The barrage of weekend headlines certainly appears to have dented this bottoming process and puts a number of scenarios in jeopardy. I expressed this concern in my "Hmmmm" post yesterday morning. As I scan across various markets, some appear to be holding on by a thread whilst others clearly offer great short setups. I am always dubious of making any strong conclusions on a Monday as these trading days are always exaggerated by weekend news flow and the like. We will see today if this is a genuine breakdown or a stepping process lower.
I thought I would keep this update simple by showing the good, the bad and the ugly.
The Good (well not that good)
S&P 500 Daily:
This market has traded right into the Daily trendline and low end of support. I am sure there are many out there who will be looking at this as a buying opportunity. If we see a bullish closing candle out of here, it would setup a "retracement" trade for many dip buyers.
S&P 500 60mins:
The market never managed to break above the downward trendline I talked about. My initial call at 1325/1320 was a good one but there was no follow through above that trendline. Yesterdays breadth was bearish with a 90% down day registered, but note volume was very low and there was no real intraday movement other than during the open. This could still be a corrective move lower with an ABC down complete, followed by an X up with the final waves unfolding here. That is hugely speculative but I have also seen the usual suspects now calling this a series of 1s and 2s down- my favourite fadeable Elliott count setup.
Eurostoxx 60mins:
The current market concerns are all about Europe and the EUR. However, the Eurostoxx doesn't appear to be breaking down impulsively. In fact, this could be seen as a wedge type pattern. Still early days no doubt but if the market can regain 2800 and the open gap with strength, I think this is a good long setup.
The Bad
ASX200 Cash 60mins
No follow through from the ending wedge pattern on the 60mins setting up a bull trap. However, are we looking at the final 5th wave down? I do not know but the market tried to bounce out of 4650 and failed spectacularly. Day trading this market has been great, swing trading a nightmare.
AUDUSD 60mins:
Holding...just. The final stages of an "e" leg or about to breakdown? I don't have much conviction unless that downward sloping trendline breaks to the upside.
The Ugly:
Shanghai Composite Daily:
That is a strong down day breaking through good support and the recent base building. I have showed this chart countless times and this was my do or die area- well looks like it died. I would only consider this on the long side if yesterdays highs get taken out. I talked about consolidation patterns a week back- this consolidation pattern has ended
MSCI Singapore Daily:
Attempted breakout and failure. Strong down candle yesterday, looking for lower prices
EURUSD Daily:
Breaks of 1.40 open up lower prices to 1.35 possibly. This is my biggest concern for the market
In sum, there are dislocations everywhere and unless the market can stage a herculean rebound today, I think we may be set for a tough time. At first glance, it seems that the market has been caught long trying to pick a low. Any more weakness will open up some genuine selling. Stick to the clearest setups and the plan- don't let the emotions get to you in these volatile markets especially in no man's land.
Thanks
Austin
