Wednesday, 29 February 2012

End of the Month

Morning All,

I don't want to go into too much detail regarding US markets in this mornings post. I see no reason to change my current view and setups which were all illustrated yesterday: Seeing headlines of "DOW 13k, whats next?" does nothing but add to my grizzly outlook at this juncture.

I scaled into shorts in the Emini S&P500 last night with an average around 1370. We did see a initial fall given headlines coming out of Europe but this proved to be short lived. I have no idea if this will reverse or where it will top, and I will only add once I see clear bearish confirmation. For now I want to be positioned small as I just cant miss out on this opportunity. For now stops are above 1380.

For what its worth, I do think we will see a little bit more upside in the next 24hrs. A number of global indicies look like they want to and need to "retest" previous highs before any new impulse down can begin. We also have the LTRO announcement at 10.15GMT and this very well could prove a catalyst to the upside for this algo headline driven market. Shock and Awe have proved to be the name of the game from global central banks so why stop now? I believe EUR400-500 is expected by the market so watch out for a number in excess of that. I believe any strong pop would set up ideal conditions for a climatic bearish reversal.

As per above, a number of markets look set for a retest of their previous highs. If they get there, this would set up great Double Top short trades. This is how trends change:

DAX 15mins:

Hang Seng 15mins:

AUD futures 60mins:

To Australia. Yesterdays SPI plan and range played out very well indeed. I said:

"I think the strongest play is to short early into 4275/4280. If we fail to sell off from here early, then I could see the market rallying all the way to 4300 and possibly 4310. Thus, I will be short fading 4275/80 with tight stops and looking to cover in the 4250s".

4281 proved to be the top and we made a low at 4250. That 4250 level continues to be defended. To me, very simply you have to get short when that level breaks but for now, we are still very much in a range. Given what I have said above, I would not be surprised if we actually popped today and made a challenge for the previous highs and above. Its a tough call here as the cash market never hit those previous highs and we cannot rule out one more push.

XJO 60mins:
Fell short of the ideal target area. Will we try and make one final push into those levels at 4315? It could be argued that the current lower high is bearish and indicative of a truncated high.

XJO 15mins:
Key support zone held yesterday (4250 SPI). Thus, this does setup the potential for one final push higher as per the count below as long as 4250 SPI/ 4255 XJO holds.

My SPI Range: 4250 to 4300. Outlier levels 4230/4233 and 4310. This implies that the 4250 does not break. If it does, don't hang around.

My SPI day trading plan: Very simply, if 4250 breaks, I will be getting short looking for a bigger move down to 4230 then 4200. However, until that time I will remain open minded with the possibility for a push all the way back up to 4300 (unlikely today). I think the most probable play is a rangebound type day until we hear more out of Europe. Thus, I will be looking to buy 4250/55 with very tight stops and short fading 4265 and then 4280 with tight stops also. Breaks of 4280 open up a push to 4300/4310 and I will be getting long to join a retest of the XJO cash highs.


SPI March 5mins: