Noel
Campbell 		As I indicated last week in my article, ‘The Power of Confirmation’, the SPI200 had threatened to show some opportunities to profit on the short side of the market. The 9th and 19th of September shaped up as a potential Double Top. The market confirmed the Double Top on Monday by making lower top and lower bottom on the daily bar chart.
When looking at the continuous chart, which rolls from one contract to the next, as the volume swaps over, the 19th is a higher top than the 9th. However the 9th was the September contract and the 19th is the December contract. In Chart 1 I have the December contract only chart, which shows the 19th is in fact a lower top compared to the 9th from this perspective.

Chart 1


click chart for more detail

You would really only ever need to consider looking at the single contract charts around rollover periods. By comparing the two tops looking exclusively at the December contract you could say that you are comparing apples with apples.

The entry for the Double Top trade was 3227, which was just outside the 33% limit by two points, however many have overlooked this and got themselves short on Monday. One thing I did pick up this week is that some traders did not enter until the low 3200’s. The key question for them is, why were you not in earlier, as the low of the 19th was broken?

By getting in late the small rally on Wednesday managed to ‘shake a few bears out of the tree’. Those who got in late would have been most susceptible to taking a quick exit. The market moved through the 50% on the first day of the trade, which was a good sign. To leave your stops behind the 50% milestone on Wednesday, you avoided being stopped out on this small rally. We look like we have some interesting times ahead of the next few weeks. Remember plan your work and work your plan.

Until next week......

Noel Campbell