Trading Plan for the S&P500 emini futures, after Greece and China dramas.
This has been a great month of theatre in the markets with S&P500 having the summer pullback, just before earnings. So leaving the nonsense of “Drama Trading” and coming back to the real world technical trading let’s look at some charts.
Trading Plan – Weekly Chart S&P500 Emini futures.
The weekly chart shows that we had a large volume week, around 3 million higher than previous seeks, with sellers bringing us down to support but buyers moving in to bounce price off of support the 50MA which is the yearly average price. Support came in at 2032 just a few points away from the 50MA but close enough. We could see price test this area again.
Price projection for buyers 2080 to 2100, or extreme move to new highs.
Price projection for Sellers 2025 to 1980 based on high volatility.
The range was below average at 41 points, not very volatile but slightly higher than the previous two weeks.
With the weekly average trading range we can see support and resistance extremes of 2013 on sell side and buyer side control to 2100. The 200 Moving average on the daily chart co-incides with the 50 Moving average on the weekly chart.
The market is still held within the “Drama Pattern” of a consolidated range within a short period looking for direction but chopping back in forth in an above average daily range. Joel Wissing
The range from 2036 to 2075 is this “Drama Pattern” where no direction is taken. In the short term beginning part of the week we could see a gap down from the relief run up we saw on Friday. The close Friday was 2069.50 Watching for a gap down. If there is selling pressure on no decision with Greece Crisis, I would watch for a close of Thursday’s open gap at 2043.25
If buyers do step in off of this first support, then I would watch for a move higher to 2090.25 where the 50 Moving Average on the continuous 24 hour trading chart. Resistance on the move up at. 2082.25 to 2090.
We might need some type of capitulation price action so there could be a head fake into sellers price failure under the 2032 range. Next support is 2000 for psychological support, 1980, 1950 from previous swing lows.
Gold prices are weak as Europe and Asia are getting hit.
Gold prices are not headed up. There is no bid catching and sellers are in control. The critical price support is coming up at 1132 to 1143. If sellers push below here we could crack the $1100 psychological support.
All the gold bugs are scratching there head saying the roof is falling, the roof is falling, but the truth is the naked shorts in futures and the margin calls that will be hitting the market and paid in gold will be huge.
The extension of the Head and shoulders which I have posted many times before is to 1050. If the margin calls are enforced in China, we could see large amounts of gold entering the market.
China Stock Market trading plan.
Chinese Stocks are cliff diving. China, as mentioned yesterday is the one on the side of the cliff. The Shanghai has stopped trading on $2.6 TRILLION of Stock. They aren’t trading on the market place and the rest have brought the market down about 9%.
Chinese stock market in Shanghai has moved in to Bear market territory with a break of the 200 moving average. Today the market is off almost 9%.
The next chart is a 1 minute chart and you can see that it has fallen 10% in the last few hours. Remember the market is still up for the year. The biggest consideration is if the government will let it slide, or step in and letting this roll over to margin call against property values. The Chinese market foreshadowed the 2008 US Market crash also. Trading Plan is no overnight holding and careful with your shorting. Chinese government can halt trading, put in their own plunge team, or just declare a price. Very Volatile, very risky. This will effect $25 billion in US purchases by China.
Greeks are climbing an Economic Mount Olympus and the China stock market could be sitting on the edge of a cliff.
Presently, the US news has pushed the trader investor into missing the biggest news item that will have a large effect than the referendum this past weekend in Greece. The news has cycled over and over on how Greece is voting on accepting austerity proposals from basically Germany and France. Greece owes them a total of around 170 billion dollars. Other countries since 2010 have contributed billions too, but as they are also in default and collateralize d their debt with junk bonds pushed into the European Community, in the short term they can wait to see how to follow if Greece takes on this arduous trek to a new economy. It is not like the news pictures it as a jump, a fall from Europe, but more of a political 1 foot forward two steps back until Greece commits to their future through their own currency. They are climbing Mount Olympus not jumping from a cliff.
Looking at the pullback in the US markets, I would attribute the long term direction more to what is happening in China. China Stock Market is the 800 lb Gorilla sitting on the financial markets. The Bank of China has just dumped 20 billion dollars into the market today, and the total loss to the Chinese markets this past month is in the Trillions of Dollars. Much more than the combined values of all the PIGS debt. This 25% correction in the market has not exhausted. If there is any indication in past major corrections there could be a 50% correction. The Chinese correction could wipe out all of this years profits if not more. I think the BOC will definitely step in with more support and extend leverage to stock holders but this is setting a very bad precedent in the market. The market clearing process of selling too much, moving to an oversold condition opens up the opportunity for new money in and inefficient, non employee-centric businesses to be cleaned out.
The Chinese stock market Correction will weigh more on the US and international markets than Greece. Joel Wissing Money Maker Edge™
Trading Plan – Stay away from overnight holding of equities, short term trading only.
S&P500 emini futures showing support on the 200MA moving average. Buyers and sellers had a capitulation before the move down showing seller exhaustion. Strong buy on today’s market with next major support at 2032, 1009 then 1957.50 News out of China could be big and set off a few international market makers that might be shorting. Watch for a break above 2100 and then some consolidation. If Greece folds and the BOC covers the market, then we could rally through to August.
Gold, the Catastrophe hedge is weak expecting lower prices.
There is a shift coming in the markets, and the risk off trade is slow, the catastrophe hedge GOLD is weak, Silver even weaker. Copper had an almost 4% change in price today to the sell side. Mortgage rates could be going up in the US in September, probably to be delayed to November or a slow sales moving month. For each half percent, an estimated 200,000 home buyers will be knocked out of the market. Home prices also correct when interest rates go up, so all these new buyers afraid of getting a higher rate are buying at the top of the market…..
Greece is going to have to climb mount Olympus to get their new economic fire and it is going to be a long hike.
The Sky could be falling, the referendum on July 5th is adding some volatility to the US and international markets.
We are sitting on the brink of some amazing changes that could be brought about by the Exit of Greece, from the Euro. Iceland previously held a referendum(in 2011) asking the people if they wanted to guarantee 2 Icelandic banks . European governments put pressure and all types of doomsday propaganda about how Iceland will loose its standing in the world. The vote was close to 60% against the guarantee. Iceland moved out from the pressure of the banks and let the business fail but kept their integrity and Iceland has been doing well since then.
It is a courageous step in the climb, and the pressure the Greeks are under both physically and psychologically must be huge and the hangover for the party in the streets just as big. In this, we might see some of the abhorrent corruption of our banking systems corrected. In the US, it seems we have not learned from our mistakes and have let the banks become our political masters, controlling our commerce, our industry and future taxes.
I remember in the 70’s when we had anti monopoly laws and policies, we broke up the “Bells”, we monitored the banks, we had mistakes but we had a sense of business that was to serve people, not as a business entity treated like a person that can not be held accountable. No banks or bankers have been charged and held responsible for the instruments they sold back and forth that created the largest transfer of wealth from middle class to the wealthy. The 2008 Financial Crisis will be small compared to what is in store for the markets in the futures.
As each of these begin to unwind, the Grexit, the Italian, Portugal, Spain exit that could follow. Eastern European countries unwind and their debt skyrockets, the baby Grexit in the US with Puerto Rico, Cities unable to pay their pensions with out issuing more debt(bonds) and of course the Ponzi of Treasuries and Bonds as the world looks for a source of safety and to take risk out of the markets.
The changes could be fast, the market could clear these fraudsters out, there could be a new start for many countries and cities. The fear of such a choice is often larger that the actual consequences.
We shall see…..
So What is your PlanB?
Remember to always manage your risk first. If you don’t have money to burn, stay out of these markets.
Money Maker Edge™