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.