Wednesday, 1 February 2012

Tuesday Reversal Indeed

Morning All

Our job as Traders is to make money. Simple as that. Whatever method you use, whatever your style, we trade to make money consistently. I write this blog to plan my course of actions, to demonstrate the setups I am looking at, and to share my thoughts with other traders. This is my path to success and consistency. Unlike most "educators" and technicians out there, I actually trade this. This is my livelihood.

No-one likes a gloater. My intention here is to show how I plan some of my swing trading setups and the results. Yesterday, I wrote this on the blog to plan my day ahead in the S&P500 cash:

"Tuesdays are often my trend reversal days. Its possible that we may see a move back up to retest the 1333 S&P500 cash highs on Monday/early Tuesday, and this would provide a great low risk short entry. I personally will scale in at 1320 and then more up at the previous highs. I think last nights strong bullish reversal is all part of this move to "retest" that 1333 high (cash). I will be getting out of my longs into 1310-1315 and looking for shorts in 1320s. Use your fib retracements, res levels, candle reversals- whatever it is you use.

Before I went to bed last night, the Eminis had rallied perfectly into my 61.8 Fibonacci level at 1317 (spot 1320), and I went short 1/2 position. I put this on twitter:

"$ES_F: Short at 1317. Feels too strong but if its going to turn, it will do it here"
"$ES_F: 61.8 Fib off the high comes in at 1317. Flipped out of long, and getting short there. Could it be????"
The S&P500 Eminis made a high of 1317.5 and then sold off all day. The S&P500 Cash made a high of 1321.5 and sold off for most of the session. A nice successful trade and now we move onto the next. Thats our job as traders- to make money.
If you want to trade these markets in this style, and if you want live updates, PLS GET ON TWITTER. I put most of my thoughts and trades up as they happen. Its all free. I really think this is of genuine value. Nuff said.
So where does this leave us? To me we are clearly right on the point of a genuine breakdown. If we retest that 1300 level again, I think we break through. Support will only work a few times before it fails. I have written in depth about why I think the markets are topping and please read the following posts showing clear Daily charts:
Eminis S&P500 15mins:
This was the 61.8 Fib level last night. This is the power of technical analysis.
Eminis Nasdaq 100 15mins:
Great double top trade and ending wedge/"3 Indians" right into resistance. To me, that has sealed it for this market.
Eminis S&P500 60mins:
Clear head and shoulders pattern in play. Yesterday I said that a bounce could form the right shoulder and here we are now.
EUR Futures 60mins:
Another possible Head and Shoulders pattern playing out
DOW Daily:
Double top. Reversal Candle. Small Head and shoulders pattern playing out. Do you want anything else?
In sum, markets made their high right into the key Daily levels. The S&P500 made a high at 1333 which is 666.5 X 2 (March 09 low). Momentum and breadth have been noticeably slowing and diverging into this high. Markets bounced sharply on Monday only to be slapped back down again on Tuesday which indicates that the bulls are losing control. All the evidence is there but we are still in the low end of the range for now. I have been banging on about how vulnerable the market is up here and that market tops take TIME. When this range goes, I anticipate quite a big pullback if not a substantial move lower.
SPI Range today: 4182 to 4240 (wide I know). Outlier levels 4250/55
SPI Day Trading plan: We are indicated at the low end of yesterdays range at 4234. Yesterdays late move was quite extreme and we bounced sharply out of 4222. Thus, any move back down to 4222 early should be bought with tight stops. It is possible we are oversold after a 3 day sell off but this is for a short term long scalp only until the trend changes. The short term trend remains down and thus I will look to short 4240/45 and more aggressively up at 4250. Note that if the 4222 breaks to the downside, I anticipate a move right back down to 4182 so be prepared for this. 
XJO 15mins:
1 trendline broken but coming into key supports at 4250/60. If this area drops, look out.