S&P 500: Descending channel established? Continued...

Following on from our post yesterday, we have executed a short position at 1103.6 yesterday citing the market's adherence to the descending channel as illustrated in the charts below. We were initially hesitant as the S&P 500 looked as if our descending channel may be the flag of bull flag; upon closer analysis however, the gradient of the flagpole was not anywhere near steep enough when compared with the typical bull flag formation manifest in US Equities:



Post-market close, we placed another sell order - filled at 1100 - on the apparent enduring nature of descending channel resistance. Perhaps more pivotal was yesterday's price action formed something of a bearish harami on the S&P 500 D1(daily). We understand that it didn't completely fit the harami criteria as it didn't open below the previous candlestick's close, but the net effect is not too dissimilar: market indecision. Please see below examples of similar formations, manifest in the S&P 500:







Even as I type this, the formation looks to be playing out better than we could have imagined! Unfortunately however, we exited ahead of MPC and ECB rate decisons at 1092.0 as we didn't want to get clipped in what we would be choppy waters! Next time, eh?

Going forward we have a potential trade on Fiber - EUR/USD on the back of a falling wedge formation this time, but the setup is on the brink of being taken as I type this:



We are long at 1.3790 with a tight stoploss at 1.3750. This level really is make or break for FIBER.

Remember NFP tomorrow, so be sure to check back in the morning ahead of the number!

Profitable trading Traders!

"Remember, I am neither a bear nor a bull, I am an agnostic opportunist. I want to make money short- and long-term. I want to find good situations and exploit them."

- Jim Cramer

S&P 500: Descending channel established? More to come......

Short executed at 1103.4; s/l moved to breakeven. More to come--->

Is this wedge pattern is playing out...

Post Obama's Volcker rule announcement, we remain without position erring on the side of caution. As technical analysts we have to prepare for more downside as our many times mentioned bearish ascending wedge pattern, now begins to break down. Turbulent times ahead traders and so position yourself accordingly in this market. Worthy of mention is that we are not reneging on our medium term mandate which is to buy dips- but we are warning of further downside in the short term. Take a look at the charts and video below and let us know what you think!











Safe trading traders!!

"Wide diversification is only required when investors do not understand what they are doing."
- Warren Buffett

Long entry at 1137,,,

Good morning Flatbookers! We were long Friday at 1137 and 1133 on the S&P 500 on the back of the ever ascending, short-term support cited in our post on January 11th post. We intended to hold this position for the interim period. We moved stop losses to break even whilst the position was substantially in the black and were duely stopped out early this trading day for scratch.

Post slightly worse than expected results from Citigroup - -33¢/share vs -30¢/share forecasted, we will reject re-entry of this long position for now, despite the market offering us a better point of entry. Moreover, the formation of a bearish ascending wedge(see below) presents more of a case for a short position than a long. As such, we will do the only intelligent thing we can do when presented with contradictory evidence; that is remain on the sidelines.



Safe trading, traders!

"I’ve got friends, of course, but my business has always been the same – a one-man affair. That is why I have always played a lone hand."

Edwin Lefevre

Long entry at 1137; more to follow.....

S&P 500 support

Good Morning Flatbookers. Ahead of the ECB rate decision (1245 GMT), US core retail sales and US unemployment claims(1330 GMT), we will remain on the sidelines. Here at the flatbook, we seek to negate being stopped out of a position due to market noise and short-term volatility. However, we do see a prospective entry long at 1034.5 should we get there post 1330 GMT. Our stop will be very tight at 1027.5. There has been enduring ascending support as of mid-March 2009 and this provides the fundament of our 1034.5 play. Secondarily, RSI on the D1 chart is facing up and so is bullish.

Profitable trading Flatbookers!



"Frankly, I don't see markets; I see risks, rewards, and money." Larry Hite

What does 2010 have in store?

Happy New Year flatbookers! May 2010 be a profitable one for your all. Now down to business. To reference our December 1st post we believe that the S&P 500 has overcome the most robust technical threat since March in long-term descending resistance and November/December's flattop at 1120. Last Friday's positive reaction to worse than expected Non-Farm Payroll data (-85k actual vs -3k forecast), only served to underline the market's bullish mood.

Now at 1145, it would seem that momentum to the upside has prevailed, for now, and as Technical Analysts we are now buyers of dips. "What's our entry?", I hear you cry. Here at the flatbook we are currently on the sidelines and waiting for a possible long entry at 1127. The hyptonuse of the aforementioned ascending triangle could act as support within the ascending channel (pictured), hence our prospective entry price. We will continue to monitor price action however, and will post if we move on anything.



Safe Trading all!

"The average man doesn’t wish to be told that it is a bull or a bear market. What he desires is to be told specifically which particular stock to buy or sell. He wants to get something for nothing. He does not wish to work. He doesn’t even wish to have to think." Jesse Livermore

S&P 500 Update III

We were stopped out at 1120.5 on 22nd December. We theorized that the flattop would not break pre-2010, as traders wound down their positions and indicators continued to look bearish. In retrospect, we might've been better positioned had we paid attention to the ascending triangle formed on the d1, from November onwards:



We saw a similar continuation pattern on d1 Gold over a similar time period:



An oversight on our part; a small setback that we will take in our stride an learn from going forward.

"...there are no mistakes, only lessons." Cherie Carter-Scott

S&P 500 Update Part II

As per the post before last (Dec 8th) we are holding a sizeable short position. We came close to being stopped out, however, the flat top saved our bacon. It really does look like resistance is in place. Let's see where we go from here.....

Happy trading traders!

Where next? Robert Prechter of Elliott Wave on Bloomberg / Oscar of Live with Oscar

Two very contrasting opinions from two well respected technical analysts. Ah, the subjectivity of TA....

S&P500 Update

To be clear, we are still short the S&P500 and inttend to remain short for the weeks leading up to Christmas. The market failed at the descending resistance, highlighted on our post on 1st December and short-term indicators are now pointing lower. Both of which underline the quality of the thinking behind this trade.

I received a mail from a flatbook reader recently asking for proof that we take our trades. In response to said reader's email, please see below, a screenshot belonging to a key flatbook contributor. She currently holds one position: an S&P500 short on the back of our call on 1st December.

Wishing you all well this festive period!

Critical juncture for S&P500?

After another brief hiatus, here at the flatbook we are back. Posting for posting's sake is not in our nature and it was our feeling that over the course of November, market conditions yielded very few high probability setups.

Thanksgiving week saw an increase in volatility on light volume as was to be expected. As panic on the back of an allegedly exaggerated Dubai World crisis fades to black, we enter a week headlined by the ECB rate decision on Thursday and US NFP data on Friday, both of which have the potential to founder market gains. Technically we find ourself ensconced on tested descending resistance (see below). Notwithstanding indicators appearing decidedly indecisive, we have executed a sizeable, yet somewheat speculative short position at 1106 with stops above recent highs. Let the flatbook go on the record and say that we expect a healthy pullback into the Christmas period as traders unwind their books and take some chips off the table. Indeed this is a critical juncture for global markets, and our direction over the next couple of weeks may provide insight as to whether we are in a genuine bull market or a bear market rally.

Safe Trading all!

Long S&P500 @ 1043.5

Although we have profited substantially from shorts at 1101 earlier this week, let us not forget our mandate: buy dips! Since March lows of 666 we have consistently made higher highs and higher lows. Today, ahead of 3Q US GDP, the S&P500 is testing ascending support that has been in play since those market lows. Is this reason sufficient for us to effect a long position? In and of itself, no. Consider this however: The EUR/USD, often considered a mirror of global indice health, is also at a key level of support. The stochastics on both charts seem to bottoming out and RSIs both look to turning higher. On this basis, we have executed a sizeable long position at 1043.5 on the S&P500 with a moderate stop loss to compensate for the inevitable noise around the US GDP data. Please note, we would not normally effect a position ahead of such a key figure, howerver, the statistical and technical evidence in favour of our doing so is overwhelming.

Safe trading all!

S&P 500 support at 1054.5?

Here at the flatbook we will action a long position (in line with our 'buy dips' mandate) at 1054.5 with moderately sized stops - 50 pips. We anticipate a bounce from this level due to the considerable support as illustrated on the d1 chart below.

Safe trading all!

Short-term S&P500 support

Our target for our short position today of 1090.0, as illustrated below, was hit triggering our limit orders. We are considering effecting a speculative long position at the ascending support (1088).

Safe trading all!

Are we at critical point for S&P 500?

After several months of upside momentum are we now at a critical juncture in the Bulls vs Bears battle? Well, here at the flatbook we certainly think so. Take a peak at the charts below. Here we see price action encroaching upon previously tested, descending resistance. That we see this resistance coming into play almost simultaneously, on more than one global market index gives this setup additional credence. The stochastic on all three charts is also looking very 'toppy'. We will effect a short position on the S&P500 at no lower than 1001 (as this is where the chart meets our resistance), with tight stop losses.
Worthy of note, is that this trade is extremely counter trend. With better than expected results popping up left, right and centre, of which Apple is the most recent (profits up 47%) the mandate for profitable trading over the weeks/months past, has been to buy dips. The technicals pertaining to our short position however, are too extensive for us to not take the trade. We are techincal analysts afterall and not fundamental analysts.

Safe trading all!

Trade Updates

Ahead of what is anticipated to be a fairly light trading day, let's reflect on a most profitable couple of trading days:

Long SPX @ 880; actioned Wednesday 19th August 0844
We find ourselves once again in a great position thanks to sound technical analysis. Here at the flatbook, we have taken some profits of the table but will leave 1/4 of our original trade size in play (with stop at break even) so as to take advantage of any further potential upside. 1017 is not beyond the realms of possibility over the next few trading days.


Long GBP/USD @ 1.390; actioned Wednesday 19th August 0942
We have taken this position off in its entirety @ 1.6550. Though aware of resistance on our h1 charts at 1.6600 we were optimistic that cable could push through this level and doing so missed out on further 50 points. Still, we keep the p&l ticking over. Moral of the story: always respect your TA!


Short US Crude Oct '09 @ 72.77; actioned Wednesday 19th August 1542
Stopped out of this one for break even. It was very much in profit at one point. We didn't take the position off however as our technical analysis indicated a prolonged movement to the downside could ensue over the next few trading days. Such is life, eh?

Happy trading all!

Trade Update: US Crude Oct '09 short @ 72.77

Again, we are shorting recent highs on the back of volatility cause by today's surprise EIA (Energy Information Administration) Oil Inventories data:

+1.1mln forecast vs -8.4mln actual

Our entry is 72.77 and we will move our stop loss (40points initially) to break even at the earliest opportunity. Please see the chart below:

Trade Update: Long GBP/USD 1.390

On the back of the release of the MPC minutes we've seen an increase in volatility in cable. We have actioned a long position at 1.390 with a 40point stoploss. We will move s/l to break even as the instrument moves to the upside. See the h1 and m10 charts below for our thinking behind the trade:






Safe trading all!

Trade Update: Long spx @ 880

On the news front today, we have only the MPC minutes to contend with/profit from.
Technically, however, we see 880 as a level of some support. Couple this with the enduring trend to the upside and we have the fundaments of what could be a profitable trade (order filled as I type this).

On a sidenote guys, please beware of the fact that we are in the midst of August, and so substantial moves may take longer than usual to develop: this is holiday season afterall.

Nothing more to report for now.

Happy trading all!