Tuesday, 6 March 2012

Are We There Yet?

Morning All,

Bit of a misleading title for this mornings post. This market certainly feels tired and we are selling off from clear resistance levels. However, for now we lack the impulsiveness to the downside and thus I really don't know if this is the beginning of a bigger correction or just a minor pullback. I remain core short the Emini S&P500 from 1370s. Topping processes take time. I believe we are close looking across a number of markets. You just have to trade the setups in front of you for your specific market and soon I believe it will all align.

S&P500 Daily:
Hit the big double top level and we have seen a small pullback thus far. No clear reversal candle but no doubt, this market is in the slot zone.

Nasdaq 100 Daily:
A lot of headlines this morning given that APPLE was actually down overnight! More interestingly, we have the NASDAQ clipping the top end of its trend channel and last nights trading left a  Daily bearish reversal candle.

Interestingly, the Russell 2000 seems to be leading the pack and has broken down through a clear consolidation pattern on the 60mins. The DOW 60mins also appears to be building a clear rounded top pattern.

In Asia, yesterdays news of China cutting GDP forecasts certainly caused a little stir. The Hang Seng sold off quite sharply and is now testing the recent low end of the range at  21,000. The A=C high on the Daily is still very much intact. The Nikkei hit the 61.8 fib retrace from the Daily high at 9800 and has shown back to back reversal candles.  AUD broke through the 1.07 level and is looking increasingly impulsive to the downside. Amazingly, the ASX200 held in remarkably well. Certainly this 4250 level is being defended. We will be testing this level once again today. Does yesterdays relative strength mean that we have a genuine bid to our market and we will hold in?

Hang Seng Daily:

Nikkei Daily:

AUD 60mins:
My potential H+S pattern was triggered yesterday. Interestingly, momentum also made a new low confirming the move. Any retracements back into the short term downtrend or 1.07/1.0750 should be shorted. This still looks like a 3 wave move for now so some more subdivisions to the downside would be perfect.

My SPI day trading range: 4220 to 4270. Outlier levels 4200 and 4290/4300

My SPI day trading plan: We have the RBA interest rate decision at 2.30pm today. The market is looking for rates to remain on hold thus any surprise cut I imagine will be taken positively. If we see no early break of 4250, I believe trading will remain lacklustre until the decision. My plan today is to look to scalp long 4245/4250 early on with very tight stops. If we fail to hold I will short for a bigger swing breakdown trade targeting 4220 and more significantly 4200/4205. We have held 4250 for a number of days now and thus I believe it is only a matter of time before it drops but obviously I don't know when this will be. If we do hold in, there are a number of targets for any bounce to 4280 and then 4290. Keep trading that range. Keep on the lookout for the HSI open today as well as we will be testing key support at 21,000 early.

Interestingly, the mining stocks in particular look very weak. BHP and RIO are both well off their highs and the short term trend is very much down in these names. FMG put in a very bearish reversal candle yesterday so be on the lookout for more weakness there.

SPI 15mins:
If this 4250 level breaks, I anticipate a sharp C wave down to 4200 adn possibly lower.