Friday, August 19, 2011

Market review 19/08/2011

The markets sold off sharply and today we saw new lows in dax.To be honest,expecting the down move even I was caught a little off guard with the speed of the sell of. But , I had my protection for couple of months, the 1 by 5 put ratio , which worked perfectly as a hedge to the stocks, turbos i bought on supports. Is it early to call that we are officially in the bear market? We will see. Fed can pull out the qe 3 , just like last year, to support the markets.Lets first check what happened:

Below is the SP weekly chart. Well, none of the supports I mentioned hold, namely 80 week MA around 1208(blue line), and 200 week Ma yellow line around 1160. The market sold till 1100, with around 1077 the low in the future during the pre-open phase.Then we had couple of crazy sessions with 5% up , 4% down, again 4% up...Well, market is being sold heavily again during the past two days, using 80 week MA as the resistance.

The day chart is below:The first major resistance is 1208 , 80 week ma, blue line, where the market reversed 2 days ago.I have been looking at the 80 week MA as the support for the bull market for the past 2 years, well the reversal of the market from that level might be a sign that we are indeed in the bear market. The picture will be clear in few weeks. I will be watching 20 day(1230 at the moment) and more importantly 200 day MA(1285 at the moment) to short the market.

Now, the eurchf. As mentioned in my previous post i tried to get long on the lows when tested 2 nd time around 1, 08. But immediately closed the positions when new lows were made. Psychological 1 level holded, but never saw the level again to get long. There were rumours about pegging the franc with Eur, which helped a 15 % rally.Thats the reason I did not sell into 20 day MA. It was a completely new situation Below you can see the daily chart, the market is testing the breakdown of the long term down channel. Actually, I am quite resistant to short it till these rumours with SNB are more clear. 1.16 is the 50 day MA, where the previous down move happened, it might be a good level. If there is some kind of a spike due to a rumour, i will definitely try shorting around 1.25, 200 day MA.

Last month trades I was looking for:

eur/chf: buy 1.08 with a tight stop did not work Stopped immediately.
sell into ma20: did not due to unknown market conditions.

This month:

sell eur/chf around 200 day MA(1.25 at the moment) :Target is 20 day MA.Stop should be wider than usual, because of the possible volatility after such a move. SO size of the trade should not be too big. I dont see eur/chf going those levels that fast, but you never know what SNB will do to "normalize" the franc.

buy index future:sp index support 1100. I am long small index position around sp 1120, with sp support around 1100. I will buy around 1100 if the market sell of continues, and I will scale out if the support is broken.I still have some extra puts left , so I am covered to some extent.Target 1208!

sell index future:.: Mainly 200 day MA, around 1285. .I will probably sell 20 day and 50 day MA's with tight stops, depending on the situation at the time.

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