Tuesday, August 14, 2007

Plan for Wednesday

"Strong discipline 90% of the time is not enough because that last 10% of impulse trading will kill you."
- Dan Fitzpatrick

"Do what it takes to sit and wait until the low hanging fruit appears"
- Alan Farley

Read Full Post.....

SPY Resistance is at 144.6 - 145.3
First level SPY support is at 140, next one is 137.5-138.

1430-35 was supposed to be a significant support level, but that has now been breached. The onus is on the bulls to reclaim the 143.5 level. Then they have their work cut out for them to reclaim the 200d SMA @145.3. Failure to do that will result in a visit down to 1400.

SPY is reaching oversold conditions again, but that doesn't have too much meaning in this current environment. SPY didn't even provide a shortable rally in the morning, so that kind of speaks to the bearish sentiment present in the market. That also makes me doubt whether tomorrow we will get a rally up to resistance @145.3.

For ES, shortable resistance is at 1450-51 ( this is where Tuesday's retrace stopped, and also close to where the 200d SMA is). It's not clear at this point whether 1435 will act as support or resistance, but I do believe that there is support @1400.
Range days usually follow trend days, so if we do see another 30pt trend day, that would be very bearish. I will be on the lookout to short any rallies that get close to 1450. If we do get a range day, I think it will be safer to play the mean reversion from the top of the range rather than from the bottom of the range. Other than that, I need to be more aware of my setups and wait more patiently for my setups to happen.

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