Autumn Equinox

Morning All,

Yesterday marked a seasonal date for many of the "timing" experts and Gann followers out there, as we hit the Autumn equinox and the 161 week window for the entire market off the March 2009 low. More importantly for me is the price action into this window. Yesterday we saw a reversal right from the open in Australia and other Asian markets grinded lower for the session. AUD clipped my resistance zone and sold off all day and is languishing on its lows. Are we on the cusp of something more meaningful here? I wrote about interesting divergences going on under the hood in Asia in this post, http://swingtradersedge.blogspot.com.au/2012/03/asian-daily-setups.html, and now we are beginning to see small confirmation.

Lets have a look at some of the setups:

Hang Seng Daily:
We are now beginning to see more bearish reversal candles out of my resistance zone. I have labelled on the chart 3 noticeable bearish candles of late. Clearly this uptrend is tiring and this confluence of resistance has proved very meaningful thus far. Note that this is occurring while US markets have gone higher and higher.

HSI 60mins:
On the lower time frame, there are a number of lower highs in place. Yes this could possibly be a triangle forming of somekind but I think the inability for this market to push higher is bearish. As labelled here, we could be on the cusp of somekind of bigger C wave down. If we open weak today, don't hang about. At a minimum, I think we will retest the previous lows at A.

A Shares 60mins:
This chart is self explanatory. A clear triple top with a very strong sell off. Price has tried to rally out of support but looks to be failing in a clear flag type pattern. If we see more weakness today, this should be a great short setup with stops above the high of the flag pattern. Given that this whole pattern off the low looks like an overlappig wedge, I would anticipate any move lower to be sharp and quick. That is the nature of wedges.

AUD June 60mins:
I put this up yesterday and it proved to be a great short setup. The A=C zone was clipped almost to a tee and a strong reversal ensued. We are now at the low end of the range and coming into supports so this should be the first area to cover. I think it is too early for the bears to get too excited but note this could possibly also be the onset of a Wave C or 3 type move. Perhaps the rally has not had enough "time". More importantly, just look to cover into those supports and re short if it drops.

And so to Australia today. Yesterday my range and outlook could not have been more wrong. However, I actually managed to make money by heeding that bearish open and by following my alternative "what if" scenario. I have no intention of gloating here but my point is to stress the importance of having action plans and alternative scenarios for when the market is doing something you don't expect. The best traders I have seen are the ones who can be truly flexible. I said yesterday:

"I will be looking to BUY any retest of yesterdays lows at 4305 with stops under 4300. Any break of 4300 opens up a potential move to fill the gap into 4285/4290".

I bought 4306 and was stopped out immediately. The opening bars on the 5min candles were solidly bearish and thus I flipped to short and covered into 4290. The rest of the day was about getting into that downtrend and good risk/reward spots.


My SPI range today: 4260 to 4305. Outlier levels 4240 and 4315


My SPI day trading plan: 2 days in a row Australia has bucked the overnight lead. I believe this is a sign that this uptrend is tiring. We did not hit my "ideal" target spot but I can't fight this price action for now. The key zone of support today is 4275/4280 and we are actaully indicated right on this at 4275.  If there is no bounce immeadiately, look to short targeting 4265/4260. Down there I will look for buy setups once more. On the upside, I will look to short fade 4290 with tight stops. Breaks of this open up 4300 to 4305 and this should be well offered and thus I will short more aggresively up there. Much of my attention will be on the open of the Hang Seng and the A-Shares this afternoon given the key support levels those markets are testing.

SPI June 15mins:
The importance of 4278/4280 early. If this drops early, I am looking for a gap fill target at 4260/65.

XJO 15mins:
Some key support zones coming into today shoudl we break yesterdays lows.

Good Luck
Austin

Tuesday Plan

Morning All

I am not going to be presumptuous and head the post "Tuesday Reversal"- last week I did that with rather disastrous consequences. Another good move off the lows in the US overnight sees a small positive gain for the Australian market today. As we saw yesterday, we are grinding up against some serious overhead resistance here in the short term after an extended move off the low. There will be many false breakouts as we grind into this zone. They say that bull markets climb a wall of worry. Nowhere does this seem more apparent than in the Australian equity market (although I would not call this a bull market down here, but certainly overseas).

The below chart shows a number of obstacles our market has to overcome which should be formidable. At any of these junctures, we could certainly stall and reverse this uptrend. That is why it is just so difficult here right now to make any kind of forecasts and it is best not to. I continue to keep my trading in Australia tight and intraday. The US market goes from strength to strength but we are just not following through for now.

XJO 60mins:
Multiple overhead resistance points namely 4315/4320; 4335 and then 4363 as shown on the chart. No doubt the short term trend is up but its a very difficult area to get too bulled up

XJO 60mins ii
We fell short of my first target area yesterday. Rather lacklustre follow through despite positive leads from overseas. Another positive overnight lead should see us attempt to retest that 4315/4320 level at a minimum. Keep following that uptrend for now.

An interesting thing to note which should have a direct bearing on Australia is the AUD. This currency remains one of the key risk assets and a good lead indicator for global markets. It continues to languish in the short term vs overseas equities. I have managed to successfully navigate this one of late and now we are clearly bumping up against some major resistance. Be on the lookout for a potential reversal into here.

AUD March 60mins (this was my count before the contract expired)
Coming into overhead Resistance which is the previous Wave 4 pattern and a potential A=C off the low. I had this as a 5 wave move down off the top and there are a number of wave and momentum relationships that came in at the low.

AUD June 60mins Updated:
Res zone is 1.05 to 1.0550 in the June futures.

My SPI range today: 4305 to 4335. Outlier levels 4290 and 4350.

My SPI day trading plan: Yesterday attempted breakout above 4315 was slapped right back down and we grinded lower for most of the day. It is very difficult in this zone after such an extended run up. We are indicated at 4315 first thing and I do think that we have to give this short term uptrend the benefit of the doubt and thus look for more retests of the highs. I also have a potential short term breakout pattern on the 5min chart as shown below.

From the open, I will be looking to BUY any retest of yesterdays lows at 4305 with stops under 4300. Any break of 4300 opens up a potential move to fill the gap into 4285/4290 so I will be prepared to buy once more down there. On the upside, 4328/4330 was quite significant resistance yesterday so I will look to short fade this level once more for a scalp only as the trend is up. If it fails to sell there, this opens up a cut and reverse trade for a move higher. I do believe it is key to keep an eye on that cash chart at all times as 4315/4320 is my primary target for now until we see any meaningful bearish reversal.

SPI June 5mins:
Potential base pattern here under 4315. Price is forming a flag type pattern right on the neckline which could be the prelude to a breakout of some 40 to 50pts.

Thanks
Austin

Monday Monday

Morning All

As part of my Monday routine, I like to scan the Weekly Charts of major Equity Indicies. As I look at the weekly charts of the US markets this morning, I see pretty strong closing action above the significant 1370/1380 resistance zone. Thus, last weeks lows of 1366/1370 should become a line in the sand for Bull and Bears alike.

One of the main reasons for my bearish stance of late was a  confluence of a major resistance points coupled with waning breadth and volume. This resistance zone comprised  the May 2011 highs at 1370; a previous breakdown zone in 2007 at 1370; and the final major Fibonacci retracement level at 1380 (the 78.6 fib level). See the chart below. If the market was going to turn, for me it was going to be into this low risk short area. We did see a small pullback of some 30pts but ultimately this proved to be short lived and the market went from strength to strength after this event. Once this level broke, we saw a rapid short squeeze up into the 1400s. It sounds so binary but resistance is resistance until it is no more. I think some of our best market information comes from good trade ideas that don't work out. If you think the market should be selling but its not, the market is sending a loud message.

S&P500 Weekly:
1370 to 1380 level decisively broken with a strong closing candle.

DOW Industrials Weekly:
A similar zone of importance was broken. Does this now open up a retest of that internal trendline and possibly the highs?

At a simple glance, you could now say that the break of this zone opens up a retest right back up to the previous 2007 highs! Now I am not going to forecast this far out as this is just not my timeframe. However, my real point is that I now have no interest in fighting this trend higher nor have I tried to since 1370s broke. I tried to short and it didn't play out. This market is going to go where it wants to go- it could top at 1450, 1550 or catch most people off guard and top here right now. For me, only if I see a major price reversal that took out the lows of last weeks candle would I be looking for short setups once more. In the meanwhile, continue to look for pullbacks into the trend on your timeframe.

As we start the week, the S&P500 seems stretched in the short term and testing minor resistance at 1405/1410. There are many "timing" experts out there who are highlighting the importance of the Autumanal equinox adn thus a potential turn- do what you want with this. I will be looking for pullbacks into my 1385/1390 support zone for buy setups first.

To Australia today. Price is clearly consolidating in the short term and I anticipate a breakout early this week to challenge the recent cash market highs and possibly beyond.

XJO 60mins:
Price has still not hit my target zone at 4315/4320. Into this zone I would be looking to scale out of longs and get on the sidelines. I doubt we will suddenly breakout after such a strong run up without some further consolidation first.

XJO 15mins:
A clear flag type pattern over the past few days. We will test the top end of this flag today at 4300 and breakouts would open up the 60min target into 4315/4320.

My SPI range today: 4300 to 4335. Outlier levels 4280.

My SPI day trading plan: We are indicated at 4315 given the SYCOM session. As ever, the match on Monday can be something of a lottery given the influence of weekend news and events. As per above, I do think we have the possibility of breaking out of this recent tight range and test the previous cash market highs (possibly beyond). Thus, I will be looking to buy any dip to 4305/4300 early with tight stops. If this fails to hold, then potentially we could be looking at another dip down to the 4280 support zone. On the upside, the June previous high was 4315 so this should be early resistance. Short term traders/scalpers should be looking to short this with tight stops for a fade only. Ill be looking for a strong breakout candle on the lower timeframes above this to join the trend higher targeting 4330/4335.


SPI Continous June 15mins:

Thanks
Austin

Asian Daily Setups

The market has gone rather quiet and thus its rather a perfect time for me to write and update some of the Asian Daily setups I am looking at. We all know that US markets and the DAX are going from strength to strength. Quite simply, that's whats happens when central banks pump trillions of $$$ into the system- it just has to find a home somewhere. It has been rather a different story here in Asia. Most markets are still way off their May 2011 highs and are showing an interesting disconnect here. I guess the million dollar question is whether we play catch up right here or are Asian markets actually signalling a more meaningful turn ahead?

China to begin with.

A-Shares Daily:
A bearish reversal candle that comes after a clear overlapping wedge type pattern. Interestingly the recent high materialised right on the intersection of those trendlines. For what its worth Jeff Greenblatt states that this top occurred in the 610 day window off the bear market peak from a few years ago. Do what you want with that. That candle to me is what really matters and I anticipate a continuation off this move lower at a minimum in coming days. China is the engine behind global growth right?

Hong Kong Daily:
The market high still coincides with the 61.8 Fibonacci retrace off the top, the A=C level off the low AND the gap target. A significant zone of resistance. I showed this chart a number of times and price still has not moved higher. I anticipate this market to also move lower in coming days/weeks if my china scenario plays out.

Australia Daily:
This has been the real dog of the region. The elevated $AUD has made our market a natural deterrent for most overseas investors. Clearly we are within a consolidation pattern and once again testing the top end of the range. There have been many false breaks both ways. However, the central point is that every time we get up here, we have been slapped back down. Keep trading that until it stops working.

And the one market that has genuinely caught a bid due to government intervention is Japan. Interestingly, that market is now also right at the top end of the range and into a major resistance zone right on the 1 year anniversary of the Tsunami. I am not suggesting shorting this market as clearly the others are weaker and we are dealing with a strong uptrend here. However, the point to stress is that it is right into its target zone.

Nikkei Daily:

So in sum, Asian markets have been capped thus far at significant resistance zones. The S&P500 could obviously keep pushing higher and thus provide a catalyst for our markets to breakout. However, clearly right now there is a disconnect going on for whatever reason. It pays to heed the message of the underlying market. If we cant go up despite the S&P500, NDX, DAX all soaring, then surely the path of least resistance will be down.

We will see in coming days. March is always a very interesting month

Thanks
Austin

Friday Plan

Morning All,

I thought I would keep today's post pre-open short and sweet. There are a number of Daily charts in Asia that I am looking at that I find very interesting indeed and I will put these up later in the day.

The XJO short term trend remains up and pullbacks over the last few days have been shallow. However, we still have not hit the first target yet at 4315/4320 and I believe we will do so before any meaningful pullback ensues.

XJO 60mins:
Clear resistance zone coming in at 4315/4320. This is the obvious target for now and this is the area to lighten up longs if u managed to catch this move especailly into the weekend. Support is down at 4260/50 but I don't think we will see this before the top end of the range is clipped.

XJO Cash 5mins:
Today we will retest Wednesdays highs at 4295. Any failure to sell out of here early opens up a push into the res zone at 4315/4320.

My SPI June Range: 4290 to 4335. Outlier levels 4280 and the moon.

My SPI day trading plan: The SPI June is indicated at 4310 early. Given the roll, my continuous charts are somewhat out of sync and there is not enough data/volume yet to show meaningful chart levels for the June. Thus referencing that XJO cash chart will be paramount over the next few days/weeks.

The Intraday range has been relatively small for the past 2 days and fading at strategic spots has worked well. Given the small range, there is the possibility we breakout today to test those previous highs. Thus my plan today is to short fade 4315 out of the blocks with tight stops. If we fail to sell there then I will look to flip long and target those cash highs which correlates to 4330 in the June contract. Up there I will look for candle confirmation to short fade once more. On the downside, I will look to buy 4300 with tight stops. Any break of 4300 opens up a potential retest of 4280 but I doubt we trade this low today.

Thanks
Austin

Thursday Plan

Morning All

There was a very interesting Bearish reversal yesterday in Chinese stock markets that I thought should be highlighted from the outset in today's post. The trigger was comments from Chairman Wen who continued his tough tone on property prices and stated that home prices were "clearly far, far away from reasonable levels". The government there is going to keep restrictions on the real estate market and restrict lending. The A-Shares tumbled 2% and the Hang Seng reversed sharply closing on its lows. This is what happens in real markets which are not being supported by trillions of free dollars.

I had this chart saved on my desktop and I find it very interesting that these comments came out at this exact juncture:

A Shares 60mins:
Double Top zone and the intersection of the wedgelines that have been in place for months.

The Daily left a very bearish reversal candle indeed. Last time I saw a reversal candle like this, it lead to the onset of a new downtrend:

A Shares Daily:

In the short term, this market is probably oversold BUT at a minimum I would be looking for follow through to the downside in coming days and weeks. This is not exactly new news as Wen has been adamant on driving out speculators and investors in the overheated property sector. From a technical standpoint, you just have to heed that reversal candle.

Now does this have any impact in Australia? Sure we are not directly correlated but no doubt we have underperformed global indicies in no large part due to China's inability to catch a strong bid.


In the short term, the XJO is up against the top end of the range as I cited yesterday:

SPI Continous 60mins:
Top end of range. Given that the trend is still very much up, I would be looking to buy a pullback into supports cited and short fade key res zones with tight stops as per yesterday at 4300 for shorter term trades.

Today it is March futures expiry in the SPI. Thus, today my primary vehicle will be the June contract. Obviously there has not been that much volume thus far in the Junes and there will not be many chart reference points at this stage. Thus, it is important to have the Cash, Continuous and June charts up for at least a few weeks.

My SPI range (JUNE): 4265 to 4305. Outlier levels 4250 and 4315, 4335

My SPI day trading plan: I will leaving the March contract alone today. There will be a lot going on with expiry and thus I think it is important to step aside unless u know what you are doing. Technical levels probably go out the window here. The first 30minutes will swing around.

We are indicated at 4289 (JUNE). As per yesterday, I will look to short fade into previous highs at 4310/4315 with tight stops. The trend is still very much up so these trades need to be nimble and if there is no confirm, you have to cut quickly and get long. Breaks of this level open up 4320 March which is approx 4335 June. Given the moves in Asia yesterday, I do think we are likely to see a deeper pullback and possible gap fill into 4265/4270. Thus, if we do see bearish reversal candles on the open, I will be looking for this as a possible target zone.

Another One Bites The Dust

Morning All

It certainly wasn't a Tuesday reversal, but a strong trending day instead. They say picking tops is a mugs game and after a strong surge overnight, those trend followers have grounds for justification yet again.

My Daily Double top trade in the S&P500 is certainly off the table. That 1370 sell zone worked for a brief while but there was just no follow through to the downside. I saw a number of markets lining up with climatic patterns, but it just wasn't to be. I do believe there are strategic spots where you can put on potential reversal trades as a Swing Trader and this is where some of my biggest money has been made. However, equally one has to be nimble and heed the market message.

Last nights move to new highs was on strong underling breadth, volume and momentum. Thus for me, I would want to buy the first pullback into the short term trend. As per the chart below, this is in the 1385/1380 region.

Of course we can keep pulling up more and more targets for this rally but so far it has proved futile. 1400 and then 1440/1450 are the next obvious "levels". However, I really thought that if we were going to sell, it was out of that 1370 area. Thus for me, I am just going to keep following these swings higher until we see somekind of climatic pattern which is just not there.

S&P500 60mins:
A strong breakout above the previous highs. No doubt there were a lot of stops above here that spurred the move late in the day. My highest probability trade is to now buy a retest of this breakout level at 1385/1380. Note that we could label this an inverse Head and Shoulder type pattern which projects a move to 1410.

S&P500 Daily:
Last nights strong closing candle puts us well beyond the 1370 Double top level. Sure we are now bumping up against an interesting trendline into round number "1400" which may lead to some short term consolidation/pullback. However, unless we trade meaningfully below yesterdays low, I think you just have to keep focusing on this trend higher. Yesterdays open becomes a line in the sand for bears.

To Australia. My short zone was blown out of the water yesterday/overnight. Really.Quite. Fkng.Amazing.

This is one of the whippiest markets I have ever traded. I can put my hand up and say I just really don't know here. Thus, I will continue to focus on day trading key levels and following the intraday trend.

SPI March continuous 60mins:
We are now testing the top end of the range at 4290/4295 and then the previous highs at 4320. Support now becomes the 4250/55 previous breakdown level.

My SPI range: 4265 to 4300. Outlier levels 4320.

My SPI day trading plan: We are now trading right at the top end of the range after almost a 150pt rally off the recent low. No doubt we are overextended and overbought here. This does not mean we will make a top, but I do think price will pause or consolidate at a minimum before another push higher.

We are looking at a gap up of some 40points. I will look to short fade early at 4295 and 4300 with tight stops. No sell off out of here opens up a move to 4320 so be prepared for the cut and reverse just like yesterday (when 4220/25 res zone didn't work, it was cut and reverse time). Obviously the short term trend is up thus any short fades should be quick and nimble with targets in the low 80s. On the downside, 4260 to 4265 should be well defended and thus I will look for long trades out of this zone. I will also be looking to get long into the moving averages on my 5min chart if we see a deep enough pullback into them.

Note that today will be the last real trading day in the March contract. Keep the June contract up on your screens today as there may be more volume there. Today we have housing starts data and consumer confidence.

UPDATE

What can I say? Clearly I have been wrong early today as the market surged through my intial 4220/4225 fade zone. Its been tough to get long as pullbacks have been very shallow. We are now right back into the 4245/4250 previous breakdown zone. Today is a trend day UP and thus as a day trader, I am not looking for a big sell off today out of here. In fact, buying the dip into the moving averages is the smart play.

However, for my bigger picture swing trading account, I have just initated some shorts and will use stops above 4260ish. I would not use such a wide stop for my day trading account. No doubt I am early but I just have to fade into this zone intially. Here is the chart clear and simple. If it doesnt sell well- BULLS YOU WIN AGAIN.

SPI March 15mins:
Previous breakdown zone; 61.8 Fib retrace off the top comes in at 4249; top end of a trend channel. All in all, this is a very low risk short area. Use whatever confirmation you normally use.

Turnaround Tuesday

Morning All

A lacklustre session overnight in the US. In fact, that was some of the lowest volume I have seen in the NYSE. I guess you could call it "consolidation" after such a strong run up over the past 2/3 days, but to me it does not suggest we are in teh middle of a strong trend up.  Either way, the S&P500 is now approaching the previous highs and double top area with the pending FOMC minutes a sure catalyst.

In terms of trade setups, short term traders could look for one more push higher into that 1377/1380 res area for potential short fade trades. Probably best to wait for confirmation first given that this trend has been quite strong. However, this is how trends change i.e. a retest of a previous high that fails to move higher. I have no idea if it fails or just keeps pushing. Certainly this is a mjor res zone but I have called this forever and the market just doesnt seem to care. The next stop would be 1400 BUT I would want to see a clear consolidation pattern before getting long.

Emini March S&P500 60mins:
Clear target and resistance at the 1377 level and previous highs. A bearish setup would be an overthrow of this level and then bearish reversal candles. On the downside, we have minor support at 1365/1367 and more importantly down at 1357/1360. I would probably buy a retest of that 1357 level with tight stops.

To Australia. We didn't see any real follow through from the early weakness yesterday and a sideways day followed. However, I still view this as a great low risk short area and a number of my setups I showed yesterday are beginning to play out.

XJO Daily:
Retest of that trendline yesterday and failure. Short with stops above 4250.

XJO 60mins:
My 55exponential moving average was hit yesterday and price reversed. Need to see more confirmation before calling a top in obviously but this is the first real pullback into the downward trend after a momentum low- a low risk short trade with tight stops.

SPI March 15mins:
These are the clear resistance levels coming into today. Friday highs at 4220/2, the 505 Fib retracement at 4227 and the previous breakdown zone at 4245/4250.

AUDUSD also completed the move I have been talking about:

AUDUSD 60mins:
Price retested the 1.05 level overnight. This could complete a 5 wave move off the top or we could still be within a bigger pciture wave 3 type move lower. Small divergences are beginning to appear. Tough here as this setup suggests a possible double bottom pattern which is bullish for risk. For me, I would wait for some bullish 60min candles to confirm a possible bullish turn. Bigger picture, 5 waves down suggests a major trend reversal?

My SPI range today: 4180 to 4225. Outlier levels 4165 supp and 4245/4250 res.

My SPI day trading plan: Tuesdays are the day when I often anticipate a trend reversal or strong move either way. Don't ask why but it is just a pattern I have seen over and over. If my analysis is correct, I think any early pop up to 4220/4225 should offer a great shorting opportunity with stops above 4230. I will fade this level aggressively. Any failure to sell out of here opens up a potential move to 4245/4250 so be prepared. I deem this the less likely scenario. Yesterday, price chopped around the 4195/4200 level so look to cover any shorts into here once more, re-iniate if it drops. I think the best area to get long is down at 4180 for long scalps and more aggressively at 4165. We have business confidence and home loans at 11.30am today. Note that SPI future rolls are also taking place and this often has an impact on price with some "random" moves so be careful.

Monday Plan

Morning All,

A positive jobs report on Friday night pushed the S&P500 higher and we are not far off that previous 1377 Emini March high. As I said on Friday, I don't have a strong view here currently given the strength of the recent rally off the low. There is the potential for a short term Double top trade/short fade but I will stay on the sidelines for now until I see a better setup. No doubt we are still in that bigger picture Daily res area but this market has been resilient. I am not seeing any follow through with most of my trade setups and ideas. Clearly this is a different market environment from the one some 3 to 4 months prior, and thus it is important for me to also change my tune and strategy as it is effecting my performance. My resources are better off in markets which are working for me.

And thus this brings me to Australia. Very simply, as we start the week there is a fantastic low risk/high reward short trade with stops above the previous breakdown area of 4250.

XJO Daily:
Breakdown through the trendline with strong momentum and back to back bearish candles. Now we are retesting this trendline and I anticipate this bounce failing here. Stops should be ABOVE the high of that bearish sell off candle at 4250.

SPI 15mins:
This is the setup I am looking at. We have a clear retest of a significant resistance area from 4225 up to 4250. If you can use a 30 to 40pt stop, this is one of the best risk/reward trades I have seen in a long time. I will be putting on a wider swing short up here.

XJO 60mins:
The cash index is clearly in a short term downtrend and is now retesting the upper end of my moving averages band. Note there is a new momentum low in place and thus my highest probability trade is to sell the first retest back into the trend. Well here we are. Any strong reversal candles today will act as confirmation for me.

AUDUSD also continues to underperform and shows interesting divergence with US equity markets. I was looking for a Wave 4 type move and I believe we have enough confirmation in place to call this in. this now opens up a retest of the previous lows at a minimum.

AUDUSD futures 60mins:
3 attempts to break above 1.0650 area but no luck. Thus, the recent high looks like a completed ABC flat type pattern (note C=1.618A). Looking for a retest of the recent lows at a minimum.

My SPI day range today: 4180 to 4230. Outlier levels 4245/4250.

My SPI day trading plan: SPI futures closed at 4219 on Friday night and AUDUSD has opened relatively flat vs the close. Thus we have no real clear lead on the open although Oz bonds are quite firm first this morning. Seems that the market is shrugging off this ISDA and Moddys news re Greece and the CDS payouts.

As per my charts above, I am looking for a bigger picture short trade in this zone and I will start initiating in this 4220 area with stops above 4250. For my day trading, I will look to short fade 4220/25 early if I see confirmation on the 5min chart, stops above 4230. Any failure to sell early opens up a potential grind to 4245/4250. Given the short term trend is up, be prepared to get long should we not sell early out of the 20s. 4200 should be relatively well defended today so I will look to cover shorts initially in the zone and go long for a scalp only. If it fails to hold there, I will re-iniate shorts again looking for a breakdown to Fridays lows at 4180. Note that tuesdays are my major turning day/trend day and this is when I anticipate a stronger reversal lower once more. No major economic announcements out of Australia today.

Resistance Is Futile

Morning All

The heading of my post this morning is a quote from a Trader who I used to work with. He used to mock Bears and say that resistance is meaningless in this algo driven rip fest of a market these days. Well I guess this kinda ran true last night. European trading went from strength to strength on continued chatter of this Greek debt participation deal. This took the Emini S&P500 up to the top end of my 1350 to 1357.50 res zone and before you knew it, stops went off and up we go. Resistance is Resistance until it is no more. The old cut and reverse.

Emini S&P500:
Market tests resistance, fails to sell, stops go off and up she goes. That's all it is really.

Most of my analysis appears to be rather meaningless in this environment. It doesn't really matter if we have increased momentum and breadth to the downside- if they want to take this market higher they just will. I guess it all about understanding what the pain trade is, where the stops are likely to be positioned, and understanding failed patterns. The AUD was an excellent tip off yesterday as it failed to breakdown through 1.05 (futures) despite a very bearish jobs number. Somebody wanted to get started early.

So I am really not sure where this leaves us in the S&P500 and so I am back on the sidelines. I took my stop quickly and move on. I like to keep it very nimble at such junctures. That strong Daily down candle was recaptured which is bullish. However, volume was woeful but when is it not when we go up? We have NFP tonight and thus really anything can happen. I cant rule out a retest of the previous highs at Emini 1377 which would be an interesting fade area.

When you start adding lines onto a chart to try and come up with new resistance levels, you know you are probably in trouble. One could argue that we are merely retesting a neckline on the DOW and S&P500 60mins charts and thus a Head and Shoulders is playing out. I'm not so sure.

DOW 60mins:
Head and Shoulders? Only if we see a big reversal and like now.

Emini S&P500 60mins:
Trading near the top end of the range. This could just be a vicious wave 2 type squueze but that is unlikely. For me, I would want to see a period of consolidation before joining any breakout higher.

Interestingly, AUD never really got going last night after breaking out above 1.06 futures. An interesting divergence with equities. I still think we could be tracing out somekind of 4th wave type pattern but I would only short this if it falls back down below 1.06 again. See chart below:

AUD 60mins:
Base pattern under previous support. Fails to breakdown yesterday despite a very bearish jobs number. For the short term trader, when resistance breaks you have to flip to long. That 1.058/1.06 level is now very key and has to hold for the bulls.

To Australia. We have been given an absolute gift here I believe for the bears. Quite simply, price cannot recapture 4250 if this is a genuine sell off which I very much believe it is. Pls see the following posts for full details:
http://swingtradersedge.blogspot.com.au/2012/03/sell-this-retest.html
AND
http://swingtradersedge.blogspot.com.au/2012_03_06_archive.html

 We are indicated at 4200 first thing. Therefore, longer term traders can start really building shorts here with stops above 4250. Short term traders should be looking to short fade 4200 with tight stops, and potentially looking for a small grind higher if it fails to sell early.

SPI Day session 15mins:

My SPI range today: 4180 to 4205. Outlier levels 4150 and 4220.

My SPI Day trading plan: Straight out of the blocks I will be looking to short fade the 4200/4205 level with tight stops. This is round number resistance, an open gap, and the 38.2 retracement off the recent 4320 high. The target for any shorts should be down to 4180 initially where I will look to cover. If we fail to sell early, I will look to flip long for a quick trade up to 4220 max. Up there, this really is an aggressive short and I will load up, with stops above 4250 for a bigger picture play.

Thanks and Happy Friday
Austin

Sell This Retest

Morning All,

I want to keep this post really simple- right here, the high probability trade is to sell this retest of the breakdown level. 

I am working under the assumption that we have seen a climatic intermediate high in the SP500. We had the Double top pattern out of 1370 and clear price confirmation on bearish breadth and volume. There are so many other patterns across markets illustrating a meaningful high but I will not recount them all again here. Most importantly, price broke through meaningful support levels on increased momentum. Thus our highest probability trade is to sell the first retracement/pullback looking for a retest of Tuesday lows at a minimum (but I think we trade lower than that).  

Let me illustrate through the charts:

S&P500 60mins:

Price is now clearly trending down with a new momentum low in place. Thus, I am looking for a reversal out of those downward sloping moving averages, targeting the 1330 to 1335 support zone at a minimum.

I have also shown my count once more for this index. That back to back 4th wave flat was the key precursor to this whole sell off. Price has hit the first target of the 4th wave of minor degree, but given the momentum and other technicals, the deeper target of 1330 to 1335 is in play.

S&P500 15mins:

I have zoomed in on the key resistance areas here. We are now backtesting the 1350 to 1355 previous support area and this provides a great low risk short trade, stops above 1365. Note there is an outlier level at 1360 which is the 50% Fib retracement off the top. Any move above 1365 would invalidate my bearish stance and setup.





In sum, I am looking for this bounce to run out of steam in the 1350 to 1355 area. I have just re shorted a small position and will increase size if I see more confirmation. Keep following this move lower. Stops should be above 1365 i.e. the big strong down night.

Adding to my analysis is the AUD. Price is now also retesting the previous support area and provides a great low risk short setup.

AUD 60mins

Clearly we are in a 3rd wave lower on increased momentum. I have no idea if this 3rd wave low is even in. Irrespective, we have to look to get into this downtrend and this zone is a confluence of res areas that should contain price.

Australia is clearly impulsing to the downside. Yesterday we saw clear confirmation on the Daily chart that this multi month consolidation pattern has ended with back to back strong bearish closing candles. Not sure what else you need?

ASX200 Daily:

And I will also re show my count that I have maintained for a while. I believe we are now in the beginnings of a new trend lower that will re target the previous lows in the 3800 region and possibly lower. Obviously I don't want to get ahead of myself, but this is the forecast.

ASX200 Daily Count:
Successive lower highs in a multi month consolidation pattern. Clearly price has failed to break out. The path of last resistance is now down. Let the bulls pay.

So in the short term we are clearly oversold and coming into the low end of the recent range. However, my experience has taught me to not fight these strong down moves. This is where the real money is to be made. As we saw yesterday, price tried to rally all day only to be absolutely slapped with an hour to go, breaking through the intraday lows. This is not a vote of confidence.

The chart below merely shows potential targets or stopping points. The key to me is to follow the trend lower until we see a clear basing pattern or bullish divergences. None of these are in place yet.

SPI 60mins:
We are now coming into the low end of the recent range in the 4130 to 4140 area. However, this is clearly a 3rd wave move lower and thus picking bottoms right here is not wise for now.

My SPI day trading range: 4131 to 4165. Outlier levels 4100 and 4175/4180.

My SPI day trading plan: Obviously the tone of my post this morning sounds rather bearish. I am aware of this and perhaps this is indicative of how everyone else is feeling and indicative of a big bear trap. I will keep this in the back of my mind. We are indicated at 4160 early given the overnight bounce. This is right back into yesterdays breakdown area. Thus I will be looking to short fade early in the 4155/4160 area with stops in the mid 60s. If we fail to sell early, this opens up the potential for a retest of yesterdays highs at 4177/4180 where I will also short fade more aggressively. I will look to get out of shorts in the low 4140s and then 4131 (the 61.8 Fib retracement from the recent high to the last major swing low on 30th December 2011). I will potentially look for long trades in the low 30s IF I see some bullish 5min reversal candles. The key is to follow the trend at this stage. So many markets such as the Hang Seng and the Nikkei are trending lower in 3rd waves so no need to fight this for now .

SPI 5mins:
Sell a retest of the 4155/4160 level.