Wednesday, 7 December 2011

Morning Plan

Morning All,

Yesterday's action in the SPI went right on plan: I talked about the tiring trend, the double top in place, and reversal tuesdays, and this all led to a great trading day for the shorts with a move down to my target of 4265/4270.

I wrote: "we saw strong support at 4295/4300 and this should very much be the case again today. Look to cover there and add/re initiate shorts on a break of this zone with a potential move down to 4265/4270"

The SPI is indicated at 4300 this morning thus representing a gap up of some 30points. I do not think that this sell off from 4350 is done just yet. Note that we had an interest rate cut and yet price only rallied for 1minute before resuming its downtrend. This is indicative of weak underlying price action for now. I think I would like to see a test of 4265 once again at a minimum before I can even begin to call a low in place. We also need more "time".  

My range today: 4265 to 4325

Outlier levels: 4250 and 4345

My Plan today: Once again, I will be looking to short early. The best areas to get short today will be on the open with tight stops (limit 4300) and at 4320/4322 which was yesterdays highs. Any move above 4325 opens up a potential move to 4350 so be on watch for this. Remember day trading is all about being flexible. On the downside, 4260/65 should offer good support. My ultimate target for this move is as low as 4200/4220 but I don't think we will be seeing that today. 

SPI 5mins
Target hit yesterday i.e. right into the previous breakout zone. If we sell early today at 4300, I think the bigger picture target is 4220/4200. 
S&P500 Eminis
Refusing to crack for now. Obviously 1260 has acted as good resistance. Bulls should look for breakouts above that level, bears should use closes below that upward trendline to short. I think this is a good risk/reward short still.