Committee - Friday, page-22

SPI200 commentary

follow or fade

The carnage continues and the volatility increases with a 200 point range. As it has done all week the SPI started out quietly, bouncing briefly then gets smashed. The SPI opened at 5075 then bounced to 5082 which turned out to be the high for the day. Then the SPI sold off down to 5000 at lunch then further down to 4950 before closing at 4960. The overnight session saw the selling continue during Euro and fell down to 4890. The SPI then rallied on news that the Chinese market would reopen today without any circuit breakers and this sent the SPI back to 4970. The relief rally was quickly reversed and the SPI fell back to 4880 before closing at 4895.

This selloff is getting serious and with Chinese regulators changing the rules this market could do anything. I notice that CNBC is having a special "Market turmoil" edition tonight so that could mean we see a short term bottom soon. There is also a countdown to the China market opening, so there is lots of fear at the moment. One thing this selloff hasn't produced is a rally in the bonds, so there isn't a huge panic just yet. Also just when you thought there wasn't enough to digest, it is also non farm payrolls tonight, so that could really send this market wild. For todays trading you have to be mindful of when China opens, keep risk small and stops tight. I will be looking to buy dips around the 4880 if it gives me the price action to do so. If there are any rallies to 4960 I'll be selling there. The last few times the XJO got to 4900 it found some buyers, if it does break this level then we could head to 4400