Monday, 27 February 2012

Monday Plan

Morning All

I apologise but I am still having problems uploading my charts.

The S&P500 cash made a new high on Friday night and thus fulfilled my recent trade idea to buy in the low 50s looking for a retest of the recent high. Now it gets tricky. I think there is the potential for a pullback/reversal come Tuesday or Wednesday this week as once again this uptrend is running out of steam.

First of all, the S&P500 is now right at the 1370 target zone. No doubt I have gone early a few times but this is the nature of wide target zones. A ideal setup would be a push above 1370 to 1375/1380 and then a sharp reversal back down below 1370. This would be a short signal for me.

S&P500 Daily:

Despite price making new highs, breadth has really failed to follow through and shows some bearish divergences. For instance, NYSE closing advancing issues of late:

24th Feb: 1630 (closing Advancing issues)
23rd Feb: 2174
16th Feb: 2281
13th Feb: 2468

As u can see, despite price making new highs, underlying issues are just not confirming this recent push higher which is not healthy. Volume has also dropped off a cliff with only 640k on the NYSE on Friday which is the lowest reading I have seen for a while. Furthermore, we once again have clear momentum divergences on the lower time frames given Fridays test.

S&P500 cash 15mins:

I have often found Tuesdays to be my trend reversal days so I am on the lookout for climatic reversal candles out of the 1375/1380 zone in coming days.

Australia has now fulfilled the recent forecast I made for a retest of the highs also. Now things get very tricky indeed. We are at the top end of the range and thus some significant resistance. Furthermore, momentum is now clearly waning. However, the short term trend is up. Thus, I believe the smart play as a swing trader is to be getting out of longs and standing on the sidelines. I believe it will be very difficult for the market to breakout here without a consolidation pattern/range first. Thus I am looking for a climatic reversal pattern to short and if instead we get consolidation, I will look to join a breakout to the upside and focus on this uptrend once more.

XJO Daily:

Clear res zone here. Bull amrkets do climb a wall of worry but its tought to be long right here right now in the short term.

XJO 60mins:

My SPI range: 4250 to 4300. Outlier levels 4310 and 4350. .

My SPI day trading plan: It is always very difficult to give an accurate range on a Monday given the weekend influences. Furthermore, today we have a leadership vote at 10am which may have some influence on trade although I doubt it. Thus I think the best play is to wait and gauge the early price points. As per above, I think we are now at the top end of the range. I will be looking to short fade 4295/4300 with tight stops and looking to buy the solid support at 4250. Keep playing this range unless we see a clear breakout of either of these levels. I will join a break of 4300 SPI on the upside, which opens up XJO targets of 4335 and then 4350. Note the SPI March contract high is 4294 and thus if we do trade higher, reference those XJO levels instead.

SPI March 15mins:
Target hit and clear divergences for now.