Reversal Tuesday? Ha I Wish

Morning All,

Firstly its great to see so many comments on the blog and some good discussion is developing. Paul, Ollie, Senate, Ronald and everyone else- good work and pls keep it up. Senate just calm it down on the bull chat :)

Well yesterday I was looking for a potential low to form in Australia but the market has a lovely way of making it difficult to actually participate. We opened a lot higher than my ideal buy zone, sold off and then ripped in the afternoon from nowhere. This now leaves us bang slap in the middle of the range once more in Australia.

SPI March 15mins:
As you can see, price has now rallied right into the middle of the range. There is minor resistance coming in at the dashed line of 4255 and then major resistance at 4275/4280 at the previous highs. No doubt this is looking something of a triangle or consolidation pattern which implies higher highs in coming days. I'm not sure just yet so just trade the charts!

There were no new highs overnight in the US but certainly the market seemed to shrug off Fridays weakness. Volume was one of the lowest I have seen in a long while in the NYSE. Resistance in the S&P500 Eminis remains 1350/1352 and breakouts above this would likely trigger a move to 1365/1370. For now, focus on that 1350 resistance level. If this is a genuine topping process, that level will hold. I am still short for now, but will be willing to cut and reverse if I see some solid 60min green candles.

S&P500 March Eminis 60mins:
Fridays sell off did not even reach the first target zone which shows that bulls are still firmly in control. We still have solid resistance at 1350/1352 and breakouts would open up 1365/1370.

I did find the move in Currencies overnight very interesting. Note that EUR actually sold off all session despite US equities pushing higher, and AUD also failed to challenge its previous highs. This shows interestesting divergences. FX is the biggest market in the world and they aint stoopid like us Equity folk :)

EUR March futures 60mins:
There was a strong breakout above 1.32/1.3220 but price failed to push on. Now price is actually trading back into the previous zone which implies a fake breakout and bull trap. EUR sold off all night as soon as the Europeans came in. A vote of confidence?

AUD March futures 60mins:
Yesterday I stated that AUD had hit the first target zone and a bounce should be expected. Interestingly, AUD topped out at the 61.8 retrace last night and failed to challenge its previous highs. I showed an interesting topping pattern on the Daily and now we are seeing a clear failed rally on the lower time frames. Potential Head and Shoulders forming here??

To Australia today. We are indicated unch vs yesterdays close. Certainly yesterdays afternoon breakout appeared strong and the key pivot was 4230/4235 in the SPI futures. As stated above, price is now right in the middle of the range thus its difficult to make any strong forecasts here. The likely scenario is a retest of those highs given the overlapping and corrective look of this whole pattern.

SPI March 60mins:
Consolidation above previous resistance which is actually quite bullish. Only a move back below 4180 would decisively turn this trend down.

My SPI range today: 4230 to 4265. Outlier levels 4210 and 4275/80.

My SPI day trading plan today: As shown in the 15min chart, we have first Minor resistance coming in at 4255 first thing. I will look to short fade this straight up with stops at 4260. Breakouts above this open up a move 4275/4280 so be prepared to join the uptrend up to there which would then be an aggressive short. Any move down to yesterdays pivot of 4230/4235 should present a good buy spot and a great opportunity to join the short term uptrend. Note it is Tuesdays and these are often my strong trending days. There has been so much see-sawing around in this market that it has actually been quite difficult. Could we be looking at a fake move yesterday and a complete reversal of those gains?? Or is the day that we trend higher and make new highs? I am really not sure, just have to be flexible and follow the price action.

Austin

Monday Monday

Morning All

Lots of press over the weekend regarding the new Greek bailout package, the new wave of austerity measures and the current parliamentary vote to get it through. I'm not going to give you my take on it all as I don't want to sound like a cynic and it really isn't my area of expertise. One article that I did agree with and found itneresting was written by El-Erian and can be found here: http://www.businessspectator.com.au/bs.nsf/Article/Greek-deal-fate-debt-bonds-ownership-credit-ECB-au-pd20120210-RBVN2?OpenDocument&src=sph.

So the S&P500 gapped down on the open, made a low in the first hour, then rallied all day. O wait, no it didn't! Finally. The S&P500 sold off on the open, made its low in the first hour but then went sideways for the rest of the session. Have we witnessed a small change in the character of the market or can we just put this down to a bit of nervous Friday jitters with all these macro issues looming? Way to early to tell, but some of my short setups have been triggered and that's all there really is to it. Looking across the charts, it does appear like the anticipated correction is underway. Some markets may make a new squeaker high but the process is underway I believe. Here are some recent posts I have put up detailing these setups:
http://swingtradersedge.blogspot.com.au/2012/02/tfif.html
http://swingtradersedge.blogspot.com.au/2012_02_09_archive.html

Firstly to the DOW Industrial:

DOW Industrial Daily:

This was the setup I posted on Friday morning and the short trigger was given overnight. Simply, a new high was made above the double top zone, and a short order was placed below the low of the previous candle. A low risk short entry for this Double Top trade.

Emini S&P500 60mins:
My 3 Indians/Ending wedge pattern was triggered and price sold off to the first target zone. I do believe that this pullback will be deeper in price and time. Stops for shorts should be placed above 1355. We may see a retest of that 1350 level although I deem this the less likely scenario.

What I found interesting was the move in AUD on Friday night. Sure we can once again put this down to nervousness ahead of the weekend but the move was really quite impulsive to me. More importantly, all of the gains post the RBA interest rate announcement were completely given up. This is bearish price action. If markets are going to turn, this one should follow suit. Well the script is now playing out.

AUD Continous Futures Daily:
We now have a clear candle reversal pattern out of the top end of the range and overhead resistance. I have shown a similar example here of such candle reversal patterns which occurred right on the July 2011 high.

AUD March Futures 60mins:
There was also a clear 3 Indians/Ending Wedge pattern here that resulted in the sharp pullback. We have now fallen into the first target zone so no doubt price could hold in for the short term. However, the bigger picture target still comes in some way lower as shown.

So today a lot of attention will be given to this Greek parliamentary vote. I am under the impression that voting begins around 10am AEST time and I have no idea how long it will go on for. Its pretty much a given that they will get this through but as ever be prepared for the unexpected.

Australia has now sold off to my first major target zone. I see a confluence of support coming in at 4180 to 4195 so I would not be surprised if we hold early with even a potential strong rally later in the day. Obviously if we fail to hold, this is bearish indeed.

SPI March 60mins:
Here is my first target zone at 4180/1495. This comprises the 38.2 Fib retrace from the high to the recent swing low. You can also see that this is an area of previous support/spike lows etc. The deeper target for this move ultimately is down at 4120/4140.

SPI 15mins:
Just giving this area more attention. We have a 38.2 Fib retrace as per above; we also have open gaps; we have spike lows; and we have a potential A=C extension coming in at 4185. Bottom line, there is a confluence of support in this zone of 4180 to 4195.

My SPI range today: 4180 to 4225. Outlier levels 4140 and 4230/35.

My SPI day trading plan: We are indicated at 4199 early but really anything can happen on Monday mornings especially with these macro overhangs. I will be looking for any early panic down into the low 4180s for potential long trades with tight stops. The key will be waiting for somekind of bullish confirmation out of here before getting long. The short term trend is down and thus I will be looking to get short and join this trend if we see any bounce into 4220. I will be also shorting if I see a clear consolidation pattern around 4180/4190 that breaks to the downside with a target down to 4140 (although this is unlikely to get hit today)

Thanks
Austin

TFIF!

Morning All

Excuse the expletives in this mornings post. But Jeez it feels like its been a long week. Yesterday's trade in Australia was very volatile and I certainly experienced the full array of emotions yesterday. I think many traders thought that we were looking at a genuine breakdown, only for price to hold in and savagely reverse. When we failed to go lower, no doubt there was a whole host of short squeezing going on. That first big dip in an uptrend always gets bought. Urgh.

Anyway, the S&P500 sold off in the first hour or so, made a low, then rallied all day to erase all losses and close up. Sounds familiar right? I put that on the blog yesterday right? It is what it is. Yes its a bull market. Yes the trend is up. But you need to somehow characterise the market and "frame" it. As I said to one of my readers this morning, with the market in this position I have to either i) Wait for a climatic reversal pattern to short or ii) Wait for a consolidation pattern and buy a breakout. That's it it to me. Up here, you have to be nimble. That's my trading style. I'm not an investor. Read the label on the tin :)

So let me, again, show you some charts and information that continue to "frame" my perspective up here.

Firstly, lets have a look at breadth. We know that price has made successive highs over the last week or so. Now lets see what closing Advancing NYSE issues have done:
2nd Feb: 2473
3rd Feb: 2347
8th Feb: 1751
9th Feb: 1235

So price is making higher highs, and breadth is just not following through. Volume continues to decline. Bullish? Or is this telling you that the trend is actually weakening?

You might think that I sound like a broken record. Well my last S&P500 trade idea was actually a LONG at 1330 looking for mid 40s. That played out. Now I am looking at what is in front of me here.

Chart time.

DOW Industrials Daily:
Double Top zone. No doubt. Linda Bradford Raschke used to trade these setups as reversal patterns and called them "2Bs". Basically, wait for price to make a new high above the double top zone, then put a sell order below the low of the previous daily candle. That simple.

DOW Industrials Cash 15mins:
Not breaking out above the previous high but wedging= bearish. You can use the low end of this trendline as a short trigger when/if it breaks.

S&P500 Emini 60mins:
Looks pretty wedgie to me as well. We now have bearish momentum divergences and not new momentum highs.

NASDAQ 100 Daily
I put my hand up- I have been spectacularly wrong in the NDX view of late. I don't trade it but I use it for my analysis of markets and to help my trade ideas. This is a very very simple chart showing how overbought we are currently. The RSI hit 82 yesterday! WOW. I havent seen a reading like this since the Flash crash. I drew vertical lines here showing everytime the RSI has trade above 75. Correction at a minimum coming. Yes longer term peak RSI readings are actually indicative of a strong trend but that is much much longer term stuff.

Another thing I have found interesting of late is the DAX. I put this A=C pattern up on the Twitter feed the other day and so far it has coincided with the current high.

DAX Cash Daily:
A=C target. We are beginning to see some small reversal candles. Obviously more work to do but this coincides with the res levels shown above.

Use whatever confirm you want. I am putting on small short positions in the S&P500 eminis here and will add if i see confirm, stops above 1260.


Australia today. I will not dwell on this for too long. I thought the breakdown through 4235 yesterday would really open us up and put the nail in the coffin. Instead, we hit the first target at 4210, held, and then rallied very sharply all day. The way this moved off the low implies that we may actually see more highs to come! Indeed, the move off the recent high is just not an impulsive move but a series of "3"s implying some kind of triangle pattern/consolidation pattern.

XJO Cash 15mins:

My plan today in the SPI is very much based around this chart.
SPI 15mins:

My SPI day trading plan: I will be looking to short into 2 resistance zones namely 4260/4265 and then 4275/80. Yesterdays move off the low was very strong as I said thus I will be looking to get into this short term uptrend and buy at 4235/40. An outlier level comes in at 4220 and wait for bullish confirmation down there.

My SPI range today: 4235 to 4275. Outlier levels 4220 and 4280

Thursday Plan

Morning All

The S&P500 opened weak last night, found a low in the first hour of trading, then grinded higher for the rest of the day. Sounds familiar right? I haven't talked about the S&P500 Eminis for a few posts, but my recent trade idea played out well. To recap:
" We now have a new momentum high in place, and a retest of the previous high. I think this is a short term buy at around 1330, stops 1325, target 1340/1345."
http://swingtradersedge.blogspot.com.au/2012/02/s-update.html

This was the chart I put up and explains the trade idea and outcome:

S&P500 Eminis 60mins:
Price made a new high above 1330 post the jobs number, and momentum also made a new high. Momentum making a new high is the key here. Thus, our highest probability trade is to buy the first pullback. The pullback into the low 1330s provided this opportunity. Scaling out of longs into the 40s is/was the target.

So where to now? I really don't have much of a target for this move as there are multiple areas for this move. We could be close. We could trade as high as the previous highs at 1370. I just don't know and until we see a climatic reversal candle or pattern, I will sit and wait and be nimble.

S&P500 Daily:
Sure there is a resistance zone here. We are way overbought. This corresponds to a clear res zone in the DOW Industrial. However, the trend is very much UP and it will top when it wants to.

DOW Industrials Daily:

S&P500 Cash 15mins:
I thought this was interesting. This is the move off the most recent swing low. I have tried to make this very simple and show the number of waves within this move up. Clearly we are now in the 9th wave which would imply that this impulse move is ending. Sure we could have yet another extension :)

To Australia today. Yesterday my cited plan was great with a recommendation to sell the SPI in the 4255 to 4260 zone. We made a high of 4255 early and sold off. However, there really wasn't much follow through at all. In fact it was desperately quiet and volume was woeful. I myself trading horribly thinking that we would breakdown through the lows only to watch the market grind higher and higher throughout the course of the day.

My resistance zone today is 4260 to 4265. We really should sell off early from here if I am right with my recent bearish call

SPI 5mins res zone:

SPI 15mins:
I didn't realise the importance of this trendline yesterday. Note how many times price hit and respected this. If we see a strong bearish move below this, perhaps that is the signal that we are about to trend lower.

My SPI range today: 4235 to 4265. Outlier levels 4275/4280 and 4200.

My SPI Day Trading Plan: We are indicated at 4260 this morning given the SYCOMM sessions.  I believe there should be solid resistance at 4260/4265 therefore I will look to short here early with tight stops. Look to cover shorts into the low end of yesterdays range at 4235/4240 and wait for confirmation/breakdown patterns if this is a genuine move lower. If 4265 lifts to the upside, that opens up a retest of 4275 and 4280. Only if price can clear these levels will I look to join the trend higher and potential buy setups. Note that RIO was very strong yesterday and this seemed to buoy the SPI. Thus, keep RIO up on your screens today to see if there is more follow through. Perhaps this Glencore/Xstrata merger is keeping these miners well bid.

Thanks and Good Luck
Austin

Thank You RBA

Morning All,

Well if you want a catalyst, than here it is. I have always used the charts to guide me in my trading but I certainly do not ignore wider macro and fundamental issues. Yesterdays decision by the RBA to leave rates on hold will prove to be short lived I believe but it does provide us with a double whammy- a technical backdrop with an underlying fundamental catalyst. I think everything is very much aligned now for a genuine move lower in the Australian stock market. Equity investors crave all the help they can get and they will not like this. A falling stock market will force the RBAs hand in time.

What I find particularly interesting is the underlying comments from Stevens and how they reflect a rising stockmarket (an overseas rising stock market that is). I have always admired much of Robert Pretcher's work and his theories on Socionomics. One of the main points he talks about is that SOCIAL MOOD drives financial, macroeconomic and political behaviour. This is in stark contrast to conventional notion that such events drive social mood. The stock market itself is a great barometer of this social mood.

And when I look at some of these comments from Stevens yesterday, I cant help but be struck by the fact that this current wider social mood, manifested in a rising stock market has forced his hand here. For instance, Stevens said:

“Financial market sentiment has generally improved since early December,” and "share markets have risen". The cynic in me wants to scream out here. Of course markets rise when Central banks decide to pump the market with unheard of liquidity. The ECB has handed out loans of $500bn+ for insolvent banks to stay alive, have another punt, and keep things ticking over until the next calamity hits. This money does not get lent out by these banks, but is instead gambled on carry trades. More LTRO financing is coming soon. Hence rising stock market. And we all know about QE in the US as well as what the Brits have tried to do.

There were some more interesting comments such as "Australia's economy is in good shape". Really? I smiled when on the same day that the RBA held rates because our economy is in supposed good shape, Macquarie comes out with a profit downgrade and slashes 1000s of jobs; NAB then stepped up and warned that the sovereign debt crisis was prolonging any hope of a global economic recovery (stock fell -4%). The last employment numbers I saw in Australia were not particularly healthy and no doubt unemployment will be on the rise because retailers, manufactures and banks are ALL cutting costs. I know so many friends and colleagues who are out of work currently- and that is not just finance related. With the Australian dollar where it is, im not sure that will help the tourism or export sectors either.

One final comment I picked up on was that "some progress" was being made in Europe. Yup, Greece is nearly there. O wait.

So that is my rant over. I guess my point is that Central banks and governments have this amazing ability to always be last to the party. They are reactive. Markets have this amazing ability to look the best on the top. The RBA clearly has underestimated what is actually going on within the country and has been distorted by a rising global stock market (which has been engineered by liquidity) and by a few inflation figures. Yesterdays reaction in the market was ugly. I expect more of the same.

So lets run through some charts.

ASX200 60mins:
This is the trendline that has kept the rally intact thus far. If you are a longer term trader, look for breaks of this to confirm a change in the character of this market from uptrend to down. Note the slowing momentum coming into yesterdays high.

ASX200 15mins:
This was the "Test" trade and double top trade I was looking for. Please read my XJO/SPI post here: http://swingtradersedge.blogspot.com.au/2012/02/double-top-trades.html. We have now sold off to a minor trendline which could provide a minro bounce. However, at a minimum I believe that open gap gets filled and lower.

Elsewhere in Asia, things are playing out as per my post yesterday.

HSI Daily:
Another down day yesterday. We are looking at interesting reversal candles here right at the resistance zone.

Shanghai A Shares 15mins:
I put this Ending Wedge up yesterday and we saw the initial confirmation. I am looking for a move as low as 2300 in coming days.

To Australia today.

My SPI range: 4200 to 4260. Outlier levels 4275.

My SPI day trading plan: As per the above, I believe yesterdays move was confirmation that we have seen a meaningful high in Australia. We are indicated at 4250 this morning. I believe there will be solid resistance anywhere from 4255 to 4265 and I am looking to get short in this zone wiht the appropriate confirmation. Scales out of shorts at 4235 but there is an open gap target for this move at 4220/4215 and I would look to cover the bulk of shorts there. I have to be prepared for a even deeper move to 4200 but I might be getting way ahead of myself here.

Obviously I sound rather bearish here so what is my plan if this doesn't sell? Yesterday the SPI was trading at 4265 before the RBA announcement came out. If we can recapture this level and hold, that would indeed be bullish and I would have to give respect to the market if that happened.

Tuesday's Plan

Morning All

I wanted to give a bit more focus on the Asian Indicies in this mornings post. I see some interesting developments which seem to be at odds with what is going on overseas in the US. Without the printing presses of Ben, and with our dependence on exports in this global slowdown, our markets have certainly underperformed over the past year or so. As I have been stressing, Asian Indicies have rallied right into some serious resistance zones and I anticipate a meaningful high to form.

Hang Seng Index Daily:
We have now rallied right into a serious resistance zone. This is a confluence of previous highs, the 61.8 Fibonacci off the high, and an open gap. Yesterday, despite the Euphoria of Fridays trading in the US, this market put in a solid reversal candle and closed well off. We need more information before we can call a top but certainly I would be looking for short setups into here.

Kospi Daily:
Korea looks very similar to me rallying right into the resistance zone. A lot of caution needed here.

Shanghai A Shares Daily 60mins:
This is a very interesting setup to me. This is my 3 Indians and Ending wedge setup.  3 peaks on 3 lower momentum readings. A bearish reversal candle today would trigger this setup and I would anticipate a quick sharp sell off to follow. Traders in Australia and throughout Asia need to be aware of this.

To Australia. Yesterday the Double top trade played out perfectly. I wrote here:
"I was looking for a retest of the previous highs in my past few posts. We are here today with the SPI indicated at 4275 early given Fridays strong move in the US. I will look to short fade 4280 and 4285 with stops above 4290. I will look to scale out of shorts in the low 60s if we do get a move lower. 4255 could provide potential Long scalping opportunities today"

That was pretty much to the tee. Hope you traded it.

My SPI inital range today: 4255 to 4290. Outlier levels 4220 and 4300.

UPDATE: WE HAVE OPENED AT 4255 AND WELL UNDER SYCOMM LOWS. THIS IS BEARISH. My range will be wrong. Given we are trading under yesterdays lows of 55, I am looking for a potential target to 4220. Focus on this downtrend.

My SPI Day trading plan: Given the overnight bounce, we are indicated at 4270 this morning. I still believe that short fading this 4280/85 zone is the low risk trade, stops above 4290. We may see a small breakout above yesterdays high but I think this should be shorted. Note that today is the RBA rates decision and although a cut is priced in, trading may be subdued somewhat. Once again, look to scale out of shorts in the low 60s but re-inititiate if 4255 drops as the target is 4220. Trading was weak in the Hang Seng yesterday and I have also shown a bearish pattern in the Shanghai Composite. Australia will no doubt be impacted if this continues to play out.

On the long side, I still would want to see price consolidate ABOVE resistance before meaningfully committing to long trades. This would be consolidation above 4285 and then 4300. Thus I will be nimble with longs up here.


SPI 15mins:
This was the chart I showed yesterday. The double top trade worked perfectly for short term traders. We obviously need a lot more follow through to the downside to confirm in the bigger picture.

S&P500 Update

Given Fridays blowout jobs number, the S&P500 obviously surged to yet another high. My double top fade vs the previous highs at 1330 (Emini futures) did not work but as I write, the Futures have pulled back to this level and I have decided to close my short at breakeven for now.

Obviously the continued strength in the US markets has thrown me off course somewhat, although I have managed to trade around some key levels with mixed success. To me this market is still to be treated nimbly. Certainly this market is overbought with the RSI of the Nasdaq 100 Daily at 78.55 and the S&P500 at 74! This is in very lofty and scary territory. But does the market care? Of course we will get a correction at somepoint but my ideal levels have been breached. Thus, I really dont know and I will now just sit back and watch the US unfold. I am looking for either a Climatic reversal pattern to form or a bearish candle reversal on the Daily. We dont have either. What we do have is a new momentum high on the lower timeframes thus I am looking to buy the first pullback for a short term trade. 

Emini S&P500 60mins:

The consolidation pattern I showed broke to the upside. I dont position ahead of major numbers. We had a strong number and before you could really capitalise, the market was trading at 1333 to 1335. We now have a new momentum high in place, and a retest of the previous high. I think this is a short term buy at around 1330, stops 1325, target 1340/1345. 

Emini S&P500 60mins ii

Interestingly, I showed these base pattern under the 1320 level the other day. If we take the width of this base pattern, and add it onto the neckline of the breakout level, we get a projection to 1342 which was hit on Friday night. I would like to see a retest of that level that fails before calling this done.

S&P500 Daily:

A strong candle on Friday. The saying "bull markets climb a wall of worry" seems more apparent everyday. In the bigger picture, we are now up against another host of resistance levels. Thus I still remain cautious up here. I don't know where this reverses. Here seems as good as any but price has no interest at the moment. 

DOW Daily:

Still in the Double Top zone. The small head and shoulders pattern did not play out on the lower timeframes. Once again, we now await a candle reversal.

EUR Futures 60mins:
A very interesting rounded reversal pattern here to me on the lower time frame. For now we are at the low end of the range and support. However, keep this one on your radar if it does crack.

In sum, it seems that many technicians continue to look for a top that just has not materialised. I guess I have been guilty of this although I have advocated  trading around the edges. Will this week and the full moon bring anything different? I really don't know. We bump from one resistance level to the next. If I see a reversal pattern, you will be the first to know. For now I don't.

Monday Plan

Morning All

I will put up a more detailed post on global markets a bit later. I just wanted to write out my plan for the ASX200/SPI here before the open.

My SPI Range: 4260 to 4285. Outlier level 4300

My SPI Day Trading Plan: I was looking for a retest of the previous highs in my past few posts. We are here today with the SPI indicated at 4275 early given Fridays strong move in the US. I will look to short fade 4280 and 4285 with stops above 4290. Longer term traders should wait for confirmation. I will look to scale out of shorts in the low 60s if we do get a move lower. 4255 could provide potential Long Scalping opportunities today. I will only look to get long and join this uptrend if we see some consolidation and holding of this morning gap up. Then I will join a breakout should that play out.

Friday Plan

Morning All,

An inside day last night in the S&P500 and thus I don't have too much to add this morning. My plan was to sell a retest of that 1333 cash high (1330 futures). Price looks to be consolidating and that would imply a breakout to retest those levels.

Emini S&P500 15mins:
This chart actually looks quite bullish with a big base pattern building under 1317/1318. My plan is to sell a retest of 1330 with tight stops. Short term breakout traders could use the boundaries of that consolidation pattern to get long or short. Its non-farms tonight and there is your catalyst.

S&P500 Cash 15mins:
I see a number of overlapping "3"s within this recent range. It is very possible to me that any retest of the Highs will be part of a B Wave with a sharp C wave lower to follow. Perhaps I am dreaming. We may have already seen a lower high, or another push higher to come tomorrow. Use that 1322 level as the line in the sand (1317 futures).

DOW 15mins:
My S&P500 pattern has added credit when I look at the DOW. This could be a H+S (although these patterns never work for me ha). Equally, we see a series of overlapping waves in this range. Like the S&P500, no new highs yet the NDX has managed to make a new high which is an interesting divergence.

All in all, price remains in a range with the broader trend up. I continue to trade the boundaries in the short term and continue to keep my targets small. My bigger picture view remains that we are building a high but price doesn't have any interest so far in the US.

To Australia. We are indicated at 4240 in the SPI this morning with the overnight high at 4250 and the low at 4225. Thus we are very much within yesterdays range. There is no economic data in Australia and with non-farms tonight, it could be a very quiet one indeed. Scalping the range could be the name of the game.

SPI March 5mins:
Yesterday we made out high at 4255 just above the 61.8 Fib retrace. Key res levels remain 4255/60 and 4285. Support comes in at 4225/7 and 4200

My SPI range today: 4225 to 4250. Outlier levels 4255/60 and 4285

My SPI day trading plan: As stated above, I think today could be relatively quiet and rangebound. My ultimate scenario is still looking for one more push back up to the previous high for a double top trade. However, early I will look to short fade 4250/55 and buy 4225/7. Price points in between that range will have to be determined as they day plays out. Look to get long and join the trend up if 4260 breaks to the upside, target 4280/5.

Double Top Trades

Morning All,

The Emini S&P500 held the low end of the range last night in the low 1300s and we saw a violent squeeze during the European session. With the market rallying back up to 1317, price was way too strong for the Head and Shoulders pattern to be valid and I said on Twitter:

"$ES_F: this is way too strong for a head and shoulders. Thinking we now head back up to 1330. Trade accordingly"

 

I believe this move now sets up for a great Double Top trade. I talked about scaling into shorts at 1330 and just missed it last night. I believe we may get one more push higher. Interestingly there are some small divergences with the Nasdaq making a new high but the DOW and S&P500 failing to do so. It may be just a matter of time before they do so but either way, I view this as a good low risk double top trade here. This market has been trading in a broad 30pt range for weeks now and thus continue to treat it as such until we see clear confirmation either way. We haven't yet. Sell the top end of the range.

 

S&P500 Emini 15mins:

 

Certainly last nights move did appear strong, but it is interesting to note that the DAX has now clipped my 61.8 Fib retrace. Sometimes we do see a small overshoot of these levels before a turn so wait for a Daily confirmation candle.

 

DAX Daily:

 

DAX Weekly on the Low:

Don't forget this chart that I put up coming into the October low. Price had a small overshoot of the 61.8 but ultimately contained price. This is the power of these Fib levels as timing tools.

 

 

To Australia today. Yesterdays SPI plan and range that I wrote here nailed it yesterday, but my trading did not live up to this unfortunately. I did not really commit to the downtrend enough and I did not execute very well. There is nothing more frustrating then having a sound plan with many scenarios, and not delivering. All we can do is go over our mistakes, learn lessons, and improve for the next day.

 

I showed this chart on the weekend and it is worth reiterating. The Australian Daily chart has put in a Bearish Candle reversal right out of clear resistance. We saw confirmation of this top with the pullback over the last few days. Thus our highest probability trade is to sell a RETEST of that high.

 

XJO Daily:

200 ema clipped, candle reversal right at the top end of the range.

 

 

 

SPI March 15mins:

As I said above, our highest probability trade is to sell a retest of this high. This level is 4285 in the SPI and 4300/4315 XJO. We may not get there today obviously but plan for these extremes. Here I have shown potential fade levels at 4255/60 and then right up at 4285. I prefer the latter level given the ABC type structure but as ever, trade the charts. Note that yesterdays open gap proved to be the perfect target for the down move.

 

 

My SPI range today: 4220 to 4260. Outlier levels 4285 and 4184.

 

My SPI plan today: We are looking at a strong gap up this morning of almost 50points right into yesterdays high of 4240. I think such gaps need time to consolidate before we can push higher, especially given the prior 3/4 day weakness. Thus I will look to fade the open straight away if I see weakness out of the 40s. This is for a short term short scalp only. I do think we are likely to push higher at some point later in the day but I will wait for some consolidation before joining this potential new short term trend up. Note that last nights SYCOMM highs were at 4260 and this could well be the target today. If we do get as high as 4285 today, this would be an aggressive short although I view a move that high unlikely today.

Tuesday Reversal Indeed

Morning All

Our job as Traders is to make money. Simple as that. Whatever method you use, whatever your style, we trade to make money consistently. I write this blog to plan my course of actions, to demonstrate the setups I am looking at, and to share my thoughts with other traders. This is my path to success and consistency. Unlike most "educators" and technicians out there, I actually trade this. This is my livelihood.

No-one likes a gloater. My intention here is to show how I plan some of my swing trading setups and the results. Yesterday, I wrote this on the blog to plan my day ahead in the S&P500 cash:

"Tuesdays are often my trend reversal days. Its possible that we may see a move back up to retest the 1333 S&P500 cash highs on Monday/early Tuesday, and this would provide a great low risk short entry. I personally will scale in at 1320 and then more up at the previous highs. I think last nights strong bullish reversal is all part of this move to "retest" that 1333 high (cash). I will be getting out of my longs into 1310-1315 and looking for shorts in 1320s. Use your fib retracements, res levels, candle reversals- whatever it is you use.

Before I went to bed last night, the Eminis had rallied perfectly into my 61.8 Fibonacci level at 1317 (spot 1320), and I went short 1/2 position. I put this on twitter:

austinmitchy

"$ES_F: Short at 1317. Feels too strong but if its going to turn, it will do it here"

 

austinmitchy

"$ES_F: 61.8 Fib off the high comes in at 1317. Flipped out of long, and getting short there. Could it be????"

 

The S&P500 Eminis made a high of 1317.5 and then sold off all day. The S&P500 Cash made a high of 1321.5 and sold off for most of the session. A nice successful trade and now we move onto the next. Thats our job as traders- to make money.

 

If you want to trade these markets in this style, and if you want live updates, PLS GET ON TWITTER. I put most of my thoughts and trades up as they happen. Its all free. I really think this is of genuine value. Nuff said.

 

So where does this leave us? To me we are clearly right on the point of a genuine breakdown. If we retest that 1300 level again, I think we break through. Support will only work a few times before it fails. I have written in depth about why I think the markets are topping and please read the following posts showing clear Daily charts:

http://swingtradersedge.blogspot.com.au/2012/01/weekend-homework.html

http://swingtradersedge.blogspot.com.au/2012/01/6665-x-2-1333.html

http://swingtradersedge.blogspot.com.au/2012/01/new-week-same-message.html

 

Eminis S&P500 15mins:

This was the 61.8 Fib level last night. This is the power of technical analysis.

 

 

Eminis Nasdaq 100 15mins:

Great double top trade and ending wedge/"3 Indians" right into resistance. To me, that has sealed it for this market.

 

 

Eminis S&P500 60mins:

Clear head and shoulders pattern in play. Yesterday I said that a bounce could form the right shoulder and here we are now.

 

 

EUR Futures 60mins:

Another possible Head and Shoulders pattern playing out

 

 

 

DOW Daily:

Double top. Reversal Candle. Small Head and shoulders pattern playing out. Do you want anything else?

 

 

In sum, markets made their high right into the key Daily levels. The S&P500 made a high at 1333 which is 666.5 X 2 (March 09 low). Momentum and breadth have been noticeably slowing and diverging into this high. Markets bounced sharply on Monday only to be slapped back down again on Tuesday which indicates that the bulls are losing control. All the evidence is there but we are still in the low end of the range for now. I have been banging on about how vulnerable the market is up here and that market tops take TIME. When this range goes, I anticipate quite a big pullback if not a substantial move lower.

 

 

SPI Range today: 4182 to 4240 (wide I know). Outlier levels 4250/55

 

SPI Day Trading plan: We are indicated at the low end of yesterdays range at 4234. Yesterdays late move was quite extreme and we bounced sharply out of 4222. Thus, any move back down to 4222 early should be bought with tight stops. It is possible we are oversold after a 3 day sell off but this is for a short term long scalp only until the trend changes. The short term trend remains down and thus I will look to short 4240/45 and more aggressively up at 4250. Note that if the 4222 breaks to the downside, I anticipate a move right back down to 4182 so be prepared for this. 

 

XJO 15mins:

1 trendline broken but coming into key supports at 4250/60. If this area drops, look out.