No doubt at times it pays to look overseas. Sure one has to be careful to not get involved in "analysis paralysis" and I strongly believe that you have to really focus on your underlying trading vehicle and market. Just focusing on the bearish setups in Asia coming into the end of March proved this point as we preceded the highs of the US: http://swingtradersedge.blogspot.com.au/2012/03/asian-daily-setups.html. Look how that Nikkei trade played out! If I had been relying on the S&P500 to make some of my decisions, I would have really missed out on what is going on in Asia.
However, this morning I have been looking at a few Daily charts in Europe and US. The more and more I look, the more I think that we really have seen a meaningful high in the bigger picture. Now may not be the time to short this but any strength in the next 2 weeks I think will provide a great opportunity. Note that March very often produces a major top or bottom throughout history. This has kinda snuck in.
Eurostoxx Daily:
This is clearly an ABC pattern. We have now seen overlap and thus this really cant be an impulse off the October lows. This topped right into a resistance zone and the sell off from the high is looking increasingly impulsive.
DAX Daily:
Clearly the DAX has been a stronger market. However, I can also make the case for a complete ABC move off the low topping right into res. Once again, the top occurred right into March.
S&P500 Daily:
Last night we held that generic trendline I had drawn. However, bigger picture we are trading below my 1370 key pivot. This count was shown to me by my friend at marketletters. Note the momentum divergences into the high AND breadth was also seriously lagging. I am not saying be short here, but a bearish picture is emerging.
RUSSELL Daily:
The Russell is often know as the beta index. What I find interesting is that unlike the S&P500, this market did not break above its May highs but topped some way short. This is a bearish divergence. Furthermore, we have seen a clear FAILED breakout. These are my favourite trading patterns and imply genuine weakness.
So there are a few things to think over. As ever, timing is everything and I don't think being short after the first big sell off is the best trade. I hope to update you as this plays out.
To Australia. Yesterday was another frustrating one as a day trader. We traded in a 15pt range for most of the day (despite a big sell off in the US). We then finally broke down in the last 15minutes of trade right into my target area.
SPI 60mins:
I could make a case for somekind of ending wedge pattern here. Clearly we are not breaking down impulsively like other markets for now and we are into a decent support area. Potential short term bounce coming but wait for confirmation.
XJO 15mins:
My SPI range: 4240 to 4280. Outlier level 4300.
My SPI day trading plan: We are indicated around 4260 on the open. This is right in the middle of the recent range and thus I don't have an early obvious trade. I will be looking to BUY 4245/4240 if we see an initial sell off and I will be looking to short fade 4272/4275 with tight stops. Note that there is also a possible outlier res level at 4280. Any genuine strength above 4275 (yesterdays high) opens up a potential move back into 4300 and higher. This would trigger that ending wedge pattern above. The trend is still down obviously so waiting for price to confirm is key.
Thanks
Austin
