Monday, 12 September 2011

Getting Ready For The Swing Low

Good Afternoon All,

This market continues to follow the technicals with precision. This blog has successfully identified a number of turning points in the market over the last few months and Friday nights sell off was no exception. I believe this is the final leg lower into a bigger picture intermediate low. I do not know if the market will bottom today, Tuesday or next week, but certainly I am getting ready for a strong turning point. You have to be prepared and you have to anticipate to successfully make money in the market. Certainly everything looks and feels very scary right now, and that is exactly how it should feel at such a juncture. Remember, you have to be willing to buy it when no one wants it just as you have to be willing to sell it when everyone wants it.

S&P 500 Daily:
The market sold off right at the top end of the range identified. I am now looking for a test and double bottom trade in the low 1100s. Markets very rarely begin a new trend without a "test" of the previous low. The wise trade is to wait for confirmation such as a bullish candle out of this zone before taking the bigger picture long swing.

(Update) I am increasingly thinking that we may not even get the luxury of a clean retest of 1100. Given where the DAX is trading, I believe we may even see a higher low form tonight at 1120/1130. Once again, wait for confirmation.

S&P 500 07 parallel
This is the updated 07 S&P500 parallel. The S&P500 in 2007 is shown by the white line. In 07 we saw a panic retest of the lows that led to an intermeadiate bottom and I think this is where we are at right now.

ASX200 Daily:
I believe this market put in a climatic bottom in early August. Australia has been one of the strongest markets globally of late. This current sell off should form a higher low in the coming days leading to another strong move higher.

ASX200 60mins:
3950 to 4000 is my key support zone. This marks the round no support, the 61.8 retrace, and also an area where A=C off the high.

Hang Seng Daily:
Hong Kong is setting up a nice double bottom trade right at the support shelf. There is also a possible complete 5 wave move down coming into play here.

Japan Daily:
Another double bottom trade lining up here. Interestingly, some months ago I wrote an article about this market following a parallel with the S&P500 post the flash crash and forecast that this market would retest its lows: This has now played out. Note the 1-2-3 pattern into the current low which is a bullish ending pattern.

Shanghai Composite Daily:
We have seen a breakdown out of the consolidation pattern I showed a few days ago. Now looking for a test of the support shelf as the final move lower.

In sum, there are a number of markets now coming into their respective support zones. This couples with the DAX coming into its 61.8 Daily retrace at the 5100 level. The key for many of these setups will be waiting for a Daily closing confirmation candle as we are still a bit early. Tuesdays are my turning day and I think we will see a bit more panic before these setups play out. I cant rule out a low tonight however. Also note that it is a full moon this Tuesday which often produce turning points :)

Obviously there is a lot of fear out there with concerns that a European nation may go under and CDS prices across the region are blowing out. Thus caution is warranted for those who do not know what they are doing. However, I do know that the best money is to be made at market turns so be prepared via these charts.


p.s. Ollie was asking about the USD. I think the EUR is coming into an interesting short term support area also at 1.3450/1.35. I am not calling a low here but this if this market is going to hold in, it is here.

A=C off the low and a key pivot point comes in here