Monday 15th November thoughts

I think we might see some more selling to come. Personally I think so long as there is no clear resolution on the European debt situation, the market is likely to be jittery. All the stats and studies being presented by the quants that I follow all point to a higher market in the intermediate term so I'm looking to get long at a well defined support level. The first one that pops to my mind is the 1180 level which corresponds to the recent area of congestion and is where the first fibbo level (23.6% retracement is located). I have a chart of this below.

I'm looking to use futures to take advantage of the situation firstly by drilling down to the shorter term time frame charts like the 15min and using the daily pivot levels as my entry points. I use the following pivot levels as price targets below. The first chart shows the regular floor trader pivots whilst the second shows the person pivot levels on a weekly and daily basis.

I've found that looking for longer term inflection points and then trading these levels on shorter term charts has been a pretty decent setup in the past. Just on Friday, I took at trade at trend line support on the ES at 1194.00 and held the trade over the weekend to close at 1200 for a 6 point winner.

Anyway so long as the European debt issue remains unresolved (and it will for some time - just think back to Greece where the ECB was forced to do something only after markets had been well and truly spooked.) It will be a good excuse for this market to take profits. I'd be building a list of strong stocks that are coming off the recent highs as good candidates to get long. Names such as AAPL, PCLN and other names come to mind. There's also the Chinese rates thing to contend with (another excuse??) so if you are long, then tread carefully as the recent selling are clear warning shots across the bow of the current uptrend. As always though I do expect the markets to eventually bounce back and move higher given the easy monetary conditions.