Friday, 20 January 2012

Morning Plan

Good Morning All,

Yesterday was a great trading day in Australia and finally we saw the bearish reversal I had been anticipating. I stressed the importance of an immediate sell off if this was to be the real deal, and we got it.

XJO 5mins:
Matched higher due to offshore lead, made a high in the first 10mins and then sold off all day. The press will tell you that the unemployment number led to the weaknesss, but the truth is that by the time the number actually came out, the sell off was already well advanced. The market actually had a good bounce post the number!

Yesterdays price action confirms to me that we are on the cusp of a significant turn in Australia and we now have great markers to place stops. Given the US session overnight, the SPI is indicated at 4225 which is not far off yesterdays 4237 high. Any retest of yesterdays highs is such a great low risk short trade.

ASX200 Daily:
Strong reversal candle yesterday in Australia right on the downward trendline. I believe this completes the "E" leg of this triangle and I expect a breakdown in coming days/weeks.

ASX200 60mins:
A perfect A=C move off the low that nailed yesterdays highs. The open gap proved to be the target for the bounce as they so often are. Note the continued bearish divergences coming into yesterdays high.

You have to look to sell any retest of yesterdays highs. Great low risk double top trade.

My SPI range today: 4200 to 4235. Outlier levels 4180 and 4250

My Day trading plan today: I will look to short any retest of yesterdays highs at 4230 to 4235. Stops to be placed above 4240. Once again, this should sell off early if this is a genuine turning point. I will only look to get long if we can hold the morning gap and breakout above 4240 later in the day. There is no data today in Australia and thus no obvious catalysts.

I was stopped out overnight in the S&P500 (probably the high now :)). That's what stops are for. The grind higher continues but I do not have a trade setup to get long. I continue to believe we are very vulnerable up here but I will wait for clear confirmation before re-entering any shorts. The following charts should be very clear and simple.

SP500 Daily:
Right into trendline resistance and a pop above 1300. Now watch it drop. Tops manifest themselves when everyone least expects it and when everyone wants to be "IN".

Nasdaq 100 Daily:
Right into the double top zone. This is setting up for a great short trade (2B trade according to Linda Bradford Raschke).

Russell 2000 Daily:
Massive underperformance which is not healthy. Right into the previous breakdown zone and resistance zone. Once again, looks like a small pop and then drop.

S&P500 60mins:
Spillover of wedge pattern? Any sharp move back down through this pattern will be my short trigger

Rally right into downward trendline. I have been following this count for a while, and I believe we may be seeing the final legs of this triangle and breakdown tot he downside. Rates are going one way in Australia especially given the recent unemployment numbers- lower.

Even the DAX has hit its 200Day moving average and looks ripe for a double top trade. All in all, the setups are aligning for a short trade but it looks like I will just have to remain patient.