Wednesday, 18 May 2011

Turning Point

Morning All,

Unfortunately this will be a very brief post but will update later in they day.

On Monday I talked about a great target box and buy zone for the S&P 500:

I said, "I think we will see more weakness before a meaningful low ensues. An ideal bullish scenario would be a break of 1330 down to 1325 that fails to follow through. Any strong hammers or strength back above 1335 would be a good initial signal to get long, adding above the downward trendline in place. Note there is an open gap at 1320 and a potential A=C projection at 1319/1320". 
Last night there was certainly more weakness that went all the way down to the low end of the target at 1319. The strong reversal off the low I believe is indicative of the beginnings of a bottoming process. This is a GREAT risk/reward area to be getting long. No doubt there are dislocations everywhere but it is important to focus on the setup. 

S&P 500 60mins:
A=C and the open gap was hit last night. Strong recovery off the lows. Look for breaks back above 1330 to get long adding above the downward trendline. These 3 wave type moves down into support are one of my favourite reversal plays. Stops below last nights low. 

S&P 500 Eminis June 60mins:
3 lower peaks with 3 higher highs on the momentum indicator. This is a potential ending diagonal in the making and look for a bullish breakout

ASX200/SPI 60mins:
Yesterday the SPI shrugged off the overnight weakness and held the previous days lows at 4650. I believe we will see more strength today. There are bullish divergences forming and price is holding in at the area of the 61.8 retrace. The bigger picture is a potential ending wedge on the 60mins and thus look for a breakout of this pattern. Short term resistance levels are 4690 and then 4720/4725. 

Shanghai Composite Daily:
This market attempted to breakdown yesterday but staged a positive recovery also. We are building a short term range right at the low end of this triangle pattern. Need follow through NOW to confirm a low. 

Good Luck