Reflections On The Week That Was

Morning All,

I know I am a cynic. I read the weekend papers and I cant help but cringe. The sensationalism, the drama, the retrospective reasoning. Anyone reading the financial press last week and this weekend would have thought the financial world had just ended. To be sure, the headlines have certainly changed and it may feel like we are on the edge of a precipice, but really the market continues to repeat identifiable patterns and characterisitcs. We talked about the topping patterns across assets here on this blog long before the market broke. We had the capitulation low right at 1102 fib support. There was a perfect retest of this area at the end of the week for a great double bottom trade. Despite the news, despite the volatility, nothing we are witnessing has not already happened before in the market, and the technicals continue to be the guide. It all comes down to experience, identifying low risk opportunities, and being able to put emotions to one side.

We begin the week in Asia with a nice gap in Australia and across most of the region. However, the All Ords is well advanced in its rally vs the rest of Asia and is now testing decent overhead resistance. See the chart below. We did not get the depth of the pullback that I was hoping for last week which makes me think that we may see some short term weakness out of these current levels. V shape lows are very rare (and very difficult to join). There are a number of stocks that are testing overhead gaps and the previous breakdown level- thus this is an area to be cautious and looking for potential resistance/fade trades.

ASX200
4240/4250 is the 38.2 retrace off the high and a previous important high prior to the breakdown. I do think this thrust can go as high as my zone "2" in time but this first area should be significant. I would be waiting for confirm before shorting here though as V shape lows can keep going and going. I do not think we trade as low as tuesdays lows so be very nimble with any shorts.

SPI Futures Day Sessions 60mins:
Open gap and possible wedge type pattern. Note there is a good looking breakout trade in the eminis tonight above 1185 which could invalidate this.


A number of people have asked me what my long term thoughts are given the recent action. To be honest, I really do not know and I don't want to try and predict. This is why I choose to be a trader and not an investor. So many traders fall apart when they try and project beyond a reasonable timeframe. This market continues to look like my 07 parallel and if this is indeed the case, then we are no doubt set for some very tough times indeed. Who knows if another round of QE3 takes place though that completely changes the game. Whos to say that the short ban does not extend beyond Europe thus altering the dynamics of the market? We do have topping patterns in the S&P500, the Nasdaq 100, the ASX200, AUDJPY, AUDUSD and Crude. Thus for me I would be using decent bounces into the end of August/mid September to really position on the short side. The best times to be short are never after the initial panic as I keep saying.

Thanks
Austin

The Test

Morning All,

The volatility continues. I said yesterday that I was out of stocks as the snapback trade had played out, and that I would welcome any overnight retest of Tuesdays lows. Well here it is. To me, it seems everyone sold the bounce in a deemed "dead cat bounce" last night. This is now setting up some great test trades and double bottom trades in Asia today.

The SPI is indicted around 3995/4000. I could see us testing 3970/3975 pretty quickly on the open. I will look to buy this level first and ff this level does not hold, there is room to fall all the way down to  3900/3875 so be nimble and willing to short intraday if we don't hold early. For the bigger picture traders, the next 2 days are great buy opportunties with stops vs Tuesdays lows. It is that simple really to me.

SPI 5mins
These are the intraday levels for the SPI. I don't think we will retest Tuesdays lows so I am looking to buy the Fib retraces. It goes without saying- be nimble.

Given the hammer and bullish reversal out of the 61.8 fib level, you have to buy this dip in Australia to me today offering a great risk/reward trade. Note what happened in March 2010 at a similar juncture with similar characteristics.

All Ords Daily March 2010:
Note the hammer, 1 day follow through followed by a retest of the low that held. I think this is where we are at.

And now:

I am also looking at 1115 and 1100 in the S&P Eminis. We will see pullbacks today of course across Asia and I would be looking for test trades across these markets.

Thanks
Austin

What A Day

Yesterday was one of the best trading days of my life. No one likes a gloater but I do think reflection is really important for development and for reaffirming all the positive things we do in this trading game.

Everyone was doom and gloom yesterday. People were talking market crash, runs on banks, P3, forced liquidation etc etc. Now I am not saying that I was not immune to these fears but the simple matter of the fact is that I have been here before and I know these moments present huge opportunities doing the uncomfortable thing. As a trader you have to think differently from the rest and really understand how the market works. The best time to be short is never AFTER a panic move out of the high. You have to to do the analysis, have a plan and put emotion to one side.

If you believe in the power of technicals than all the news and rumours should mean nothing. I titled yesterdays post 1102. The low for the S&P500 cash last night before a 70pt rally was 1101.60! Technicals mean nothing you say? It is all about how you manage yourself. I just sold my long emini position at 1176.50 for a huge overnight gain (I think my biggest ever). Look at how the All Ords reversed out of the 61.8 fib retrace. The papers will give you this reason and that reason for the rally but the simple matter of the fact is that this level was right there for you BEFORE the event happened.

Here is yesterdays post before the huge reversal: http://swingtradersedge.blogspot.com/2011/08/1102.html

So the snapback has occurred and we have seen a 3% gap up today in Australia. I have just sold the long basket of stocks purchased yesterday. I am sure I am probably early but the trade has played out. The market will do 2 things here I believe- we could retest yesterdays lows once more and this would present a great buying opportunity. If we do not get this test tonight in the S&P500 then I think we will grind higher for at least a week or so and look for targets of 1200/1220 S&P500 and 4300 ASX200. We also have strong hammers in confirming markets such as Copper and AUDUSD. This market is set for a good bounce in coming days/weeks so get positioned if there is any panic retest tonight.

ALL Ords Daily:
The low right on the 61.8. This market has put in a BIG swing low.

S&P500 Daily:
The low right on the 38.2 as forecasted at 1102



Eurostoxx Daily:
The low just beyond the 61.8 retrace. I have used the Jan 2010 high here

There were similar reversals across Asian indicies yesterday. Hong Kong and Australia staged the best recoveries from ideal levels. For now we are holding the morning gap but there has been little additional gains from the morning opening thus I am am short term cautious. However, any overnight panic would present a great buying opportunity as a good short term low is in place.
Thanks
Austin

1102

Morning All

(UPDATE 14:00 Sydney time) Australia is surging after the All Ords clipped my 61.8 retrace level. We will see a big hammer on the close. I got stopped out of my S&P futures but re-entered at 1090. I have bought the basket of long stocks in Australia as I said this am. Now we await Europe. Cmon

I wake up to see the S&P500 -6.66% (spooky hey). Last night I highlighted 1145/1150 and then 1100/1105 as the targets for this move lower. I didn't expect the latter levels to get hit so quickly but hey, this is panic. Have a look at an intraday chart of the S&P500 and you can see how sharp the moves are when these levels break. Once again, it is a day traders dream so keep trading the levels.

I could show hundreds of charts showing how broken this market is but that is not of value. I could list a thousand things that scare the hell out of me and that is unnerving this market. However, most of that is mere hindsight now and we are dealing with the now. I will keep it very simple- I am buying the market here at 1105 futures. It is Tuesday (my reversal day), we have hit the 38.2 retracement level. Everyone is scared shtless. It is thus time to put on a small low risk trade and add if we see confirmation.

These are the levels:
S&P500 1102/1105 (38.2 retrace from 2011 high to 2009 low)
ASX200 3800/3850 (61.8 retrace from 2011 high to 2009 low)
Eurostoxx 2250/55 (61.8 retrace from 2011 high to 2009 low)

These should be formidable. This is what happened in 2007 after the initial panic off the high:

SPX 2002 Low to 2007 High

And if we zoom in at this area:

And now:

No doubt this is bottom fishing. However, I am playing a simple level with the right stops into panic. I would do this time and time again. In Australia today I have pulled up a number of levels in leading stocks and will be looking for these to hold in the first 30mins. If they hold, I will also be buying a basket of stocks for a small position and adding if we seeing confirmation in the next day or so. Keep it simple. Of course it all looks horrible and there is blood on the streets thus the longer term traders need to see confirmation BEFORE getting long.

Austin

ASX200 Daily:

Are We There Yet?

Good Evening All,

Another trading day has closed in Asia, and we have just seen another pretty horrible session across the board. Tonight will probably be another difficult one in Europe/US especially with rumours circling of a run on Socgen and Unicredit. It all feels a lot like the initial panic in August 2007 when the interbank market froze and Northern Rock went belly up. Technically, the 2007 parallel scenario I showed back in June continues to play out perfectly: http://swingtradersedge.blogspot.com/2011/06/party-like-its-2007.html. If my take on the market is right and this parallel continues to play out, we are now in the final stages of a short term capitulation low. 1145/1150 and then 1105 are the key levels for any low. Of course this is a wide range, but we are dealing with extreme volatility.

As day traders, we thrive on this volatility. These are the times when you should be (and have to be) making your year. We saw a 100 point intraday swing on the SPI today as we traded around the big 4400 level. Many chances to get long and short intraday all with tight risk.

As swing traders, I restate that now is not the time to be short for the bigger swing. As we are witnessing, there will be government interventions and changes to the rules in the game that will cause violent short squeezes. These can be very painful. It really is best to keep it nimble and NOT be wedded to any one position. The real money now will no doubt be made from buying this market once we have found the short term low. Easier said than done. However, like in 07 and many other market tops, price is now reaching a climatic extreme coupled with climatic selling volume. When there is this much fear, you have to be willing to buy when it lines up.


S&P500 Daily:
Here are simple vanilla targets for this move lower. Should we see a break of Fridays lows in tonight's trading, 1145/1150 is the first major target. This is the 61.8 retrace off the 2010 lows.

S&P500 Daily 2009-Current
And if we see real panic, 1105 is the big 38.2 retrace off the 2009 low. I don't think we will see this level on this leg down, but later in this bear trend this level should prove to be an intermediate low and major turning point. Note the Jan 2008 low bottomed at the 38.2 retrace.

S&P500 2007:
This is the parallel and topping pattern I have been following. Note the panic move lower on the break of the upward sloping trendline. This move bottomed when price was clearly overextended out of the bollinger bands. The entry signal was a wide ranging bullish closing bar back into the bands. A 100point+ rally followed suit.

S&P500 Current:
In similar fashion, price is clearly overextended and treading out of the bollinger bands. I am looking for a bullish wide ranging closing candle to get long for a significant rally.

ASX200
The 61.8 retrace comes in at 3850. Today we tried to put in a low but the rally failed in the afternoon. I think any move lower into this level will set up a great buying opportunity.

Thanks
Austin

So What Happens Next?

Morning All,

Well I was wrong. You always put yourself on the line by writing a blog and last nights action certainly blew away my short term analysis. It is a shame- I had been bearish and right early in this distribution process showing the 07 top parallel, the topping patterns in Equities, the Double Top in AUD etc but I overtraded. Ultimatly, I tried to buy support last night and got caught. It seems the whole market got caught and that is how these sell offs manifest themselves. It is all about leverage and liquidity- when levels break there is forced selling, liquidation and it all spirals out of control in this electronically driven environment. If anything, this whole move shows the importance of obeying stops at all times. Really, anything can happen at this moment.

Right now we are in panic mode. Panics do not make for good shorting opportunities as the bulk of the move has played out. If you want to short down here you will have to have very wide stops which dont justify the risk/reward. Equally, stepping in front of this before confirmation is a ticket to the poor house.

This is what I am thinking. We have levels where the S&P500 can make a low at 1195 then all the way down to 1105. We are at that first level come last nights action. This correlates to 4075/4100 ASX200. We again saw a huge volume spike last night which is indicative of a capitulation low. Today is 610 Trading days out from the March low thus there is the chance of a turn for the cycles men. I also think that there is the very real possibility of government intervention or a FED announcement today or coming into the weekend to calm the market. The game is rigged and has always been rigged from the long side- that is why shorting is just so tough. I have seen this time and time again in my experience. I do think we see a strong snapback given some of these factors and this will last for a period of a week or so (think flash crash) but I am just not certain yet if it is today. We will then see one more retest of the low before a genuine bottom and intermediate low can form.

Right now, the only way I can play this is with tight risk via futures. Futures offer the ability to be wrong and get out of the market without too much pain. The time for buying a basket of stocks is not clear yet.

Here is a chart of the ASX200 target levels coming into today at 4075/4100

ASX200 Daily:
ABC target at 4100/4130

ASX200 Fib Retrace

50% retrace and prev June 2010 high at 4075

S&P 500 Climatic Low Is In!

Morning All
I was looking for a climatic low in the S&P500 last night and we got it, although someway below my ideal levels. Unfortunately, these overshoots are what can happen in panic situations and these type of junctures. No matter. We had an extreme volume event with 1.2bln trading on the NYSE which is the highest we have seen since this market topped. Price traded down on the open and broke through the 1250 level but reversed in the first hour of trading, closing up on the day. This is a classic bear trap. Also note that many technicians are calling a "confirmed Head and Shoulders" and neckline breaks etc. All this after a 100pt move off the high! These are the worst trading patterns and indicative of a bearish extreme.

S&P 500 Daily:
A hammer right out of the previous March lows and 38.2% retracement off the 2010 low. Hammers after such a steep decline are one of my favourite trading setups for a short term long swing.

S&P500 Daily ii
Note the clear overthrow of the Bollinger band and the close back inside. This is a buy signal and indicative of a panic extreme.

S&P500 Daily iii
This is the H+S pattern every blog has been showing of late. This is a classic bear trap as the pattern triggered last night only for price to rip back into the bears faces.

Thus in the short term I do believe we have seen a tradeable low. Price could retest last nights low one more time before the genuine bottom but that is not my primary view. I am looking at a target of at least 1280+ in the next couple of days.

Thanks
Austin

Trading an S&P500 Low

(UPDATE) Looks like there has been some government intervention in EUR and S&P has just moved 7pts in a straight line from when I wrote this post. I got long and will be adding come cash open.

As per my morning post, I am now looking for a short term trading low in the S&P 500. We have seen a good move lower and as a short term trader, I am now looking to profit from the panic and hysteria at these levels. The best times to short are when everyone wants it and the best times to buy are when no one wants it. This is a short term trade only and needs real discipline and tight risk. Hopefully the charts below demonstrate my thinking at this juncture.

Firstly, we are seeing bullish divergences on the 5min chart with a clear 3 step push lower. These ending wedges and 3 push moves are ending patterns and great setups for a turn.

S&P500 5min Cash:

Secondly, price is coming into clear support/low end of the range on the Daily. As shown, 1245/1250 is the area of the previous March low and also an area where A=C off the high

S&P 500 Continuous Futures Daily:

Finally, there is also a clear fib relationship between the 2 major waves lower off the July high. Wave (iii) or C is 1.618(i) at 1246.

S&P Futures 15mins:

Thus there is a clear buy zone at 1246 to 1250 in the S&P futures. I would be buying a small position when the cash market opens and then adding with confirmation i.e. hammers/break of the ending wedge/whatever confirmation from price you use. This is a great risk/reward trade with stops below 1240 and the target at least 1265/70.


As a final backdrop, AUDUSD has now played out my Double top pattern and I would be covering shorts. Once again, you have to develop a low risk idea at all times and characterise the market for the best possible trade. Here we are trading back into good supports and the upward trendline.

AUDUSD Daily:

Morning Thoughts

Morning All

US indices had another wide ranging down day overnight and the market continues to confirm the analysis presented here. It is all getting very real. I have a lot to get through before the open so I will keep this post brief with more to come this afternoon.

We have seen 2 wide range days down in the S&P 500 from recent high and I anticipate a short term trading bottom/capitulation low tonight. Markets often turn after a 3 day move from high to low. Key areas to watch are 1245/1250 and 1240 futures where there is a confluence of support and relationships. I am sure there are many technicians now who are now calling for a confirmed H+S top and iii of 3 down etc which makes this ripe for a capitulation low. From here, I am looking for a short term bounce back up to 1280s and this is another great area to add to shorts. This is short term trading only, the bigger picture is not good.

I have been stressing many bearish patterns and distribution profiles across markets. S&P distribution, Nasdaq Megaphone/Triple Top, Shanghai breakdown, ASX200 triangle breakdown, Copper bearish reversal candle, AUD double top etc etc. This continues to play out and it has become increasingly likely that a major high is in (short term bounce aside). I thought the market was following the 07 profile and unfortunately I put this aside 2 days before the high. The similarities look eerie to me.

S&P500 Daily 07
Note that a genuine turn out of the low only began with 2 strong hammers and after real panic. Look for this before getting long for a longer swing.

S&P500 Daily Current

ASX200 Daily:
ASX200  we have been in a volatile range from 4450 to 4650 over the last month or so and this will be broken today. We have minor supports at 4315 first thing today but I think we are more likely to see a thrust down to 4200/4250 in the coming days. No need to step in front of this yet given the breakdown of the recent range.

It Wasnt The Bears Who Got Trapped

Morning All

O no. US lawmakers did what was widely expected and the market followed script.....for less than a day! I must have read about a "relief rally" a thousand times over the weekend. And what we got instead was a good old slap in the face. Last nights action was nothing but bearish with the gap up completely filled. I highlighted a good turning point area on Friday at 1285 but the inability of the market to hold onto any kind of gain is indicative of a market in distribution. The heavy hitters used the bounce to sell stock. NYSE advancers were as high as 1600 on the open and closed at 646! The price action itself speaks volumes. This could be a really horrible week indeed and I have growing conviction that we are on the cusp of a major move lower. Are we looking at a potential breakdown into the end of August which will force Ben's hand come the Jackson hole meet? Don't rule it out. Now that this debt ceiling charade is off the agenda, the market is turning its attention to the economy. "It's the economy, stupid".

S&P500 Intraday
The importance of waiting for the cash open! I stressed this in my comments field last night and last nights action clearly illustrates paying heed to actual trading vs the futures driven after hours robotic ramp ups. A market that gaps up 20pts and tops in the first 5minutes is not indicative of a healthy market. 1305 has now become major res and a line in the sand for me.

Also note that NYSE new 52 week lows surged. Interesting that this has spiked beyond the June readings despite the fact that price has not breached this low yet. This is yet another sign of distribution.

NYSE 52 week lows:

S&P500 Daily:
I have seen many Elliott counts depicting a Wave 4 triangle. The fact that the biggest bear blog out there (and worst trading blog) has been showing this bullish count makes the cynic in me disregard this wave 4 idea. The thing with Elliott is that you really can create any count all within reason. Here I have shown a valid count that shows this market has topped and on the verge of a strong sell off. Breadth supports and this is all in line with the other Daily distribution patterns I have been showing here. Also note that the market is retesting the 200SMA. This is not healthy. The first bounce worked well but the market should not be retesting this moving average so soon. Read High Chart Patterns blog for more information regarding this.

Copper Daily:
Copper put in a bearish reversal candle right at the top end for the range. I would expect some follow through to the downside at a minimum.

So where does this bring us in Australia? We had a false breakdown on Friday that was followed by a bullish wide ranging day on Monday. Futures are indicated at 4390 on the open thus ALL OF YESTERDAYS GAINS HAVE BEEN REVERSED OVERNIGHT. Not good action and this is all in line with the triangle pattern I have been showing. Expect a thrust lower in the coming days and I am looking for 4200 (minor support at 4325).

ASX200 Daily:

Today I will be watching the 4378/4380 level on the SPI futures and will be shorting if this level drops. Look for intraday resistance at 4415 and 4425.

In sum, the S&P500 remains in a period of distribution within a range. It is increasingly likely to me that we are on the cusp of a breakdown and the high is in. The technical picture across Asia is a mixed bag with Australia being the major underperformer. 2600 is of major importance for the Shanghai Composite and if this level goes in the coming days, I think the whole region will be dragged meaningfully lower. I cant stress enbough the need for preserving all capital and keeping it really nimble here.

(UPDATE 11am Sydney time) The ASX has held the 61.8 retrace from Mondays high to recent low all morning. Price has failed to breakdown thus far and taken out my intraday res levels. If this is going to reverse lower, it needs to do so now as Asia comes in at the 4435 level. For now, bullish action).
Good luck

Austin

Gambling vs Trading

Morning All,

Last night we saw a small rally in the S&P500 that completely failed, and the market went on to retest its lows. I expected the market to continue the move down last night at a minimum and this played out. When a market makes a new momentum low, our highest probability trade is to sell the first pullback. That trade worked well and we are left in a position where the market can genuinely do anything. I don't know about you, but given the position of this market, and given the magnitude of the discussions that are going to take place this weekend, I am happy to have absolutely no position. Taking a major position ahead of this event is gambling, not trading.

To me, this market is tired and is showing increasing signs of distribution. Of course, there is a very real likelihood of lawmakers putting something together over the weekend resulting in a equity market rally. The key levels I am watching the S&P500 are reiterated below

S&P500 60mins:
We have key pivot level at 1296/1300 (which is also the 61.8 fib retrace off the June low), and there is a potential A=C move lower target at the 1285 level. If this market is going to hold in, it is here. I am thinking we see one more session of weakness/panic into the low end of this range and then look for hammers etc for confirmation.



Just food for thought. The market is pricing in almost ZERO chance of a default. The overwhelming consensus is that a deal of some sort will get done despite the persistent politicking. I don't necessarily disagree with this. However, given that the market is not positioned for this event, there will be genuine panic if these levels do go and if something does not happen on time. Again, we cannot know in advance thus wait don't  gamble.

I received an email from a reader (nice one Erik) who suggested that a bullish "E" leg of a triangle was forming on the S&P500 Daily. I cant refute this and it would coincide with this final support zone that I am mentioning here. Personally I think this is the lower probability event but I await the price action come Tuesday.

Another Daily chart that is looking interesting to me here is the AUD Daily. I talked about this the other day and we are now seeing confirmation on the Daily of a possible Double Top trade. These are great risk reward trades and you have to be willing to be contrarian in these situations.

AUDUSD Daily:
Reversal candle right out of the resistance area. Get short and there should be immediate follow through otherwise cover.

The Australian market is hanging right on the edge here. This 4450 area have been tested on several occasions and the bounces have been anaemic. I think it is only a matter of time before this breaks.

ASX200 Daily:

India Daily:
I was concerned about false breakouts. Here is the first one in the region. Not good

UPDATE
S&P Futures are getting hit here. Panic into the 1285 support level.

On The Edge

Morning All,

The S&P 500 broke through my short term 1330 support level last night and we trended lower all day. Breadth was very bearish with 1729 decliners to 113 advancers. Expect a continuation of this move tomorrow at a minimum. On Tuesdays post I said  "my take on the S&P 500 is that it is trading at the top end of its range. Thus, this remains a fade vs 1345/1350 and look for breakout trades above." This has played out very well given yesterdays move and now we coming into the low end of the range and final supports. I could make a very strong case for a number of topping patterns across markets as the charts below illustrate.

S&P500 15mins:
This was my short term pattern coming into last nights session. Price gapped through the 1330 level on the open and never looked back.

S&P500 Daily:
Price has now sold off sharply from the top end of the range. I am not a big fan of Head and Shoulders patterns but not doubt this is a market that is tired and unable to break higher. A close below 1295/1300 would seal this I believe.

Nasdaq 100 Daily:
This is also a clear topping pattern. Megaphone top/Triple Top/Failed breakout- call it what you want but this market has repeatedly failed at the previous highs at top end of the range.





Crude Daily:
I talked about this pattern some weeks back and now is an opportune time to update. This looks like a countertrend wedge pattern back into the previous breakdown level and the pshyc 100 level- a great low risk short area.. Price has closed below the wedge and look for confirmation that this market is spent.

EURUSD

Some of my favourite trading setups are failed patterns. I read so many blogs of late about the "downward trendline" in EUR. Sure enough we have seen a breakout and complete rejection back into the range. This is also the 61.8 retrace level, a great area for a genuine high. Note the engulfing candles highlighted in the rectangular box. It is also interesting to note that AUD has surged into the 1.10 level and is setting up a great potential Double Top. It looks climatic to me but there is not enough confirmation yet.

This does not have a great read across for Asia. I have shown a number of bullish and bearish setups across the region in my recent posts: http://swingtradersedge.blogspot.com/2011/07/mixed-story.html.

If Singapore and India fail to hold their respective breakout lines, it is likely to mean the high for these markets also. China remains in trouble. Australia is holding its previous lows for now but there is very little conviction as I write. There is no volume and nothing being done by funds.

In sum, I have 1290 to 1300 as the final supports for the S&P 500 (pls read below ) so short term traders could be lightening up shorts into this zone. I would expect a test of these levels at a minimum coming into tonight. We are still in a range so there is still a possibility of the market holding at these support levels but the overwhelming backdrop looks bearish to me.

Levels to watch:

S&P 500 Cash Supports

1295/1296- Prev interim low on 19th July.

1295- 61.8 retracement off June low.

1285- A=C move off the July high.

The Waiting Game Continues

Morning All,

Nothing clear coming into today. This market remains in a range and no doubt the move in Equities will come as we reach a resolution with the Debt Ceiling. I am amazed at how resilient (or complacent) the market is currently despite this genuine potential threat. I have always been of the belief that a market that shrugs off bearish news is indicative of a strong underlying trend. We will see.

Looking at the S&P 500 index, the market appears in a short term consolidation pattern. 1330/1228 is key short term support and as long as this holds, look for short term breakout trades for a retest of the highs.

S&P 500 Cash 15mins:

In Australia today, the SPI futures are indicated at 4520 right back down to yesterdays lows. I really do not have a clear pattern or setup currently. In situations like this, I like to trade the levels and keep it really nimble for scalps only. I am looking at 4505/4500 as support and 4540 as resistance. I will have my eyes firmly on the Shanghai Composite when it opens today. Given the strong breakdown the other day and new momentum low, the highest probabilty trade is to short the first bounce looking for a retest of the low. 2715 and 2730 look like potential resistance areas today.

Shanghai Comp 15mins:

Bigger picture there are a number of markets now "testing" their previous highs whilst other still lag which is setting up all kinds of divergences and dislocations. AUD is now testing 1.10, the Nasdaq 2415/2420 and Copper is on its way to test its previous highs. Possible double tops? Note S&P 500 still remains some 20points off its high whilst all Asian indices are well off their highs with some breaking out of consolidation patterns whilst others such as Australia languish. Not an overall healthy picture to me.

Austin

A Mixed Story

The technical picture across Asia is a mixed one indeed. My main fear yesterday coming into the session was China's inability to rally despite the positive leads from the US. When the 2750 level broke early, we saw a very strong trend day lower. This market is in a very pecarious postion indeed. How long before this has a genuine effect on the rest of Asia and maybe even the globe?

No doubt we are in a tough summer trading environment. I thought the best thing to do at this point was to break the Asian region up into the Bulls and into the Bears. At some point I imgaine all these markets will align so be prepared for false breakouts etc
BULLS

Singapore Daily:
As can be seen, the market has broken out of a big consolidation pattern. Yesterday saw a test of the breakout line on a weak day, but the market held in positively. Look for breaks of 3180 for a genuine move higher.

India Daily:
On the cusp of a major breakout? The market has been coiling up under this overhead resistance level and expect a range expansion imminently either way. Note the influence the 200SMA has had on this index.

BEARS

China Daily:
The recent rally has run out of steam. Yesterday was a strong bearish trend day and I would expect continuation at a minimum. If the recent June low at 2600 breaks, we are in trouble.

The Longer term daily chart shows the broad consolidation pattern. Some weeks back I stated that the false break of the low end of the trendline was a great bear trap and failed pattern. If this low subsequently breaks, expect a very strong move lower indeed. Are we looking at a sharp C wave move lower?

NO MANS LAND

Australia:
We have a tradeable low in place at 4450 in the XJO. However, ever rally gets quickly slapped down. Look for breakout confirmation above 4600 and I remain positive as long as we hold 4500.

No doubt the resolution of the debt ceiling debacle will give this market the catalyst it needs. My take on the S&P 500 is that it is trading at the top end of its range. Thus, this remains a fade vs 1345/1350 and look for breakout trades above.

S&P 500 Daily:

Thanks
Austin