Friday, 9 December 2011

Morning Plan

Since the start of the week, I have been consistently bearish and looking to fade the Australian market:

The targets for this move were 4260 and then 4220/4200. Last night the SPI futures finally broke the 4260 level and closed at 4216 thus fulfilling the forecast from the start of the week. It is unfortunate that so many of these moves are happening in the SYCOM night session with little intraday activity. It is what it is.

4220 was my potetenial A=C target off the high. 4210/15 also represents the 38.2 fib retracement from the recent high to the November 25th lows. We also have formidable round number support at 4200. Thus all in all, I think we have now traded from one extreme to the other and are coming into decent supports. I will now be looking for buy setups and covering all shorts.

My Range Today: 4205 to 4245

My Plan Today: We are looking at a 50pt gap down this morning into a potential zone of support. Thus, my gap strategy is firmly in play today. I will wait for a morning range to be established and then I will buy a breakout of the morning range (first 10 to 15mins) should it materialise.  Ultimately, I think any shorts will need to be covered at 4205/4210 so the risk/reward does not favour the shorts today I believe. I will be scalping from the long side at 4200 and 4210 should I get the chance. It may be a subdued trading session ahead of the weekend and the European Summit and given the large gap already.

SPI 5mins
A=C target
SPI 15mins
38.2 retrace comes in at 4215/4210. Also low end of potential trend channel

Emini S&P500 15mins:
I showed this pattern several times over the past few days. Sure there were a few false dawns but ultimately this 3 Indians/Ending pattern has played out perfectly with a false breakout last night and follow through to the downside. The key with this trade as ever is understanding risk/reward. Shorting res at 1260/1265 with stops ABOVE 1270 as per my twitter post was a great low risk/high reward trade. As Paul tudor Jones said "I develop an idea on the market and pursue it from a very low risk standpoint until I have repeatedly been proven wrong".  Amen

The targets for this move in the short term comes in around 1225/1230.