Tuesday, 7 February 2012

Tuesday's Plan

Morning All

I wanted to give a bit more focus on the Asian Indicies in this mornings post. I see some interesting developments which seem to be at odds with what is going on overseas in the US. Without the printing presses of Ben, and with our dependence on exports in this global slowdown, our markets have certainly underperformed over the past year or so. As I have been stressing, Asian Indicies have rallied right into some serious resistance zones and I anticipate a meaningful high to form.

Hang Seng Index Daily:
We have now rallied right into a serious resistance zone. This is a confluence of previous highs, the 61.8 Fibonacci off the high, and an open gap. Yesterday, despite the Euphoria of Fridays trading in the US, this market put in a solid reversal candle and closed well off. We need more information before we can call a top but certainly I would be looking for short setups into here.

Kospi Daily:
Korea looks very similar to me rallying right into the resistance zone. A lot of caution needed here.

Shanghai A Shares Daily 60mins:
This is a very interesting setup to me. This is my 3 Indians and Ending wedge setup.  3 peaks on 3 lower momentum readings. A bearish reversal candle today would trigger this setup and I would anticipate a quick sharp sell off to follow. Traders in Australia and throughout Asia need to be aware of this.

To Australia. Yesterday the Double top trade played out perfectly. I wrote here:
"I was looking for a retest of the previous highs in my past few posts. We are here today with the SPI indicated at 4275 early given Fridays strong move in the US. I will look to short fade 4280 and 4285 with stops above 4290. I will look to scale out of shorts in the low 60s if we do get a move lower. 4255 could provide potential Long scalping opportunities today"

That was pretty much to the tee. Hope you traded it.

My SPI inital range today: 4255 to 4290. Outlier levels 4220 and 4300.

UPDATE: WE HAVE OPENED AT 4255 AND WELL UNDER SYCOMM LOWS. THIS IS BEARISH. My range will be wrong. Given we are trading under yesterdays lows of 55, I am looking for a potential target to 4220. Focus on this downtrend.

My SPI Day trading plan: Given the overnight bounce, we are indicated at 4270 this morning. I still believe that short fading this 4280/85 zone is the low risk trade, stops above 4290. We may see a small breakout above yesterdays high but I think this should be shorted. Note that today is the RBA rates decision and although a cut is priced in, trading may be subdued somewhat. Once again, look to scale out of shorts in the low 60s but re-inititiate if 4255 drops as the target is 4220. Trading was weak in the Hang Seng yesterday and I have also shown a bearish pattern in the Shanghai Composite. Australia will no doubt be impacted if this continues to play out.

On the long side, I still would want to see price consolidate ABOVE resistance before meaningfully committing to long trades. This would be consolidation above 4285 and then 4300. Thus I will be nimble with longs up here.

SPI 15mins:
This was the chart I showed yesterday. The double top trade worked perfectly for short term traders. We obviously need a lot more follow through to the downside to confirm in the bigger picture.