Wednesday, 22 February 2012

Wednesday Plan

Morning All,

Despite all the euphoria surrounding the Greek bailout package, the reaction from the US post their holiday break was subdued indeed. The market tried to push high but grinded lower for the rest of the day with a small pop into the close. Volume was anaemic. The cash market made a high of 1368 which is just short of that 1370 May high. Interestingly, AUD trended lower for most of the day and there are major divergences going on there vs US equities. However, it does look to me like we will still see a push higher in the short term in the S&P500.

Emini S&P 500 60mins:
This is the megaphone type pattern I have been showing of late. We saw a clear spillover at the top end that has resulted in a 10 handle pullback. However, momentum made a new high, the move off the top looks overlapping and corrective, and we are testing previous supports. Thus I think the most probable trade is for the market to hold in here with a swing back up to 1370. Up there ill be on watch for somekind of reversal pattern.

S&P500 Cash 15mins:
I'm not sure if these wave counts are correct. My main point is that we have seen a clear breakout from consolidation and are trending higher. Our highest probability trade is to buy the first pullback to that breakout zone. We are there or thereabouts. Only if this fails can we deem this move off the recent high as more meaningful.

To Australia. Yesterdays SPI day trading plan played out very well. We saw a strong trend day that took us up to the previous highs and target of 4280 where the market made a short term high. I stressed the importance of following the intraday trend and paying heed to the previous days strength.

SPI 60mins:
We hit the 4280 target yesterday

XJO Cash 60mins
However, the cash market did not challenge the previous highs. The more likely trade is that we get there before a more meaningful top/pullback.

My SPI range: 4250 to 4300. Outlier levels 4230 and 4220.

My SPI day trading plan. We are indicated at 4255 early. Yesterday 4250 provided a major inflection point. I believe this should offer good support early. Thus, I will be looking to buy this level with tight stops, looking for a run back up to 4280 and possibly beyond. Note yesterdays low of 4230 is also a good long scalping area if 50s do not hold. On the upside, I will be looking to short fade 4280 but this is for a scalp only. Given that the cash market did not hit its previous highs, I think we may still see a push higher which could take the SPI to as high as 4300.

p.s. the Hang Seng is the one market I have been watching with real interest. The market nailed that resistance zone and sold off. When I drop down to a 5min timeframe, I clearly see an impulsive move lower and a corrective rally. This implies more weakness ahead. This may have an influence on Australia but as ever, trade the underlying.

Hang Seng Cash 5mins: