Wednesday, 15 February 2012

What Was That!

Sometimes this game just isn't fair. I woke up at 6am this morning to check the Emini S&P500 and see them trading 1337. My short from the high 40s was sitting pretty. One final check before I leave home at 7am and it looked like the market was going to close on its lows. Its going to be a good start to the day. I get into the office some 30mins later and I see them 10handles higher! In 30mins! WOW

What can you do? It is what it is. Yes its a bull market and yes the trend is up and thus when you do try to pick turning points, this can happen. You can cry about rigged markets, the plunge protection team etc etc, but if you want to play this game then you are susceptible to whatever the market throws you.

My main goal as a trader is to minimise risk rather than maximise reward. I can never predict the outcome of a trade but picking low risk spots is the only way to get a free look. You can then manage the position based on the markets behaviour.

That move was on some serious volume in the futures. Ive seen these end of day squeezes before and they don't just happen for no reason. They often lead to some genuine follow through. Do you remember the S&P500 bottom on October 5th 2011? A similar thing occurred when the market traded from 1080 to 1120 in the final 30minutes. Have a look! The market never looked back.

Now I'm not saying this is the bottom of another massive leg higher however I expect we will now see more strength in the coming days. Time to probably bail out of shorts in the interim if 1350 breaks. And if you want a marker- then last nights low is it! If the market gives up those gains and trades back down through 1337, then you know this is a genuine top.

S&P500 Cash 15mins:
A higher low was formed. Are we looking at a potential ABC flat and a new impulse higher now into 1370? Ill be looking for breakout trades above 1350.

If there is one shining hope for the bears, it is in Currency land. I talked about some interesting divergences yesterday with currencies all failing to challenge their highs which was bearish. And then the Moodys downgrades hit! AUD retested the target zone and held in this morning. However, are we looking at a potential Head and Shoulders topping pattern? I hate these patterns as they never really work for me. However, support is support so if this level drops, take heed. The Daily is still bearish to me.

AUD March futures 60mins:

EUR continues to languish. Price is now in a clear short term downtrend and has re-entered the previous consolidation range. This is bearish and shows a clear failed breakout.

EUR March futures 60mins:

To Australia today. My target for this move was in the 4180 to 4190 zone. Please see: We hit 4195 yesterday and reversed. Urgh. Are we now also building a higher low? Its been so whippy and choppy over the past few weeks that trying to make a prediction is futile. Following that intraday trend has been key.

My SPI range today: 4190 to 4230. Outlier levels 4180 and 4250.

My SPI day trading plan: We are indicated at 4210 after the late squueze in the eminis. In the bigger picture we are at the low end of the range and thus I will be looking to get long at selective buy spots such as 4195/4200 and then at 4180. On the upside, I will be looking to short fade 4220/25 and then more aggressively at 4250. The key over the last few days has been to follow that intraday trend once the morning range gives way. Keep this at the top of your mind today.

SPI March 60mins:
We missed my target zone yesterday. Will we get one more shot at it? The market never makes it easy.