Tuesday, 9 August 2011


Morning All

(UPDATE 14:00 Sydney time) Australia is surging after the All Ords clipped my 61.8 retrace level. We will see a big hammer on the close. I got stopped out of my S&P futures but re-entered at 1090. I have bought the basket of long stocks in Australia as I said this am. Now we await Europe. Cmon

I wake up to see the S&P500 -6.66% (spooky hey). Last night I highlighted 1145/1150 and then 1100/1105 as the targets for this move lower. I didn't expect the latter levels to get hit so quickly but hey, this is panic. Have a look at an intraday chart of the S&P500 and you can see how sharp the moves are when these levels break. Once again, it is a day traders dream so keep trading the levels.

I could show hundreds of charts showing how broken this market is but that is not of value. I could list a thousand things that scare the hell out of me and that is unnerving this market. However, most of that is mere hindsight now and we are dealing with the now. I will keep it very simple- I am buying the market here at 1105 futures. It is Tuesday (my reversal day), we have hit the 38.2 retracement level. Everyone is scared shtless. It is thus time to put on a small low risk trade and add if we see confirmation.

These are the levels:
S&P500 1102/1105 (38.2 retrace from 2011 high to 2009 low)
ASX200 3800/3850 (61.8 retrace from 2011 high to 2009 low)
Eurostoxx 2250/55 (61.8 retrace from 2011 high to 2009 low)

These should be formidable. This is what happened in 2007 after the initial panic off the high:

SPX 2002 Low to 2007 High
And if we zoom in at this area:
And now:

No doubt this is bottom fishing. However, I am playing a simple level with the right stops into panic. I would do this time and time again. In Australia today I have pulled up a number of levels in leading stocks and will be looking for these to hold in the first 30mins. If they hold, I will also be buying a basket of stocks for a small position and adding if we seeing confirmation in the next day or so. Keep it simple. Of course it all looks horrible and there is blood on the streets thus the longer term traders need to see confirmation BEFORE getting long.


ASX200 Daily: