I want to keep this post relatively succinct.
-My central strategic case was/has been to initiate shorts in the SP500 1350/1365 region as a global proxy for world equity markets: http://swingtradersedge.blogspot.com.au/2012/06/initiating-shorts.html AND http://marketletters.blogspot.com.au/2012/06/initiating-shorts.html. The initial entry has given us a lot of room to ride this move lower.
-The first target and bounce zone for this sell off was 1300/1305 Emini SP500 as posted here: http://marketletters.blogspot.com.au/2012_06_22_archive.html AND http://marketletters.blogspot.com.au/2012_06_26_archive.html.
-Last nights price action and move has fulfilled the minimum requirements for this bounce sequence. It may still have some room to play out. However, the key message is that we have trend changes lower across equity markets. It is important here to focus on the bigger picture. Thus holding partial shorts or putting shorts back on in the 1330/1335 Emini zone is key, stops above 1350.
-This obviously has important implications for Asia and all global equity markets.
-I have massaged the market over the last few weeks and now I want to sit back and let the bear trend play out. If this is a genuine break, then markets will fall sharply out of the Euro Summit. If policy makers actually surprise everyone and come out with something meaningful- then so be it. A risk to my scenario is a move above 1345/1350 Emini SP500. Certainly I will have to pay heed to the market if that occurs and re-assess.
-Pls see the setups for the Market tops in 2007 and May 2010 before the big breaks. To me we are in an eerily similar junction.
SP500 Daily Now:
SP500 Daily May 2010:
(I realize that this may not be a clean "1" down in this example but I use it to explain the market positioning currently).
SP500 Daily 2007:
-Are we on the cusp of a 3 of 3 down moment? These kind of events are impossible predict and often wrong. However, my central message is that we have had strong move off the tops, complete countertrend bounces with confirmed bearish reversal candles (1360 currently), and now a squeeze out of the first support.
-My sell zone is 1330 to 1335 Emini SP500 with stops above 1345/1350 for shorter term traders.A break of 1300 would lead to a breakdown and confirmed trend lower.
ASIA
-Clearly my short term sell patterns did not play out in Asia yesterday. My message here remains the same. We are in a confirmed downtrend and thus selling into rallies is the key trade unless we see a meaningful base/bottom pattern. I don't see those at all yet.
SPI Continous 15mins:
Major res at 4050/4060 today and I will be putting on bigger picture shorts here.
Hang Seng 15mins:
We will gap up right into meaningful resistance this morning.
A Shares 60mins:
Note that the A Shares/Shanghai Composite did not catch a bid at all yesterday. This market continues to underperform and has remained my bearish play throughout the region. To re-iterate, this is not healthy for the region. Target is still down at 2250 minimum.
CURRENCIES
AUD futures:
I have highlighted the clear boundaries here. Bounced out of the support zone which was central to my bounce scenario across markets. Now up against resistance.A break of that support shelf will open up a protracted move lower.
