Monday, 13 February 2012

Monday Monday

Morning All

Lots of press over the weekend regarding the new Greek bailout package, the new wave of austerity measures and the current parliamentary vote to get it through. I'm not going to give you my take on it all as I don't want to sound like a cynic and it really isn't my area of expertise. One article that I did agree with and found itneresting was written by El-Erian and can be found here:

So the S&P500 gapped down on the open, made a low in the first hour, then rallied all day. O wait, no it didn't! Finally. The S&P500 sold off on the open, made its low in the first hour but then went sideways for the rest of the session. Have we witnessed a small change in the character of the market or can we just put this down to a bit of nervous Friday jitters with all these macro issues looming? Way to early to tell, but some of my short setups have been triggered and that's all there really is to it. Looking across the charts, it does appear like the anticipated correction is underway. Some markets may make a new squeaker high but the process is underway I believe. Here are some recent posts I have put up detailing these setups:

Firstly to the DOW Industrial:

DOW Industrial Daily:
This was the setup I posted on Friday morning and the short trigger was given overnight. Simply, a new high was made above the double top zone, and a short order was placed below the low of the previous candle. A low risk short entry for this Double Top trade.

Emini S&P500 60mins:
My 3 Indians/Ending wedge pattern was triggered and price sold off to the first target zone. I do believe that this pullback will be deeper in price and time. Stops for shorts should be placed above 1355. We may see a retest of that 1350 level although I deem this the less likely scenario.

What I found interesting was the move in AUD on Friday night. Sure we can once again put this down to nervousness ahead of the weekend but the move was really quite impulsive to me. More importantly, all of the gains post the RBA interest rate announcement were completely given up. This is bearish price action. If markets are going to turn, this one should follow suit. Well the script is now playing out.

AUD Continous Futures Daily:
We now have a clear candle reversal pattern out of the top end of the range and overhead resistance. I have shown a similar example here of such candle reversal patterns which occurred right on the July 2011 high.

AUD March Futures 60mins:
There was also a clear 3 Indians/Ending Wedge pattern here that resulted in the sharp pullback. We have now fallen into the first target zone so no doubt price could hold in for the short term. However, the bigger picture target still comes in some way lower as shown.

So today a lot of attention will be given to this Greek parliamentary vote. I am under the impression that voting begins around 10am AEST time and I have no idea how long it will go on for. Its pretty much a given that they will get this through but as ever be prepared for the unexpected.

Australia has now sold off to my first major target zone. I see a confluence of support coming in at 4180 to 4195 so I would not be surprised if we hold early with even a potential strong rally later in the day. Obviously if we fail to hold, this is bearish indeed.

SPI March 60mins:
Here is my first target zone at 4180/1495. This comprises the 38.2 Fib retrace from the high to the recent swing low. You can also see that this is an area of previous support/spike lows etc. The deeper target for this move ultimately is down at 4120/4140.

SPI 15mins:
Just giving this area more attention. We have a 38.2 Fib retrace as per above; we also have open gaps; we have spike lows; and we have a potential A=C extension coming in at 4185. Bottom line, there is a confluence of support in this zone of 4180 to 4195.

My SPI range today: 4180 to 4225. Outlier levels 4140 and 4230/35.

My SPI day trading plan: We are indicated at 4199 early but really anything can happen on Monday mornings especially with these macro overhangs. I will be looking for any early panic down into the low 4180s for potential long trades with tight stops. The key will be waiting for somekind of bullish confirmation out of here before getting long. The short term trend is down and thus I will be looking to get short and join this trend if we see any bounce into 4220. I will be also shorting if I see a clear consolidation pattern around 4180/4190 that breaks to the downside with a target down to 4140 (although this is unlikely to get hit today)