Sideways movement....but where next??

At the end of last week, I mentioned that I would be looking to re-enter shorts at 1,066 on the March Future - I have taken this position today. However, the market looks to be trading sideways, without any significant indication that the trend will be continuing in any one direction.

In light of this, using the spreadsheet tool I have built, I was looking for a technically strong long position as a short term hedge. BP Plc (BP/ LN Equity) is sitting on a good diagonal support formed since March last year and have taken a small long position with a tight stop.

On the S&P500, the price action has been contained within a downwards channel (daily graph) with the next key support at 1,040 (cash index).

I have attached my latest graphs below with a brief comment on each - feel free to contact me with any questns or comments.

AAL LN - diagonal support broken on downside. Price contained in down channel. Shorts good unless diagonal support is broken on the upside and/or resistance of channel broken on upside. 

BAC US - diagonal support broken on downside. Break out from converging triangle validates shorts. Looking for horizontal support to break for continuation on downward price action. 

BP/ LN - big support holding thus far. Favour long positions as long as this is the case. Resistance (previous high) to be broken to further validate long positions.

DXY - down channel broken on up side. Trading within an upwards channel off low. Inversley correlated to the S&P.

S&P500 - 2hr graph (March future): noise at the previous low. Price action contained by downwards channel. Continuous lower lows achieved validating bearish view.

Daily cash index graph: diagonal support broken on down side and trading within a channel. Trading just above a key support zone.

PRU LN - diagonal support broken on downside. Shorts good unless diagonal support is broken on the upside and/or resistance of channel broken on upside. Next support zone joins recent low and a previous resistance.

End of another sucessful week...

The markets continued to fall as I expected this week - unfortunately I was a bit conservative in closing my single name shorts early, especially Lloyds which could have banked me another 140 points!

Nevertheless, the portfolio is performing well with the current value over £12k.

I closed the most recent S&P short opened @ 1,097 when it looked like we hit a support @ 1,067. Again, this was premature as the S&P dismissed this technical level and powered through, reaching a low of 1,050.5. I still have my long term short from 1,127 open with the 'double dip' in mind hoping that the high may be in for the time being.

From a shorter term prospective, I am looking for a retrace back towards 1,066 to sell short once more.

Levels to watch:
Support: 1,059 and 1,050 (March Fut); 1,039 (cash index)
Resistance: 1,065 and 1,078 (March Fut)

On the cash index, the 1,070 level looks key to me - it has acted as both a support and resistance level in the past. A breach above this level will mean re-evaluating my bearish view.

The long dollar trade is looking better everyday as it continues to power through the diagonal resistance. From a fundamental and macro point of view the trade is looking like a good long term bet.

I also cut half of the gold position - I was very bullish gold coming into this year, however the sentiment I am getting from the market is that the rally may have been a mini bubble which is always liable to burst. Since I lost some of my conviction, I closed half at a small but significant loss, keeping open a small position while keeping a close eye on my stop at 1,024.

Have a good weekend all!