Monday, 14 March 2011

End of Day Summary

Evening All,

Today was a very interesting day indeed. We certainly saw more weakness than I was anticipating on the open but ultimately there was no strong follow through. I stressed the importance of respecting the risk/reward for new shorts and I hope this message was heeded.

The SPI gapped down through Fridays lows and opened at 4612. Price failed to stage any real bounce and we soon saw a sharp thrust down to 4561 in the first 45minutes. This was just short of the 4550 level I cited on the Cash Index and right on the 50% retracement off the high. This proved to be the low for the day and we soon reversed with a relatively strong move higher for the rest of the day. Note the engulfing 5min reversal candle off the low that led to the rally. The Cash index closed with a bullish hammer candle right out of strong supports. Lots of great intraday trading opportunities but position traders should still be on the sidelines/covering shorts.

SPI 5min Day Session:

ASX200 Daily:

Where does this leave us? We are clearly still trending down on both the Daily and 60min timeframes but I believe we are now in a short term bottoming process as witnessed by the strong reversal off supports and the closing hammer candle. This is a climax pattern. I must stress that bottom pattens do take time and we do need follow through but the setup is now there. Key SPI supports are 4560/4550 with resistance at 4630 and then 4650/70. We will have more of a game plan after tonight's trading.

Taiwan threatened to break the 8500/8450 support levels I stressed but manage to hold in and also reversed positively into the close. This market is building a clear range and is not trending. Look to get long above the open gap at 8650 and add above 8800. Short if the low end of this range breaks.

Taiwan 60mins:

MSCI Singapore held supports and staged a modest bounce. This market remains in a downtrend and position traders should wait for a break of 3650 to confirm a new swing up and potential change of trend.

The Hang Seng opened lower but reversed all its losses to close just off its highs. It is possible that the "E" leg of the triangle has now been put in. For now, this market is still in a clear consolidation pattern and we must wait confirmation to take the longer term breakout trade.

Hang Seng Daily:

In Sum, despite huge losses suffered by the Nikkei, the rest of the region held in very well. Some markets are more advanced in their consolidation/bottoming patterns than others. We need to see more follow through in the SPI tomorrow before really commiting for a stronger swing higher, and Taiwan is still in a clear range. Reversal tuesday tomorrow will be interesting indeed.

Notes on other markets:
Eurostoxx March: has failed to break Friday's low and has bounced positively. I still believe 2925 (March futures) should be used as a long entry for a strong swing higher. This was all posted on my weekend thoughts here:
Eminis June: Key support is 1295/1293. I still think we may see some intial weakness on the Cash open and we should look for solid reversals off the lows before commiting for a new swing higher. Breaks of 1310 should be seen as bullish.
AUD Spot: has traded into great support levels at 1.0050/1.0060 spot. Momentum made a new high on the 60mins on Friday and thus we should be looking to buy the first pullback. I think here is a great low risk long entry targeting Fridays highs and beyond.