Tuesday, 3 April 2012

A Fresh Start

Morning All

A new month, a new p/l, a new high for the S&P500, new personal enthusiasm, and now onto the next trade. I am sitting here and smiling away to a favourite song of mine right now aptly called "NEXT GIRL" by the Black Keys: http://www.youtube.com/watch?v=x_PrT25o8Vs&ob=av2e. Its awfully cliche but this really is the tune I need right now to move on and stay positive :)

The post I put up on Friday played out very well with the S&P500 cash making a new high overnight and the DAX rallying relatively strongly off the A=C low: http://swingtradersedge.blogspot.com.au/2012/03/month-end.html.

Emini S&P500 15mins:
This was the setup I put up on Friday. We saw the breakout above the downward sloping trendline and last night we tagged the target area. We did fall a bit short of the previous highs at 1420 whereas the cash did make a new high. Is this signalling divergence?

What is the next trade? In the short term, we are trading at the top end of the short term range in the S&P500. This could also be somekind of 3 Indians/ending wedge although I personally think this is more likely a consolidation pattern before another genuine push higher up to 1440/1450.

S&P500 Cash 15mins:
This is the chart that concerns me in the short term. We are no doubt approaching some solid resistance after a strong 2 day run up. I think it is possible we see one more push higher into the 1420s and I will be on the lookout for potential bearish reversal candles.
The Emini S&P500 has sold off back into some supports. Thus I think the trade here is to look to buy once more around 1407/1410, stops below 1400, looking for a swing back up to 1420/1425. If we see real bearish reversal candles out of that zone than perhaps it is time to short.

Emini S&P500 15mins:

To Australia. Yesterday was a impulsive trend day lower. I havent seen a bearish day like that for a while. It was a classic gap up on euphoria and dump. Note that this happened right at the top end of the range after a clear 5 wave advance. Thus I think that we have put in a short term tradeable high and will be looking for fade trades in the next 24/48hrs in this market.

XJO Daily:
Bearish reversal candle right out of the top end of the range. A move back below that dotted line at 4300 would be bearish indeed and indicative of a false breakout.

XJO 60mins:
This is looking like a complete 5 wave advance with bearish divergences. These momentum divergences yesterday were a key tip off for that failed gap up. At a minimum, I would expect continued weakness throughout the week back into 4300.

SPI 5mins:
Yesterdays sell off was IMPULSIVE. We opened on the highs and sold off all day, closing on the lows. Thus I think the highest probability trade is to look to short this morning gap up into resistance levels. 4360 to 4370 should provide good short entries early.

Todays RBA interest rate decision at 2.30pm will obviously be the main event. The market has priced in no rate cut thus any cut will obviously be taken as a major positive for equities and bear this in mind.

My SPI range: 4330 to 4370. Outlier levels 4305 and 4380 on the upside.

My SPI trading plan: I will be looking to use this gap up early to get short into resistance levels. The bigger picture trend is up but I believe we have seen a climatic short term reversal. Using gap ups into resistance levels is a great low risk short fade setup. If we fail to sell, then look for possible breakout trades above consolidation to get long.

Core Ideas:
1) SHORT 4360, stops above 4365

2) SHORT 4370/4375. I am not sure if we will trade up this high but if the first fade level doesn't work, I will look to short this level more aggressively. Any move back above 4380 would clearly prove me wrong.

3) BUY a retest of 4330 and yesterdays low for a long scalp only.