30 Days Net - Thursday, page-11

SPI200 Commentary

Follow or Fade!

The volatility increased yesterday with a 140 point range and news sending fear throughout the market. The SPI opened slightly stronger at 5170 then rose to 5180, then sellers came back and took control and sent the SPI down to 5110. Then more sellers came again due to the news of North Korea testing bombs and more disappointing data out of China. This sent the SPI all the way down to 5050 before closing at 5080. The Euro session saw the SPI recover to 5100 but traded new lows at 5040 during the US session before finishing at 5065 this morning.

The relative strength between the falls and bounces should clearly tell you that the easiest way to trade this market is to keep selling rallies. All the drops have been very strong and swift and and bounces have been very weak and anemic. Since the start of the week I have though the SPI would test the 5000 level but I didnt expect it to come so quickly. The overnight action and low close tell me to expect more weakness so keep looking for rallies to sell. For todays trading I will be looking to sell rallies around the 5100 level. For those brave enough to try and buy dips in this market should see how price reacts around that 5040 level. Keep stops and risk tight on those trades though, if it goes against you, get out. The next downside target is around the 5050 level on the cash which is about 5000 on the SPI

5m SPI Chart from Wednesday