Friday, 1 July 2011

Targets For The Rally

Morning All

What a week. I wake up this morning to see the S&P 500 another 1% higher right into my 1320/1330 target zone and fulfilling my projection that I called for on the 22nd June:

I am sure there are many bears out there who are confounded. However,  anyone who has been reading this blog consistently would have nailed this move. This is not to gloat as no one likes those services. However, I genuinely believe that you will find very few blogs offering the depth and accuracy of analysis provided here. My intention here is to try and get readers to look back over recent posts and understand not just the setups, but the thinking patterns required to be a success in this business. I guess there is no better avenue for marketing then putting your analysis out there and getting it right. This also means that I am probably letting my emotions get way ahead of me so I am probably good for a fade :)

Here are some recent posts of interest:
22nd June:
24th June:
27th June:

So where to from here? As a swing trader, I take profits in the direction of the price move or just as price reverses via a trailing stop. Swing trading depends NOT on riding out the reactions or giving up profits already won like Trend following. Thus, right here I wold be tightening up risk considerably and letting the market take me out. If you caught this move successfully you should now be on short term look out to lock it in.

S&P 500 Daily:
My target zone for the S&P 500 was from 1320 to 1330 and this is illustrated below. We have the 61.8 Fibonacci retracement coming in this zone and I have always found this a key reversal point. Note we also have a strong confluence of resistance at 1340 which is the 76.4 retrace and overhead horizontal resistance. Obviously I have no idea where this rally will halt thus letting the market take you out or trailing a stop is key. I would wait for a strong bearish reversal as confirmation before looking to short

S&P 500 2007 Top:
I have been following an interesting parallel with the 2007 topping pattern and this continues to play out to a tee: Note that in 2007 we reversed right out of the 61.8 retrace with a very strong bearish candle reversal. Look for something similar if this scenario and parallel is to continue to play out. I think it just might but let the market prove it first.

And now.....

I would still give this rally a bit more time before getting bearish. However, just as we had to be willing to buy it when no one wanted it 2 weeks back, be on guard to sell it when everyone wants it. I do think there is a strong possibility the high for the market is in so you will want to be on guard. If this is going to follow the 2007 pattern, look out below

XJO Daily:
Yesterdays breakout confirmed a short term trend change. I envision that the rally out of this low will be stop and start with many back and forth moves. Ultimately, 4700 to 4750 looks like an interesting resistance area. The rally is still in its infancy so give it a bit of time before getting too bearish.

Broken out from one minor trendline and looking for a larger breakout to "test" 1.50. Any failure to break the 1.50 high would seal a meaningful high to me

Still think price has more to do on this breakout and I am looking for 1.08/1.085 at a minimum. Ultimately, a test and failure of 1.10 would be ideal to confirm a more meaningful top and shorting area.

Thanks for all the comments and messages on the blog of late. I value all the interaction and the feedback so pls keep it coming. I hope you are enjoying my commentary and using it to the best of your abilities.