Friday, 13 January 2012

Friday 13th

Well I thought that was going to go last night. Markets don't usually top on a Thursday night but when I saw that rally into the high 90s in the Eminis and the sharp reversal, I thought it was game on and I put my head on the pillow. I wrote this on twitter just before lights out:

"$ES_F, $SPY- just got out of long position from low 80s into this strength (93). Looking for a climatic reversal tonight to now SHORT"

My plan was always to put a small short position on in the mids 90s and this was a ideal initial level. It seems clear that the 1280 level is being strongly defended however. Those looking for confirmation should now wait for a clear break of that level to confirm. The way the cash market held in last night, I would not be surprised if we grind higher and bit more into next week. Next week the games may really begin.

Emini 60mins:
Sharp bearish reversal right out of the ideal short zone. However, no follow through just yet and buy the dippers were out in force. Add shorts below 1280.

S&P500 60mins:
The slow grindy wedge higher continues. I have seen these patterns so many times and they usually always end in a sharp sell off at a minimum. Be ready

I really don't have too much to update re Australia today. I wrote a rather long post with a number of charts and this remains my primary view:

My initial range today: 4155 to 4190. Outlier levels 4145/50 and 4220

My day trading plan today (SPI): We are indicated at 4180 this morning which represents a gap up of some 30points. There are a whole host of potential resistance points at 4180, 4190 and 4200. This represents the previous SPI high and double top area, the Sycomm highs, and the 4200 round number respectively.

Given it is Friday, I don't think we will see a strong breakout above the 4200 level and I will short fade early vs cited levels. However, I do feel that this market is consolidating before one final push higher thus I would use any early dip into the low 60s to get out. Any stronger sell off to the 50s is a strong buy. Ultimately, today is trade the range day. I will look to short fade 4200 more aggressively today. Fading is a difficult skillset which needs a lot of practice and good tape reading skills. Of course it is very possible that all those resistance levels get blown out of the water. That is why it is so important to gauge the tone, the order book and ultimately view the Candles before short fading an uptrend. If it doesnt sell off early, stop trying to fade!

SPI March 15mins: