Well we have had a good run of late in this market, successfully negotiating a number of turns but my luck has finally run out overnight. The SPI successfully held the double bottom area of 4170 all day yesterday but there was no follow through above 4200 to the upside. The Eminis have subsequently broken through my 1220 level and thus negated my first buy zone. Take the stop and move on- it's that easy.
If I am honest, I don't have a clear view here now. I stressed that as long as the S&P500 remained above 1200, we should look for buy setups: http://swingtradersedge.blogspot.com/2011/12/little-present-from-santa.html. We have not broken through this yet but it is not looking promising. I really don't like this time of year for trading or for making any grand calls. You will find that there is a lot of window dressing and a lot of "funny" moves as we approach Christmas time/Year end. Thus, I really don't think we break down but I guess you just got to follow the price action.
For what its worth, I could see the market retest 1200/1205 and holding in the coming days. In Australia, the 61.8 Fib retracement comes in at 4125/4120 and I love trading this Fib number (note that these are DEC future levels; the front month is now MARCH)
Unfortunately, I am now off on holidays for a week surfing up the coast. As I said, I don't like this time of year for trading. I really hope you have been enjoying the new formats of late. In the New Year I really plan to dedicate more time and resources to this blog. I have been sent a number of emails of late asking for trading tips and advice. This is great and I value the interaction. My dream is really to reach out to short term traders and provide first rate analysis and education. I know how tough trading is and I know the journey that is needed. I wholeheartedly agree with Brett Steenbarger that Trading is a performance discipline, and trading performance can be cultivated through the same kind of training activities that generate expertise in such diverse domains as athletics, chess, and the performing arts etc. Expertise is the outcome of a process. It takes time and training. I hope to be a mere guide along that way.
Thanks and good luck next week