Friday, 17 February 2012

Australia Continues to De-Couple

Morning All

I don't seem to be having much luck currently in the US markets. I thought a correction was likely underway and was looking for a retest of the mid to high 40s to short. We got that and more. I said here yesterday:

"Supports are stacked everywhere from 1330 to 1337 and thus I anticipate we will hold in short term......I am looking to short a retest of 1350."

The Emini S&P500 hit a low of 1334.25 and then surged as the cash market opened. The first big pullback into support in an uptrend always gets bought. I had bids in from 1333 and didn't get filled. I had offers in to get short in the high 40s and did get filled. My stops for this short is above 1360. Not really liking the look off it so far as certainly the rally appears stronger than anticipated. If you pull up the chart of APPLE, it seems the whole market is moving in tandem with that one stock! No new highs anywhere from what I can see and much of what I said yesterday is still valid I believe:

S&P500 Eminis 60mins:
I have this chart labelled on my screens and thus far, the market appears to be attracted to these zones. Yesterdays strong bounce probably opens up a push to that upper trendline in the low 60s.

What is working for me is my Australian analysis. I said in my morning SPI report:
"I feel we could be looking at a genuine break and trend lower into 4140 and then 4125. Thus I will look to short at around 4170/75 if those 80s drop"

Given Westpacs results, we sold off sharply through 4180 straight out of the blocks and trended lower for most of the day, making a low of 4130. This despite some bullish jobs numbers. All does not appear healthy to me despite US markets continuing to grind higher.

XJO Daily:
The top end of the range proved solid resistance as I called for. A sharp breakdown candle yesterday. Focus on this new downtrend as long as the highs of yesterdays candle are not taken out. That simple. That upward sloping trendline may mean something in the short term although I doubt it.

SPI March 60mins:
A new momentum low and break of the support zone. Thus, our highest probability trade is to short the first pullback looking for a retest of 4130 at a minimum.

My SPI initial range: 4160 to 4190. Outlier levels 4125/4130 and 4200.

My SPI day trading plan: We are indicated at 4180 given last nights rally in the US. This is right into yesterdays highs. Straight up I would be looking to short fade this level with stops above 4190. Any move above 4190 is likely to be capped at 4200 and thus I would look for short fades again up here. On the downside, 4160 should be the first target zone for any shorts and I would look to cover there. Breaks of 4160 open up a move back down to yesterdays lows of 4130 but i doubt we push that low today.

As a sidenote, the Hang Seng will open today right into a major sell zone. Keep this on your screens if you see a gap up and reversal. This sell zone is the open gap, an A=C target and the 61.8 Fibonacci retracement off the top. Should be a big one indeed.

HSI Daily i:

HSI Daily ii:
The 61.8 Fib in more detail