Monday, 12 March 2012

Monday Plan

Morning All,

A positive jobs report on Friday night pushed the S&P500 higher and we are not far off that previous 1377 Emini March high. As I said on Friday, I don't have a strong view here currently given the strength of the recent rally off the low. There is the potential for a short term Double top trade/short fade but I will stay on the sidelines for now until I see a better setup. No doubt we are still in that bigger picture Daily res area but this market has been resilient. I am not seeing any follow through with most of my trade setups and ideas. Clearly this is a different market environment from the one some 3 to 4 months prior, and thus it is important for me to also change my tune and strategy as it is effecting my performance. My resources are better off in markets which are working for me.

And thus this brings me to Australia. Very simply, as we start the week there is a fantastic low risk/high reward short trade with stops above the previous breakdown area of 4250.

XJO Daily:
Breakdown through the trendline with strong momentum and back to back bearish candles. Now we are retesting this trendline and I anticipate this bounce failing here. Stops should be ABOVE the high of that bearish sell off candle at 4250.

SPI 15mins:
This is the setup I am looking at. We have a clear retest of a significant resistance area from 4225 up to 4250. If you can use a 30 to 40pt stop, this is one of the best risk/reward trades I have seen in a long time. I will be putting on a wider swing short up here.

XJO 60mins:
The cash index is clearly in a short term downtrend and is now retesting the upper end of my moving averages band. Note there is a new momentum low in place and thus my highest probability trade is to sell the first retest back into the trend. Well here we are. Any strong reversal candles today will act as confirmation for me.

AUDUSD also continues to underperform and shows interesting divergence with US equity markets. I was looking for a Wave 4 type move and I believe we have enough confirmation in place to call this in. this now opens up a retest of the previous lows at a minimum.

AUDUSD futures 60mins:
3 attempts to break above 1.0650 area but no luck. Thus, the recent high looks like a completed ABC flat type pattern (note C=1.618A). Looking for a retest of the recent lows at a minimum.

My SPI day range today: 4180 to 4230. Outlier levels 4245/4250.

My SPI day trading plan: SPI futures closed at 4219 on Friday night and AUDUSD has opened relatively flat vs the close. Thus we have no real clear lead on the open although Oz bonds are quite firm first this morning. Seems that the market is shrugging off this ISDA and Moddys news re Greece and the CDS payouts.

As per my charts above, I am looking for a bigger picture short trade in this zone and I will start initiating in this 4220 area with stops above 4250. For my day trading, I will look to short fade 4220/25 early if I see confirmation on the 5min chart, stops above 4230. Any failure to sell early opens up a potential grind to 4245/4250. Given the short term trend is up, be prepared to get long should we not sell early out of the 20s. 4200 should be relatively well defended today so I will look to cover shorts initially in the zone and go long for a scalp only. If it fails to hold there, I will re-iniate shorts again looking for a breakdown to Fridays lows at 4180. Note that tuesdays are my major turning day/trend day and this is when I anticipate a stronger reversal lower once more. No major economic announcements out of Australia today.