drops. I will be looking to get out of longs at 4180s and shorting at 4195/4200 with tight stops. Longer term traders should wait for a solid breakout/60min candle closes above 4205/4210 for the big picture Long trade

Tuesday Double Bottom?

Morning All,

Firstly, I have added an Email sign up function to the site. Glenn (Kooke boy) made the suggestion and I value this input. Thank you. Pls sign up so you can get my posts delivered straight to your email.

Well yesterdays trade idea was spot on but unfortunately the intraday action made it difficult to exploit. Once again, we saw the real move happen in the SYCOMM session, with the SPI breaking down through support in the 40s around 6pm Sydney time. As I stressed, if you are going to Swing trade these markets at the moment, you just have to be at your screens for the first 2 to 3 hrs of European trade.

In Yesterdays post I said: "I am looking to short with a potential move back down into the 40s at a minimum and lower for a gap fill. As per the charts below, the SPI has rallied right back into the previous breakdown zone which represents a great short term sell level with tight stops. Thus, I will be looking to fade early at 4260 with tight stops and will short more aggressively at my outlier levels of 4287/4290".  




I showed this chart/setup yesterday and this is how it played out: 

As you can see, my levels were certainly off yesterday as the market opened at 56 and quickly surged to a high of 78. Thus my initial 60s level was overthrown.I didn't get the chance to short in the 80s and from then on we drifted and chopped for the rest of the session. We also saw a false breakdown late in the day which would have trapped some short term day traders (myself included). I love looking through these examples however. Markets very rarely play out exactly according to plan and thus going through setups and examples is a great way to train ones mind. 




SPI 5min gap
My gap entry to get short was a 5min close below the established low of the day. As you can see, there was no follow through and I was stopped out at the end of day only for price to breakdown later overnight. The key here was being flexible enough to re-enter the short when the next signal was given

SPI 5min ii
You can see the real breakdown came in the after hrs. Now price is right into the support zone. 4188/4190 was Fridays day session lows. 4170 is the Sycomm lows. 

Thus today, we are indicated at 4196 and thus right back into Fridays lows. This sets up for a great double bottom trade, one of my favourite low risk/high reward LONG plays. This is how new trends begin. Furthermore, Tuesdays are my reversal days so if ever we are going to put in a genuine low or turning point, today is the day. I think we may see a bit of weakness to begin with, but will be looking for buy setups into my cited levels below. 


My initial range today: 4170 to 4210. Outlier levels 4150 and 4125.  


My plan today: I will use 4200/4205 as an initial level to get short for scalp trades only. I think we will see initial weakness and thus this is a great level for day trading shorts. If we break above 4210, then I will have to join the long side adn the breakout. I will be looking for long trades at the Double bottom support areas. This is 4188/4190 (fri day session low) and 4170 (sycomm low). I think the 4170 Sycomm level has a better chance of proving to be a genuine low and thus I will be aggressive here. When playing these double bottom trades, remember to be nimble and keep risk tight. You can always keep trying but do not risk too much


Thanks
Austin

Mondayitis

Morning All,

On Friday, I talked about covering shorts into SPI 4200/4220 and S&P500 Emini 1225/1230, and looking for long setups:  http://swingtradersedge.blogspot.com/2011/12/morning-plan_09.html.

This did eventually play out v.well but the real move came after hours in the SYCOMM session once again. If you are a swing trader and trying to capture these moves in Australia, you really do need to watch the first 1 or 2 hours of European trade or go home flat. There was some late selling pressure during Asian hours on Friday with the SPI even breaching the 4200 level and trading as low as 4170. However, we saw a solid bullish recovery off this low and this is indicative of a longer term swing low now in place!

The SPI is indicated at 4250/4260 this morning thus representing a 50 to 60pt gap up. AUD has done little since re-opening post the weekend thus doesn't offer any particular clues.  A much quieter week on the Economic data front in Australia. Eyes will be on the FED meeting come Tuesday.

My Range today: 4220 to 4265. Outlier levels 4287/4290.

My Plan today: My gap strategy is firmly in play today and thus I am looking to short with a potential move back down into the 40s at a minimum and lower for a gap fill. As per the charts below, the SPI has rallied right back into the previous breakdown zone which represents a great short term sell level with tight stops. Thus, I will be looking to fade early at 4260 with tight stops and will short more aggressively at my outlier levels of 4287/4290 but I doubt we will get up that high today. There should be support at 4245/40 and any move into 4220/4230 should be used to cover any initial shorts.

As per above, I do think we have now seen a good swing low in place. I am looking to get long to exploit this at the right level vs stops at 4170. Tuesdays are my trend days and thus I will be looking tomorrow as a more likely day to get long.

SPI Dec 15mins:
A clear ABC move off the high and a failed breakdown through support/low end of the channel. Thus, I think we have a bigger picture swing low in place coupled with a bullish Daily setup. Thus, look for dips in the coming 24hrs to get long vs 4170
SPI 5mins: 
Retest of previous breakdown level should provide some short term res. Thus as a short term trade, I am looking to fade this mornings gap.

Morning Plan

Morning
Since the start of the week, I have been consistently bearish and looking to fade the Australian market: http://swingtradersedge.blogspot.com/2011_12_05_archive.html

The targets for this move were 4260 and then 4220/4200. Last night the SPI futures finally broke the 4260 level and closed at 4216 thus fulfilling the forecast from the start of the week. It is unfortunate that so many of these moves are happening in the SYCOM night session with little intraday activity. It is what it is.

4220 was my potetenial A=C target off the high. 4210/15 also represents the 38.2 fib retracement from the recent high to the November 25th lows. We also have formidable round number support at 4200. Thus all in all, I think we have now traded from one extreme to the other and are coming into decent supports. I will now be looking for buy setups and covering all shorts.

My Range Today: 4205 to 4245

My Plan Today: We are looking at a 50pt gap down this morning into a potential zone of support. Thus, my gap strategy is firmly in play today. I will wait for a morning range to be established and then I will buy a breakout of the morning range (first 10 to 15mins) should it materialise.  Ultimately, I think any shorts will need to be covered at 4205/4210 so the risk/reward does not favour the shorts today I believe. I will be scalping from the long side at 4200 and 4210 should I get the chance. It may be a subdued trading session ahead of the weekend and the European Summit and given the large gap already.

SPI 5mins
A=C target

SPI 15mins
38.2 retrace comes in at 4215/4210. Also low end of potential trend channel

Emini S&P500 15mins:

I showed this pattern several times over the past few days. Sure there were a few false dawns but ultimately this 3 Indians/Ending pattern has played out perfectly with a false breakout last night and follow through to the downside. The key with this trade as ever is understanding risk/reward. Shorting res at 1260/1265 with stops ABOVE 1270 as per my twitter post was a great low risk/high reward trade. As Paul tudor Jones said "I develop an idea on the market and pursue it from a very low risk standpoint until I have repeatedly been proven wrong".  Amen

The targets for this move in the short term comes in around 1225/1230. 

 Thanks

Austin

Delayed Morning Report

Morning All,
Unfortunately this is going out a bit after the open today. I had a meeting which went on.

Yesterday I wrote:  I think I would like to see a test of 4265 once again at a minimum before I can even begin to call a low in place. We also need more "time". Last night the SPI hit a low of 4260 and bounced relatively strongly back up to 4300. 


Thus, a clear range has been established from 4260 to 4320. Usually, if the SPI is going to make a genuine low/double bottom, it will do so during the day session. I have been bearish the last 2 sessions and todays open has not altered this stance although we have to give credit to how well the market has held in thus far.  Perhaps everyone is awaiting news come Friday. 


My range today: 4260 to 4305. Outlier levels 4250 and 4320.


My plan today: Todays open has been weak and price immeadiatly sold off from 4300. I am short with tight stops above 4300, looking for a retest of Sycom lows at 4260/65. If we trade down there, I will look to cover and scalp from the long side. The low 80s may also proved some minor support for scalp longs. The ultimate target for this move could be as low as 4200/4220 but we need the 60s to break first which I don't think they will today. I will not change my bigger picture bearish outlook until 4320/25 is breached to the upside.


Employment data out at 11.30am


SPI 5mins
Tested and held 60s overnight. However, bounce does not look impulsive

Eminis 5 mins:
Last night I tweeted that eminis were a perfect low risk short at 1265. This worked great and the move was right into the 40s which was the target zone. However, that bounce was certainly strong off the low. Clearly we are building a consolidation pattern here. Looks like it wants to breakout in time...but not yet

Morning Plan

Morning All,

Yesterday's action in the SPI went right on plan:http://swingtradersedge.blogspot.com/2011/12/reversal-tuesdays.html. I talked about the tiring trend, the double top in place, and reversal tuesdays, and this all led to a great trading day for the shorts with a move down to my target of 4265/4270.

I wrote: "we saw strong support at 4295/4300 and this should very much be the case again today. Look to cover there and add/re initiate shorts on a break of this zone with a potential move down to 4265/4270"


The SPI is indicated at 4300 this morning thus representing a gap up of some 30points. I do not think that this sell off from 4350 is done just yet. Note that we had an interest rate cut and yet price only rallied for 1minute before resuming its downtrend. This is indicative of weak underlying price action for now. I think I would like to see a test of 4265 once again at a minimum before I can even begin to call a low in place. We also need more "time".  


My range today: 4265 to 4325


Outlier levels: 4250 and 4345


My Plan today: Once again, I will be looking to short early. The best areas to get short today will be on the open with tight stops (limit 4300) and at 4320/4322 which was yesterdays highs. Any move above 4325 opens up a potential move to 4350 so be on watch for this. Remember day trading is all about being flexible. On the downside, 4260/65 should offer good support. My ultimate target for this move is as low as 4200/4220 but I don't think we will be seeing that today. 


SPI 5mins
Target hit yesterday i.e. right into the previous breakout zone. If we sell early today at 4300, I think the bigger picture target is 4220/4200. 

S&P500 Eminis

Refusing to crack for now. Obviously 1260 has acted as good resistance. Bulls should look for breakouts above that level, bears should use closes below that upward trendline to short. I think this is a good risk/reward short still.

Reversal Tuesdays

Morning,

My bigger picture thoughts remain here: http://swingtradersedge.blogspot.com/2011/12/little-present-from-santa.html.

In the short term, this uptrend continues to wane and I have growing conviction that we are set for a decent pullback today. Headlines that S&P have put 15 countries on credit watch should certainly act as a short term catalyst although AUD has taken this announcement very well. However, as ever we let the underlying price and the technical picture be our guide.

Yesterday I wrote "Thus all in all, I am looking for potential fade trades (going short) in the next 24/48hrs. This is fighting the short term trend and is a short term trade only. I usually look for reversals on Tuesdays so today's bearish outlook may be premature.  However, the risk/reward and technical outlook favours this setup.....The latter level at 4350 offers a great low risk fade level."


Last night the SPI rallied right up to the ideal 4350 short level, reaching a high of 4360, before falling 30pts to close at 4332. The chart below shows the perfect setup last night. As you can see, Price tested the double top area and sold off, potentially completing a 5 wave advance out of the recent triangle. Couple this with the bearish divergences I am seeing, the waning breadth, and a potential 3 Indians/Ending Wedge in the Eminis, and I have to remain a seller. I have often found that Tuesdays are a great day of the week for reversals and trending moves (don't ask, it is just experience).  


My range today: 4280 to 4340 (wide I know)


My plan today: The SPI is indicated at 4332. I would be a seller early in the mid to high 30s. Stops should be placed above 4345 or 4350 depending on your timeframe. Yesterday we saw strong support at 4295/4300 and this should very much be the case again today. Look to cover there and add/re initiate shorts on a break of this zone with a potential move down to 4265/4270. The SYCOM highs are at 4360 and ultimately any move above there invalidates my bearish interpretation leaving the potential for a move to 4400 in coming days. 


The RBA interest decision at 2.30pm will be a major catalyst. Day traders should be flat into this. The market is pricing in a 63% chance of a cut currently. I think they will cut for what its worth.


SPI Dec 5mins:

Emini Dec 15mins:
A 3 Peaks pattern and Ending Diagonal pattern. Looking for a breakdown to 1220. 

Thanks
Austin

SPI/ASX200 Morning Thoughts

Morning All,

Last night I put up my thoughts on where this current market stands: http://swingtradersedge.blogspot.com/2011/12/little-present-from-santa.html. I encourage you to pls read.

Going forth, I will write a morning Trading plan and outlook for the Australian market pre-open. This is more of a short term perspective for shorter term traders. This will come alongside my usual posts and updates. I value any feedback as ever.


This mornings open has a positive tone vs Fridays close. AUD is up some 60pips from the open (+0.5%) and EUR is up 35pips. The SPI is indicated in the region of 4300/4310.

The current rally in the ASX200 off the 3975 low is slowly running out of steam and tiring. You can see the bearish divergences on the 15minute chart below despite price making new highs. This is not indicative of a strong breakout. In the bigger picture, we are also now approaching the top end of the recent range namely 4300 to 4400. Friday nights trading left a bearish reversal candle with a high forming at 4350. Thus all in all, I am looking for potential fade trades (going short) in the next 24/48hrs. This is fighting the short term trend and is a short term trade only. I usually look for reversals on Tuesdays so today's bearish outlook may be premature.  However, the risk/reward and technical outlook favours this setup.

My range today: 4290 to 4325. Outlier levels are 4265 and 4350.

My plan today: The open will be very important today with 4300 a key area. I will be looking to short should the market fail to hold above 4300 early and will use a break of 4290 as my trigger to short. Breaks above 4300 will open up moves to 4325 and potentially even as high as 4350. The latter level at 4350 offers a great low risk fade level. There is a lack of data today so I am not expecting big moves today.

SPI Futures December 15mins

SPI Futures Dec 30mins
Coming into top end of range. 4350/60 and 4400 were the previous highs. I expect the market to struggle up here if it hasnt already found a high.

Big Week for Australian Data- Interest rate decision on Tuesday, GDP on Wednesday, and Employement data on Thursday.


Thanks
Austin

A Little Present From Santa

A lot has happened since my last post. It is amazing that during just 1 1/2 weeks away from the screens, the picture of the market has altered so dramatically. I guess that is the nature of the current volatility.

I could go into depth about some obvious setups in the week prior but that will do us no good. We deal with the present. I have always stressed that being flexible is key in successful trading. I feel this is very much one of those times to respect the underlying bullish price action. My past posts of late have all focused on the bearish trend, the markets failure at the 200 day moving average, and the bearish parallel with 07. As I scan across charts, it appears very clear to me that we have now decoupled from this scenario. Is this just a bear market rally? Quite possibly but I believe this will continue to move higher in time and price before any meaningful pullback or trend lower. Look for a continued move higher at least into the first trading week of January.

In the short term, it looks like Friday's Jobs reports led to a high. Use this pullback and retracements levels to get Long into this new trend higher over the coming days. If 1200 is breached to the downside, we know that this indeed is a bear market rally and one giant headfake for bulls.

Here is a rundown of markets as I see them:

AUSTRALIA Daily:
The Chart is a bit of a mess right now. However, price closed higher everyday this week! This is indicative of a KICK OFF new trend higher. We are headed for the 200 day moving average at a minimum. In the short term, Friday looked like a short term blow off top. Use the pullbacks and dips to get long.

We have a 3 wave rally up and a 3 wave rally down, thus my natural inclination is to think that this market is headed higher in a 5 wave move to complete a flat. I was shown a very interesting parallel by a colleague Kurt Dalton a while back, and it appears this is playing out with precision with the 2010 advance. The target is right up to 4600/4700 which is an open gap and the 61.8 Fibonacci retracement and I expect this to be hit come mid January.

ASX200 Current:

2010 Parallel:
Note the 3 wave ABC moves followed by a Kick off candle and strong trend higher into the open gap target.

DAX
A failed Head and Shoulders patterns. FAILED PATTERNS ARE THE BEST and I have consistently stressed this in the past. We had a confirmed break of the neckline which set off stops and short trades. However, price has now recaptured this level with genuine strength. Looks like a classic bear trap. Join this move higher in coming days with ultimate targets at 6500/6600.

S&P500
That one closing candle says a lot. Jack Schwager calls these candles "wide ranging days" which in themselves are a trading signal to get long, with stops below the low of the candle i.e. 1200. Wednesdays strong upside day was also on volume of 1.5bln which makes it one of the best I have seen in months. I think a natural target for this move higher is back up to 1300/1315. This is the FIRST time we have decoupled from the parallel. If this was a genuine trend lower/breakdown, price would not have rallied this high so quickly. 1200 has become my marker and line in the sand- bulls are in charge as long as we hold above there and I am looking for pullbacks from Fridays high to get long.

To be clear, I am not saying we are going to new highs. I still believe we have a Market high in place and a bigger picture bear trend in play. However, the market may just need more time to consolidate and rally before a genuine move lower can begin. I want to go with that strong candle and not fight it for now.

These are all Daily charts and bigger picture scenarios. Going forth I will also write a Daily short term trading post pre-open for the SPI/ASX200. I realise a lot of my readers are looking for more short term actionable ideas in our local market and I now have more time to deliver this material.

Thanks
Austin

Back From Break

Morning All

I apologise for the lack of updates but I took sometime off at the end of last week. The Blog has been having a great run of late and it is always good to step away for some fresh perspective and re-charge the batteries.

I will have a full run down of analysis and where I think we are at later in the day.

Thanks for the continued emails and comments. Nice to know that people are out there craving for the analysis :)

Austin

Monday Musings

I like to ramble on a Monday morning. Rather than a long descriptive narrative, I thought I would jot down some of my thoughts as we start the week.

-This blog has been consistently bearish since the S&P500 and DOW hit their respective 200day moving averages. This trade has worked v.well thus far and I don't see any reason to change this stance from a bigger picture perspective. See:
http://swingtradersedge.blogspot.com/2011/10/short-term-high-is-in.html AND
http://swingtradersedge.blogspot.com/2011/11/i-am-bearish.html

-However, in the v.short term I see markets holding in and a potential long trade setting up. Volume has not picked up despite the breakdown, potential bullish divergences are forming and we are coming into a great zone of support in a few markets. Gap downs on Monday mornings often prove to be a good buying opportunity for the nimble.

-The key levels to watch are 1200 to 1210 S&P500 (Eminis 1205 last). Markets had a consolidation day on Friday and I see this move lower on Monday through consolidation as a potential final move lower. This area marks the 38.2 retrace, a potential A=C move, and previous breakout area.

(Update The Eminis are trading 1195 last. This is probably too low. Only a buy if price recaptures 1205/1210 when the Yankees get in. If not, keep focusing on that bigger picture bearish scenario.)

-The target for any long trade should be no more than 1225/1230. This market is only bullish if we can recapture 1250+

-The bigger picture is bearish. We have topping patterns across many markets in place; we have 5 wave impulsive moves off the top; and we have a confirmed DOW Theory Primary trend change to bearish. The bull market trend from the March 09 lows to the May 2011 highs lasted roughly 26 months. The sell off to the October lows was only 5 months and thus not even 20% of the time of the preceding bull market. We need a lot more time to consolidate and work off the previous bull trend excesses. I anticipate this bear phase to last at least 12 months.

-Any failure to bounce meaningfully out of here is bearish and confirms the above. The market failed from this exact zone in 2008. See below. It may not look impulsive of late but if this zone eventually goes, dont hang around.

-The DAX and EUROSTOXX have not made new lows of late. One could argue this is forming a bullish base pattern i.e cup and handle. If we see an upside breakout of this wedge/handle pattern, this could really change my big picture bearish stance. Counter this though with the Nasdaq which has triggered my Head and Shoulders top

-The ASX200 is trading at the low end of its range. The levels I am interested on the long side are 4150/55. Tuesdays are my reversal days and I will be looking for this tomorrow.

S&P500 Support Zone:


S&P500 Support Zone in 2008

S&P500 When support goes......

Some More Bearish Stuff

Morning,

I just wanted to continue on the recent theme I have been drumming home here- I continue to see underlying weakness across markets. CDS prices in Europe continue to make new wides. France, Spain and Italy all made new all time highs last night. Yields on sovereign debt continue to blow out. This despite new heads of state being installed and a Trillion EUR pledged bailout. I don't know what positive catalysts there are still to come but clearly the markets are not paying attention. The US "Super" Committee is also due to release plans to slash $1.2trillion in debt and expect increasing nervousness ahead of this and mumblings of more downgrades if they cant get their act together. I don't have too much faith in them. Most importantly, the technicals are not healthy here and abroad.

France CDS Daily
Breakout to new highs. 2nd biggest economy in the region. All looks healthy here............

I showed a number of bearish patterns in overseas markets in my last few posts: http://swingtradersedge.blogspot.com/2011/11/monday-musings.html
http://swingtradersedge.blogspot.com/2011/11/i-am-bearish-take-2.html


Monday I talked about selling the Emini S&P500 at 1265/1270 looking for mid 40s. This worked out well. That market is obviously in some kind of triangle pattern and volume has continued to dwindle throughout the pattern. We await the breakout either way but I just don't think it will be an upside breakout. The DAX is also flirting with that neckline.

However, I wanted to focus on this post on some confirming evidence here in Asia.

BHP Daily:
The recent stalling action is all indicative of a Wave 4 type pattern. I have labelled a very valid count here. Note the strong bearish reversal candle at $40 and the minor 4 of lesser degree. The bigger picture trend is down and the recent short term rally has run well out of steam. A break of that trendline should initiate a move down into the previous lows and beyond.

RIO Daily:
A Similar count. Note the continued failure to break above $70. This stock is clearly offered. Looking for a breakdown in coming days.

CBA Daily:
Another big component of the Index. The Banks have been major outperformers vs the miners. Nonetheless, CBA tagged the 61.8 retrace and the 200ma and reversed. Up here, it is a low risk short for a move back to $46. I could see Miners making a new low whereas banks make a higher low in time.

ASX200 Daily:
The best risk reward trade here remains selling/shorting up here with stops above 4400. We have a perfect A=C move off the low. We have price reversing off previous highs and at the top end of the channel. We also have a potential short term head and shoulders pattern forming. Any move below 4200 in coming days would trigger this.

AUDUSD 5 days:
The barometer for risk. A market that breaks out from a base pattern and retraces all of its gains and more is not healthy. As per my last post, we have a bigger picture Head and Shoulders pattern in play.

So all in all I remain nervous. The patterns, the fundamentals and the tape are all indicative of a tiring market rally. Perhaps we do breakout to the upside in the S&P500 and I will be forced to join for a trade only. However, I view a BREAKDOWN as more likely.

Thanks
Austin

P.S
Havent shown it for a while. That 200 day capped the rally in 08. Done the same again this time. Hold onto your seatbelts

P.P.S

(UPDATE)

ASX200 Intraday

Opens +0.4%, Closes -1.5% on lows. Nuff said



Monday Musings

Morning All,
A rather lacklustre start to the week here in Asia. We gapped up 1.5% the open on thin volume in Australia and we have slowly grinded lower throughout the day (just closed FLAT!). I thought I would keep it rather simple this morning and run through a number of things on my mind.

ASX200 Today:

Thoughts
-Fridays rally in the S&P500 was on woeful volumes of 790m only due to Remembrance day. This is the lowest I have seen in months and not indicative of a new impulse move higher.

-The pattern in the S&P500 looks like a clear triangle. A break above 1275 should trigger a "breakout" but I would be very hesitant to join this move given the patterns across other markets and the continued failure at the 200day ma. IN FACT I AM SELLER AT 1265/70 WITH TIGHT STOPS looking for a move back down to the 40s

-The DAX, NASDAQ and AUD, EUR all show very clear Head and Shoulders patterns. These are not my favourite patterns but no doubt they are as clear as day to see. Does that make them invalid? Context is the most important thing in pattern recogniton and note that these patterns are forming after a sustained rally off the October lows that has alleviated a lot of the bearishness. These are the best conditions for putting on shorts.

-There was a potential false break on Friday that got may have got some bears covering. The volume in futures and equities does not validate this however. The market has now rallied sufficiently into great levels to put shorts on. The real trigger comes on close below those supports. When support drops, you got to join it.

-If I had told you 2 months ago that the market would be 12/13% higher, what would you do? I think you would have seen this opportunity as a gift from the gods to get out/get short. Now has anything really changed?

-My major concern for the bearish scenario is the concept of TIME. I have reiterated this a few times. The sell off from the high to low was 5 months. We should expect the rally to be at least 1/2 the time of this i.e. 2 months+. We are closer but not there yet ideally. Furthermore, end of November/December is often seasonally a very strong time of year given end of year dressing This is when all funds are bench marked and trust me, it does have an impact on stocks. That doesn't get investigated though.

NASDAQ 100 60mins:
Looks like a topping pattern to me. Needs confirmation.

SPX 500 60mins:
The market held right onto the trendline I showed here last week. Could be a triangle. Bears need this to drop and soon.

DAX 60mins:
Looks like a H+S to me as long as price doesnt break 6200 on the upside. I would short into this with stops above 6200. Add if we break Fridays lows.

AUDUSD
Another interesting topping pattern playing out potentially with a right shoulder forming. Price should not break above 1.04

EURUSD
False breakdown on Friday that will have bears frustrated. If this rally was to run out of steam and price retraces to Fridays lows, then the pattern really is in play.


Potential 5 down and rally into previous 4th/resistnace?