Tuesday, 24 May 2011

S&P 500 Emini

Seeing a small recovery here in Asia today and the Eminis are holding the previous low of the 18th May at 1316. This pattern here does not look like a bearish breakdown currently. Bear this pattern in mind

Emini 60mins:
This looks like a corrective pattern to me off the May highs and not the beginning of a serious impulsive breakdown. 1315 appears to be a key pivot and looking for a strong recovery off here to confirm.

Bull Trap?

Morning All,

The barrage of weekend headlines certainly appears to have dented this bottoming process and puts a number of scenarios in jeopardy. I expressed this concern in my "Hmmmm" post yesterday morning. As I scan across various markets, some appear to be holding on by a thread whilst others clearly offer great short setups. I am always dubious of making any strong conclusions on a Monday as these trading days are always exaggerated by weekend news flow and the like. We will see  today if this is a genuine breakdown or a stepping process lower.

I thought I would keep this update simple by showing the good, the bad and the ugly.

The Good (well not that good)

S&P 500 Daily:
This market has traded right into the Daily trendline and low end of support. I am sure there are many out there who will be looking at this as a buying opportunity. If we see a bullish closing candle out of here, it would setup a "retracement" trade for many dip buyers.

S&P 500 60mins:
The market never managed to break above the downward trendline I talked about. My initial call at 1325/1320 was a good one but there was no follow through above that trendline. Yesterdays breadth was bearish with a 90% down day registered, but note volume was very low and there was no real intraday movement other than during the open. This could still be a corrective move lower with an ABC down complete, followed by an X up with the final waves unfolding here. That is hugely speculative but I have also seen the usual suspects now calling this a series of 1s and 2s down- my favourite fadeable Elliott count setup.

Eurostoxx 60mins:
The current market concerns are all about Europe and the EUR. However, the Eurostoxx doesn't appear to be breaking down impulsively. In fact, this could be seen as a wedge type pattern. Still early days no doubt but if the market can regain 2800 and the open gap with strength, I think this is a good long setup.

The Bad

ASX200 Cash 60mins
No follow through from the ending wedge pattern on the 60mins setting up a bull trap. However, are we looking at the final 5th wave down? I do not know but the market tried to bounce out of 4650 and failed spectacularly. Day trading this market has been great, swing trading a nightmare.

AUDUSD 60mins:
Holding...just. The final stages of an "e" leg or about to breakdown? I don't have much conviction unless that downward sloping trendline breaks to the upside.

The Ugly:

Shanghai Composite Daily:
That is a strong down day breaking through good support and the recent base building. I have showed this chart countless times and this was my do or die area- well looks like it died. I would only consider this on the long side if yesterdays highs get taken out. I talked about consolidation patterns a week back- this consolidation pattern has ended

MSCI Singapore Daily:
Attempted breakout and failure. Strong down candle yesterday, looking for lower prices

Breaks of 1.40 open up lower prices to 1.35 possibly. This is my biggest concern for the market

In sum, there are dislocations everywhere and unless the market can stage a herculean rebound today, I think we may be set for a tough time. At first glance, it seems that the market has been caught long trying to pick a low. Any more weakness will open up some genuine selling. Stick to the clearest setups and the plan- don't let the emotions get to you in these volatile markets especially in no man's land.