Wednesday, 20 June 2012

Initiating Shorts!

Morning All

This is another one of those important posts. Since S&P500 1290 (June 7 post), my central case has been for a strong countertrend bounce in risk assets led by the S&P500 with an idealised target up to 1350/1365: Last night we finally hit this target zone and thus this trading scenario has played out well indeed. Asian Equity markets have also been dragged higher as we anticipated. This is the value our analysis offers traders and investors alike.

Now I believe it is time to re-initiate shorts. No doubt this market could still go some way higher in the short term, especially given the FED meeting tonight. However, the central point to make is that we have confirmed major trend changes lower across global markets. It is always difficult to time the "top" in these countertrend bounce sequences and you have to be willing to sit through these squeezes.  The real money will be made holding core shorts now through the summer months into September/October. The simple fact that price has rallied strongly into this FED announcement implies that there is a high level of expectation. Ben better not disappoint.

Some notes:
  • The 61.8 Fib at 1365 was hit on the S&P500 cash overnight (1355 SEP futures). There has been no confirmation of a short term high but my preference is to begin scaling here on the short side. 
  • Key risk is obviously the FED meeting tonight. I cant rule out a spike up to 1385/1390 if Ben pulls a real rabbit out of the hat. However, it is supposed to feel like this at these key junctures i.e. that this is the beginning of a new trend up. You have to be willing to sell it when everyone wants it.
  • AUD has not shown a meaningful reversal or short term climatic pattern at this stage. This does concern me slightly in the short term. However, no doubt it is up against some meaningful overhead resistance. EUR looks like a clear Flag pattern or A=C bounce to me off the recent low.
  • ASX200 is indicated around 4160 first thing. The base pattern I showed the other day has clearly been triggered. Note there is a minor res level at 4160/4165 first thing but the main target is 4200/4250 for the big picture shorts. 
  • A Shares continues to dwindle and underpeform. I believe this is very meaningful and indicative of a major break coming. 
  • HSI has fulfilled my forecast and is now coming into idealised short levels at 19800/20k. 

S&P500 Daily:
Retest of major resistance level. Strategic view remains to re-initiate shorts at 1350/1365, stops above 1400. 

S&P500 60mins:
Res zone in more detail. Note the potential inverse H+S projects up to 1390 as an outlier level. 

DOW Industrial Daily:
Retest of meaningful resistance. 


ASX200 60mins:
Breakout of base pattern. Minor res at 4160/65 today but the real zone for aggressive shorts to me is 4200/4250. 

HSI 60mins:

A Shares 60mins:
Has failed to bounce in line with other markets. Looks like a flag pattern below the key triangle trendline which implies a continuation of the trend lower in coming days.