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.

Downside favoured...add to shorts!

Quick update - the S&P has continued to fall on the uncertaintly surrounding banking reform. The index has fallen 4.69% since breaking it's diagonal support.

This obviously has implications on single names. I have used a tool I have built to identify stock where they may be the technicals to take advantage of the drop. My tool threw out Anglo American, Prudential, Exxon Mobil and IBM as good technical shorts should the fall continue. This is in addition to the Lloyds and Bank of America shorts I added previously. It makes sense that financial and oil related stocks are the first to be hit.

Short term it looks like the S&P is trading in a range between 1,100 and 1,081 (March 2010 future). For this reason, I cut half my short S&P. I also lost conviction on the Ford position and closed it at a small loss. I will look to a break above 1,100 reassess my shorts. In the meantime, I will be looking for a break of 1,081 to add to my shorts while keeping a close eye on the the single name charts for support areas to close my positions.

I have changed the structure of the portfolio table to make it easier to follow. I have added a hypothetical account balance of £10,000 and you can track the performance by looking at the current value of the portfolio on the top left of the caption. It is also easier to assess the margin requirements of putting on similar positions with most online brokers.