Thursday, 14 April 2011

Asian Morning Thoughts

Morning All,

The S&P 500 attempted to recapture the previous breakdown zone at 1320 on the open and failed in the first 15mins. For the rest of the session the market grinded lower retesting the previous days lows. The short term trend is down and we made another lower high. I believe there will be another swing down to test the 1300/1305 support region before a meaningful low is put in. Bottom line, the key levels are 1320 to the upside and strong support at 1300/1305. Buy breakouts above 1320 and look for basing patterns in the low end of that range.

S&P 500 Cash 15mins: 
The short term trend is down and price failed at the previous breakdown zone. I am looking for a test of the 1300/1305 level.

We saw a strong bounce across the board in Asia yesterday, with Australia being the exception. This is all in line with my thoughts posted here: Indeed, Singapore put in a meaningful low right at the pivot level and closed above its previous gap down; China put in several intraday reversal bars right at the previous breakout zone and rallied strongly into the close; the Nifty surged in a clear trend day; and Taiwan bottomed right at the open gap. This is all indicative of a very strong move coming over the ensuing weeks. Don't be afraid to join this as yesterday was clear evidence of a swing low. I continue to focus on China and the Nifty Index as my strongest plays in the region.

The SPI is indicated at 4903, right at yesterdays previous lows. There is a potential breakdown trade in play to day if this 4900 breaks. Look to get short if this level goes targeting 4860 and then possible 4835. An astute reader here pointed out a flag pattern on the 60mins chart and I think this is valid indeed. Price struggled yesterday at 4935 and this is the clear short term resistance (it is also th2 38.2 retrace from 5000 high to yesterdays low)

SPI 60mins:
Price failed at the moving averages yesterday and made an overlapping ABC pattern up into 4935

SPI 5mins:
The SPI is in a short term range from 4900 to 4935. Look to trade these range and get short on a break of 4895/4900.