Last night saw a positive session in US markets with a strong gap up and the S&P testing the key 1300 level. I have been focusing on bullish base patterns and these have played out well thus far: http://swingtradersedge.blogspot.com/2011/03/s-bullish-patterns-developing.html. I now feel is the time to urge some short term caution for a few reasons:
i) We have had 3 consecutive gap ups with little intraday follow through. This is not indicative of a strong underlying trend
ii) Volume was less than 1bln on the NYSE. Again this is not indicative of a new kick off move
iii) Price is coming into key overhead resistance from 1305 to 1310.
iv) High beta indices such as the Nasdaq 100 are not following through
I do believe the bigger picture is bullish but here is the chance to lock in some of the recent gains. I stressed last week that successful traders need to be able to buy near the emotional extreme of a decline- this has played out well and now is the time to be cautious I feel.
S&P 500 5mins:
Nasdaq 100 5mins
The SPI broke out of a clear consolidation pattern yesterday afternoon which I posted. I thought we would get more weakness down to 4600 but this never materialised. We are indicated to open at 4694 and this is right into a big resistance zone. Similar with US markets, I feel short term caution is now warranted here. These resistance levels are:
4697/4713- an open gap
4720- 50% fib retrace
SPI 5mins:
ASX 60mins:
The bigger picture is bullish and fade trades should only be considered I believe for the most nimble of traders.
AUD is coming into some strong overhead resistance. There was no signal from yesterdays short setup late in the afternoon. I don't have a trade here and am still hoping for a pullback into the 60min moving averages to get long
AUDUSD 60mins:
In sum, I am turning cautious here. The intial move is coming into some strong resistance in the US and in Australia, and I am happy to get flat here and wait. I would be very careful getting short as there is no signal. I will post more charts of Asian indicies shortly.
