Wednesday, 25 January 2012

Markets Top on Euphoria Right?

Morning All

Well the S&P500 held in AGAIN last night with that 1300 zone proving formidable in the Eminis. APPLE have just realised some blowout earnings results and the stock is trading up some 10% in after market. The Nasdaq futures are surging and are now well above the previous 2435 Daily high back in July 2011. Its game on right?

If you ask me, these are the EXACT conditions needed to form a genuine top. Remember when the market peaked on the euphoria of Osama bin laden? That was the top. All I am reading is "breakout" this and "breakout" that. Great but I really don't see the base pattern or the volume or anything to suggest this is the case. Am I being stubborn? Maybe but just bear in mind that these are exactly the moments and feelings that one should have at a genuine turning point. All markets are right up against previous highs or resistance points. Note the Eminis have not even made a new high yet above 1318. Have a quick read of twitter, and get a feeling for which way the crowd is leaning right now. I am reading predictions of 1338, 1350 and 1450 all of a sudden. All yours if you wanna join.

This has been my central case: Sure we haven't seen the confirmation yet. However, if the Nasdaq futures get slapped back down (which i think it will), that will be a bearish engulfing pattern and seal the deal to me. The S&P500 Eminis put in a climatic reversal at 1318 on monday night, and price is now "testing" this previous high. Any move below 1300 would now seal that market to me. If you want confirmation, that should be it. Remeber that tops are a process that take time with much back and forth choppiness. This is exactly what we are seeing over the past few days and sessions.

S&P500 Eminis 60mins:

To Australia. For the last 4 trading days we have opened strongly/gapped up, and then got slapped down straight away giving up all gains. That really is a tired market and has offered great trading opportunities for the bears. Is today the day where finally it gets going and breaks out? I really don't know but I will continue to fade that morning open into resistance. That is the low risk/high reward. The minute that stops working, then we probably do have a genuine move higher.

XJO 15mins

My SPI range today: 4220 to 4180. Outlier levels 4150 and 4235.

My SPI day trading plan today: The SYCOMM session closed at 4202 but we will obviously open above this given the move in the S&P500 Eminis and Nasdaq futures. 4220 offered solid resistance yesterday and I will once again short that level with stops above 4225. Previous highs were also at 4230/4235 which offers another shorting opportunity. If price shows nothing but green candles straight out of the open and drives straight through this, I will look for pullbacks to join a new trend higher. Until then, this is still within a range. As per yesterday, scalping long levels remain 4200 and the 4180s.