Thursday, 29 March 2012

Morning Thoughts

Morning All

It was great to get so much feedback on yesterdays post. Honestly, thank you very much for the comments and it really is interesting to hear about other traders experiences and personal journeys. Sometimes it is a good thing to just let things out and voice situations. I had some of the highest hits I have ever received in yesterdays post so no doubt relating personal experiences rather than just trading setups strikes a chord with many. Here is the link for yesterday if you didn't read:

I intend to keep narrative to a minimum today. I wanted to write something however given the interesting moves that happened yesterday in Australia as well as overnight in the S&P500.

The sell off in the S&P500 was sharper and deeper than I anticipated. Is this a sign of a more meaningful high and pullback? Note that the recent high was made on euphoria regarding comments from Ben Bernanke and the potential for more easing. That's how highs should be made- on bullish euphoria. However, also note that we are approaching month end and end of quarter- in my experience, I would anticipate a lot of "window dressing" into this period i.e. a potential rip fest.

Looking at the charts, I can see a few setups.

Emini S&P500 15mins:
Last nights 1405/1407 support zone did not hold and we saw quite a sharp thrust lower. This erased almost all the gains post Ben Bernankes speech which is bearish. However, the low was put in right on an upward trendline and ABOVE the 1385 zone i.e. a higher low. Thus I think the trade here is to sell a retest of 1405 with tight stops, flip to long if we see strong candles above this zone. I would BUY a retest of 1385/1380.

SP500 Cash 60mins:
It is quite difficult at this juncture. I could count this a complete 5 wave advance into the high with a double top pattern with bearish divergences. However, the clear alternative would be somekind of ending wedge type/3 Indians pattern with a further grind higher. It is a bull market and thus you just have to be prepared for this trend to continue.

SP500 Cash 60mins Count:
This is the one for the bears. Clear overthrow of the upper trendline which is indicative of a climatic top. Too early to call it but must be noted.

EURO Futures 60mins:
This is one of the most interesting patterns I am looking at right now. Remember Europe? This is a huge base pattern for the EURO under the 1.33 neckline (futures) and it is trying to breakout. Any failure to do so would be indicative of a FAILED pattern and bull trap. I think any move under 1.3250 would be bearish indeed.

To Australia, Strong breakout yesterday above 4300. Finally. However, how many false breakouts have we had both up and down? Bottom line, I would buy the first retest and if this fails, flip to short for a false breakout. Binary but it is what it is.

XJO 60mins:
Clear breakout above resistance. However, this market is just so frustrating. Could we be looking at a complete 5 wave move off the recent low to trap the bulls? I just don't know. BUY the first retest to that previous resistance zone first.

XJO 15mins:
Note that there was no real pick up in momentum behind yesterdays move. Certainly a reason to be cautious.

MY SPI range: 4320 to 4360. Outlier levels 4300/4305 and 4380/85.

Trade ideas:
1) BUY a retest of the neckline at 4330. Stops 4325

2) BUY a retest of the lower end of the neckline and fib retrace at 4320/4322. If this cannot hold, look to flip to short and look for the potential failed breakout.

3) SHORT a retest of 4360.