Monday, 16 April 2012

Monday Morning Setups

For the first time in a long while, selling into resistance in the S&P500 worked. On Friday night I put up a great short setup into the 1385 resistance zone and this played out:

Emini S&P500 Setup:
This was the sell zone that I showed on Friday

Emini S&P500 60mins:
And this is what we got.

Right here it is a tricky one. We are right into the low end of the range and decent supports at 1355/1360. A number of things make me think that we will actually hold in:
i) The S&P500 cash does not look like an impulse from its Friday high
ii) Underlying breadth was not particularly weak. In fact, the no of declining issues was 2298 vs a high of 2618 on the 10th April and 2500 on the 4th. Clearly we are now seeing divergences
iii) Currencies did not really sell on Friday night and are now retesting big supports which I think they hold.

Thus, I have got out of most of my short position. I do want to hold some but it just doesn't look right for now. Having said that, the weekly close on the S&P500 was bearish in my eyes and we closed BELOW my key 1375/1380 pivot. Especially given my thoughts re the month of March, I do very much think that this will be a bigger picture pullback. Thus I am rather torn between the short and long term perspectives. For now, look to see how we act in the 1355/1360 Emini support zone.

 S&P500 Weekly:

Asia could be on the cusp of a Wave 3 down type moment. No doubt there are very rare but they are low risk short setups. I am not seeing enough confirmation yet to have confidence with these but it is no doubt worth having in mind if Europe and the US keeps selling in the short term.

ASX200 60mins:
I highlight a potential ending diagonal on Thursday and looking for possible long trades: This played out but price was stopped in its tracks by the 61.8 Fib. If we give up the gains seen on Friday, I think this would be bearish indeed.

SPI 60mins:
You can see a clear retest of the neckline on the SPI futures that failed. We had a very sharp sweep up to the 45 level that was beaten down straight away. A blow out lower high?

A Shares 60mins:
A sharp rally has taken this market back into a great overhead resistance zone. This could be a possible ABC flat? A small gap down this morning but not enough confirmation yet of a new trend lower. I would continue to look for low risk fades here.

The next 24/48hrs will be very interesting indeed.