June 29 2009 – Quietly firm

Another quiet summer trading session for US markets and still we stay stuck in a range. There are some interesting technical points on the chart that we’ll discuss in more depth tonight, suffice to say that the main point of reference is 888.5 basis the S&P 500. This week has employment data being released on Thursday night, usually a market mover, and then the long weekend with no trading on Friday. All in all we’re directionless and will more than likely remain so. We’ve being dragged out of a one or two short positions, PGN last night, and into one or two long positions. There are more setups in both directions but it looks like short side setups are slowly fading and long side are getting closer to triggering. It may be a sign of what is to come.

June 29, 2009 – Financial Year end in sight…

A very quiet session locally but weakness seen in the resources sector. Tomorrow marks the end of the Financial Year, the worst performance in a financial year since 1982. Combined with last years financial year drop, the two cumulative represents the worst on record, just in case you were wondering why its been tough. If you’ve come out reasonably unscathed over the last 24-months you should give yourself a pat on the back. Later this week in the US we see the employment data released again, typically a market mover, before a long weekend holiday over there. It could be quiet trading in the coming days. We remain range bound with the major focal level being 3714. Bearish below there.

June 26 2009 – A flat week

At weeks end the S&P 500 lost 3-pts for the five trading sessions, albeit taking a sizable dive on Tuesday and having a sizable rebound on Thursday. Although price hasn’t moved a great deal in terms of direction, we’ve been left with one positive technical signal and another developing bearish pattern. The positive technical signal was a reversal back above the June 17 lows reversing what could have been a southbound 5-wave impulse. What we’re left with though is a 3-wave counter trend move which as we know is corrective. In other words it increases the chances that what we’re currently seeing is a period of congestion before renewed strength higher, at least from an Elliott Wave perspective. On a classical technical level we also have what appears to be a developing Head & Shoulders pattern, a bearish formation that confirms on a close back down through 888.5. Therefore this now becomes our important focal point. The daily trend is up, just, and the daily momentum in completely neutral. Below 888.5 we go near term bearish. Follow through strength early next week will be a strong sign that the next up leg has begun and we want to position ourselves accordingly.

26 June 2009 – 3 waves down confirmed

A good day for the market and another that stands above the all important support at 3714. Today also produced another important technical signal; a penetration of the lows June 18. Why is this important? Because the move off the June 12 highs was a clear 3-wave pattern and todays upside push has confirmed as such, and not a 5-wave. This is a confidence builder that we’re still in the midst of a congestion phase and not a deep retracement. It does not mean that the market can streak straight higher as we may continue to see some broader congestion take shape over the coming weeks. Today was a good sign though but we remain wary ahead of the June 30 financial year cut off. Some funny games can be played and whilst I don’t expect any tax loss selling this year we could still be seeing prices inflated here for window dressing. Stay cautious and keep the risk low. On the swing trading front I’m only rising a few small positions until the trend becomes more defined.

25 June 2009 – Watch the window dressing

The support levels we’ve been discussing held well last night with price reversing sharply higher in what was suggested by the media as a confidence vote for Fed Chairman Bernanke. I’m not so sure – we have the end of the financial year coming up in a few days and we may be seeing some window dressing after the solid gains in the recent quarter. My full commentary of the Dow Jones last suggested further consolidation over the coming weeks above support was very bullish, but a failure of support leads to a deeper decline. The jury remains out with regard to the immediate direction. The daily trend is up and momentum has just turn back up again. Personally I only have two short positions on, including PGN from last night. I’m playing both sides of the market and have orders waiting to drag me in if the market decides on its immediate direction.

25 June – A solid up day

A solid performance today by the local market, supported by positive comments last night by the IMF, OECD, the announcement of China’s biggest ever acquisition of Canada’s Addax Petroleum and quite possibly a late buying surge into Financial Year End by institutions. Todays gains were also well supported by US strength during the futures night trading session. I remain cautious and don’t place too much emphasis on US night trading, but no doubt the market will lead us in due course. The domestic market remains above the support level we’ve been discussing. The daily trend remains up but momentum is still in the negative even after todays efforts. There are some nice long trades setting up with risk slowly but surely dropping. In my opinion a single days strength doesn’t make a new bull market and I wouldn’t be surprised to see some weakness after the June 30 cutoff. Just be wary of new longs and keep the risk down.

24 June 2009 – Fed reversal

Not only are the indices stuck in a range but now they’re also diverging to some degree. The NASDAQ showed some good strength last night whilst the Blue Chips struggled. The NASDAQ has shown the more impulsive patterns off the March lows but more often than not its the Blue Chips that set the agenda. At this stage the Blue Chips, that is the S&P 500 and Dow Jones, are range bound with important supports just below still not out of play. The major support in the S&P stands at 879.0 but there is scope for several developing patterns, namely a bullish flag or a bearish Head & Shoulders. We’ll examine both those tonight but for now we’re jammed in a range without any trend conviction. Daily momentum is down.

June 24 2009 – 3714 under the microscope

The market did okay today, initially selling off but then making some lost ground back into the close. The important level to watch stands at 3714. a penetration down and through suggests a much deeper decline will commence, possibly as far as the March. However, as we stand above that we’re in neutral territory and should trade conservatively. The daily price trend remains up, but barely. Price momentum is negative. Until both these are align we need to stand back for better trend clarification because its in the strong trends where we make the money. There is no harm standing aside until this issue is resolved – we have the rest of the year to make trades. If you are intent on trading at the moment, just keep the risk down.

23 June 2009 – Watching S&P 500 @ 879.0

An expected pause day after yesterdays steep drop but the outlook remains the same. The important level, the ‘hold or fold’ level is 879.0 basis the S&P 500. A stiff break down and through will place the market into a deeper retracement trajectory and short positions should be the order of the day. A push through that level will also turn the daily trend to DOWN for the first time since early March but as it is momentum is already down so I favour short positions over longs albeit cautiously. I also note a number of other analysts are now calling for deeper declines so watch for a false break of that 879.0 level.

23 June 2009 – testing 3700 support

The market got walloped today and if nearby supports break we will most likely fall a lot further in the coming month. We need to remember that the market has come a long way and without any significant pause. As much as we like price to travel higher without hiccup, its an unrealistic expectation. As far as the All Ordinaries goes the important support stands at 3700 and the ASX-200 is slightly higher at 3714. There is a small line of diagonal support right at todays lows (which we’ll discuss in the ASX-200 review tonight in further detail) but quite frankly I’m not that much of a believer in diagonal support prefering horizontal. As per our materials sector review last week we expected further declines in the resource universe but I also note that the energy sector held up nicely today. We’ll see how the US travels in the coming week but for now momentum has shifted to the bear side and our daily trend filter is at risk of rolling over.

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