Kazoo Thursday, page-16

SPI200 Commentary

Follow or Fade

The SPI had another volatile session with a 110 point range and most of that traded after the FED announcement. The SPI had a weak day session opening at 4940 then bouncing to 4953, it then fell down to 4910 mid morning. The SPI managed a recovery back to 4945 but then fell away into the cash close down to 4885 before rallying back to 4915 for futures close. The Euro session saw the SPI trade between 4925 and 4895 but the start of the US session saw a buy the rumour rally and sent the SPI all the way up to 4955. Once the FED released their minutes it was then sell the fact mode and the SPI got crushed and fell all the way to 4865 before closing at 4885.

As I mentioned yesterday its all about the central banks at the moment and its pretty clear that the only way this market can rally is if we get more money printing from somewhere. We do have the BOJ commenting tomorrow afternoon so we could see another pump and dump move there. Either way it seems that 4950 level is too strong to break and the path of least resistance is lower. So I think the easiest trades to look for are sell rallies. It is equity options expiry today so keep an eye out for pinning in the large caps. I do think the SPI stays mainly range bound today so I will be looking to cautiously buy dips around the 4850 level and happily sell rallies around 4940

5m SPI Chart from Wednesday