Friday, 2 March 2012

Friday Plan

Morning All,

Well I'm pleased I covered something! Excuse me if I sound a bit cynical this morning but I just fancy a good old fashioned rant. Yesterday was actually one of the best trading days I have had in a long while so my frustration isn't born out of market losses. Perhaps missed opportunities. However, it's just that this market has become something of a joke to me. Just buy any dip. Just apply for a European banking license and get a 1 Trillion EUR handout or whatever it is to go punt on markets and tie up some loose ends. I doubt much of this money is actually being "lent" to businesses or for any other real purpose. Last night we had an ISM that missed big time, we had Oil exploding through the roof (just don't know how this is good for the economy) and what did stocks do? Yup, they went up. A good low liquidity melt up. Just to add to how farcical everything appears right now, the ISDA obviously came out and said that Greek debt "restructuring" certainly doesn't trigger a credit event and the bailout would not prompt payments on credit-default swaps. Of course. Why would it?

Breathe, breathe, relax.

Anyway, no new highs anywhere but probably only a matter of time. It makes me think that Thursdays sell off might just be a one day wonder.

 Yesterday I wrote (Emini S&P500):

"So for now, we have sold off into the first minor zone of supports. It is important to not get too ahead of oneself in these situations as the first dip in a uptrend usually gets bought. We have a number of supports coming in from 1350 to 1357. As per above, I have covered some of my shorts and will look to re-initiate on any bounces back up to 1370. I will hold a core position for sure given the initial confirmations and given the magnitude of this zone and because I am looking for a bigger swing lower from here. No doubt, I recognise that the lower risk play right here for short term traders is to look for buy setups into the uptrend with stops below 1350. All yours."

Ha "all yours". That certainly haunted me overnight. I have just re-iniatied more shorts back in this 70 zone looking for a possible double top trade but I will keep it real tight.

Emini S&P15mins:
That A=C move off the top proved to be the low. That first big dip always gets bought. Now looking for a retest of the previous highs at 1377 and failure. Otherwise, well its probably just going to keep going.

S&P500 5mins:
No new highs yet on the cash index. Looks like an overlapping mess for now.

DOW 5mins:
Interestingly, the DOW closed on its lows and did not get anywhere near to challenging its previous highs.

So all in all, I just don't know here. I think the best trade is to short a retest of that 1377 Emini high with tight stops but certainly the recovery off yesterdays lows was impressive. Furtheremore, given its end of the week, we will probably have to wait until tues of next week before a more meaningful sell off.

Perhaps its time for me to change markets and redirect my focus. One market that is actually respecting the technicals and trading within somekind of meaning is the Australian Dollar. On Thursday night we saw a sharp spillover from resistance and an impulsive looking move lower. In tandem with the bounce in stocks, AUD has rallied and is now challenging some great low risk short levels. This looks like a low risk fade to me in here with stops above Thursday nights highs.

AUD March futures 60mins:
That A=C long setup that I put up on the lows played out with precision and was the trade of the month. A rally all the way back up to the highs ensued. Now we have tested and clearly failed at resistance with a clear bearish reversal. Looking to now short the first retracement. Well here it is.

AUD March futures 15mins:
61.8 Fib retrace comes in here as well as the 1.08 level and previous failed breakout level. Should be a meaningful barrier and low risk short entry with stops above Thursdays highs.

To Australia. This is another market that has played out very well of late and I just need to keep the focus up here and not worry about whatelse is going on in the world.

My SPI range today: 4245 to 4290. Outlier levels 4300 and 4320. Outlier Supp 4230.

My SPI day trading plan: Given the overnight bounce, we are indicated at 4270 early. This market feels tired. We tried to breakout at the end of the month only to be firmly slapped down. Yesterdays bounce failed and we ended up closing right back on the lows. However, I recognise that the oil move overnight may give us a little added kicker today. More broadly, we are still stuck in a range from 4250 to 4300 and thus in the short term we must continue to trade around those zones. Thus, I will be looking to short fade a bounce to 4285/4290 with tight stops. Any move above 4300 opens up a retest of 4320 and would present a great low risk double top trade. Note yesterdays highs were 4275 and it looks like we may challenge this early so be wary if we fail straight up. On the downside, 4245/4250 remains solid. Buy it and sell it if it drops. I am keeping it that simple.

SPI March continous 60mins: