Tuesday, 17 January 2012

Emini Double Top


I was tragically wrong in Australia today as I didn't expect such strength. However, this rally has taken the S&P500 Eminis right into the double top area. I view this as a great risk/reward SHORT with stops above 1300. You just have to be willing to short when everyone wants it into these kind of zones

S&P500 Eminis 60mins:

More Pain in Asia to Come?

Morning All

Well despite the downgrade of Europe being "factored in", the Australian equity market took quite a sharp hit yesterday. Our futures fell some 30points in the first 5minutes in quite a move, before recovering off the 4110 lows.

To me, I believe there is increasing evidence that a short term high is in. I have shown a number of targets for this rally and the cash market was unable to break above the first 4200 level. Despite, US markets continuing to rally, Australia remains de-coupled and I believe we are now in the beginning stages of a protracted trend lower. I have shown a number of charts and setups of late illustrating this view and pls read the following link for a refresher: http://swingtradersedge.blogspot.com/2012/01/more-evidence-of-bearish-turn-ahead.html.

The XJO chart below shows a completed countertrend rally off the low, completing at Fridays 4200 high. We have a double top/triple top at 4200, a completed 5 wave move off the recent low, and confirmation with yesterdays sell off. My momentum indicators on my short term time frames all made a new momentum low yesterday thus my highest probability trade is to sell the first rally before any meaningful low can form. Obviously my view will be wrong if we recapture the 4200 level.

XJO 15mins:

Today could be quiet given the US holidays. We are indicated at 4135 in the SPI futures which puts us just 5/10 points off yesterdays highs. Straight out of the gates I would be looking to short 4140/4145 in the SPI with stops above 4150. Support comes in at 4120 and 4110 today and I will be looking to cover some shorts into this region today given the possible quiet nature. Note we have RIO and FMG production numbers out today.

P.S. Is the S&P500 tracing out a Head and Shoulders top? Too early to say but my strategy remains selling 1290s with stops above 1305. I like to get short at strategic levels in this market and add on confirmation.

S&P500 Eminis 15mins: