The Local's Take: Year End Commentary and a Peak Ahead, Forex Style

Good afternoon Traders and Investors,

What goes down stays down. That has been the story for the dollar in 2009.
Now if we could get a storm over the Wasatch to stay on track and stall out, that would be just perfect. The holidays are ending, tourists are leaving and January still has short enough days where the sun doesn't spoil the snow too quickly.

No, the Head Local won't give you any weather predictions here or tell you his favorite spots in the Deer Valley trees.

If you were able to catch the move and understand it and you added to your commodity portfolio, well, you had a very good year Mr/Mrs. Trader.

Yes, the dollar was weak. If you think about it, all Central Banks weakened their currencies in order to stimulate their respective economies. Why then did the dollar weaken compared to the other currencies when all were devalued?

Maybe it is a blessing in disguise. When markets rally, the dollar weakens. The opposite occurs when markets crash - in the past the dollar has strengthened. In time of need, rely on Uncle Sam.

Will that continue to be the case if the markets deteriorate as the global economy goes into 2010?

Lots of questions will be answered as traders bring the markets back to life after the "Holiday" break. If the equity market rallies, overall volatility stays low and it will be the "grind it out trader" who plugs away each day. If the equity markets swoon due to any number of events, then the disciplined trader will have to quickly adapt to wider spreads and wider ATR's.

Notice that I am NOT making any predictions. I am not an investor in the forex markets and thus don't really care where the currencies go, as long as they go. Also, in order to sleep at night, I RARELY hold open positions going into the close. Therefore, it isn't important to "call" the markets for 2010, but understanding the big picture always helps in intraday trading.

Let's take a quick peak at a longer dated chart:
I only posted one chart as any currency related to the dollar is going to look fairly similar.

This look at the GBP/USD on a daily timeframe gives us a great view of the strengthening dollar during the economic freefall and then the weakening dollar during the economic recovery.

BUT, there is a divergence - the equity markets have leaked higher over the past month and the dollar has strengthened.

• Is it a small correction in a bigger downmove in the dollar?
• Is it a sign that the equity markets are overbought and buyers of the dollar are preparing for a downmove in equities?
• Is it fear that the Bernanke and the Fed will raise rates?

As I mentioned, I don't care as I am not investing long term in any specific cross pair. We will get new information in the markets to help us disseminate some of the questions I pose above.

The bottom line is, wether you are an intraday trader or an investor, you have to pick your spots and have money/risk management as things can change in a hurry.

If the past 2 years are any indication, change seems to be on the horizon and for traders, change is good!

Happy Trading and Be Environmentally Cool with Locals Have More Fun Apparel

The Local's Take: Year End Commentary: The Trend is Your Friend, Friend

Good afternoon Traders and Investors,

This is the year end wrap-up and I am going to include a few bonus insights into next year's trade.
BUT, before I jump into things, SNOW is in the forecast! I have had enough groomers for a while and I am ready (with my Rossignol Phantom 97's) for some serious powder! We have been in a warming/high pressure trend over the Wasatch and it looks like it is about to break!

Speaking of TREND!! We were trend down in 2008 and trend up in 2009. What will 2010 bring for the markets? Let's take a look at a chart of the SPY:



We came off the bottom in March with help from the Fed and as you can clearly see, have just surpassed the 50% retracement mark, with full steam ahead towards the 61.8% mark. There is a peculiar trend line coming in, but the markets seem to have MORE recovery on their minds.

A few other charts that show a similar trend: AAPL in the tech sector, the retailers and of course, the commodities!!!




The trends we saw were up (unless you are talking about the dollar). The financials were up (but are starting to lag). Is this a precursor to the rally running out of steam as financials tend to be a leader?

So aside from the dollar and the financials lagging, it was a VERY robust rally from March to December. The job market improved (some of you may not think so) says the Labor Department. Consumers spent money (or credit).

Do you hint at sarcasm? There shouldn't be because the local barista, Park City Coffee Roasters are now brewing 6 days instead of 5. Those microeconomic factors say that people are spending money and life is great.

Onwards and upwards into 2010 as most optimists say it will be BETTER than 2009.

A question: How much has your portfolio gained since last year? Some returns are 50% plus - just by holding on to your positions! Astounding!! It would be nice if we did that again (which means the dow is closer to 15000, but I am not going for it.

I believe we are going higher before we go lower, but not MUCH higher. That's it, I said it. Enough is enough as Park City has 65% of its rooms full during Christmas week (microeconmics in a resort town).

We have higher taxes on the way, unemployment that is in an uptrend (or at least sideways for a while), (I won't mention terrorism), and PHENOMENAL growth. No one should be complaining about their portfolio versus a year ago and if it goes sideways or even down a little bit, hallelujah - another buy point (which have been very hard to come by of late!).

I see the Dow going towards 11,500 at the very highest (I don't think it will make it) and then going sideways to down a little bit. I originally thought a double dip was likely and still give it an OUTSIDE shot. The higher we go, the less likely that double dip seems.

Regardless of my prediction or any other out there, volatility should increase by the start of the 2nd quarter and opportunities will be abound. So whether you read my predictions or listen to any others, it shouldn't matter.

Why?

Because YOU should have a sound trading/investing plan. Don't have one? Don't know how to make money in a neutral to down market? Don't know how to protect your stocks, mutual funds, 401k, IRA? Well, you better learn because we aren't trending up forever!!!

The bottom line is, if the markets continue to go up, traders will suffer, but portfolio holders are happy. If the markets start to gyrate, traders will reap it in. Wherever you fall, there will be money to be made.

Happy Holidays, Happy Trading in the New Year and Be Environmentally Cool by wearing Locals Have More Fun apparel!

The Local's Take: Mid Day Commentary

Good Morning Traders and Investors,

Just as the weather patterns have dissipated before they hit the Wasatch Mountains, it seems as if the forex markets are finding a bit of stalled momentum. There definitely isn't any stalled momentum when it comes to tourists arriving to Park City. Merchants such as Locals Have More Fun are very happy to see them!

The dollar has strenghtened quite significantly over the past month or so, but unless you are holding long term positions, the daily moves have been quite choppy. It seems as if there could be some support coming to the cross pairs, which may stop the dollar from strengthening - but the location and timing of that play haven't arrived yet.

Short term trades are still there - we had a nice move after the release of US GDP that allowed for a DOUBLE FALL LINE TRADE (sleepy eyed, I hit the wrong pair!).



FYI, for all of you Larry David Fans, there is a very funny "ski" attempt by JD Smoov at the Deer Valley Celebrity Ski Classic/Waterkeeper Alliance Fundraiser - I am sure it is on You Tube by now.

Happy Trading and Be Environmentally Cool

The Local's Take: Mid-Day Commentary

Good Morning Traders and Investors,

I hope it starts to rain a whole lot in sunny California as Utah could use some snow.
What we have is great, but the season starts to get short when you don't have any powder days in and it is late December. Deer Valley has been prepping the snow and definitely has the best "product" around, from snow making to customer service, to food, etc...

It will come (right?).

As far as the markets go, we have a definite lack of sellers in the broad markets. QQQQ broke out to a new intraday high today. The trend is still sideways to up so all of you who are bearish, use tight stops and any of you who are protecting your long positions, also use tight stops.




On the intraday side of things, volume is very, very light, so be careful trading. If you get a good one, nothing wrong with taking profits and then enjoying the rest of the day. Trading opportunities will likely thin out as we get later into the week. There are a few data releases Tue, Wed and Thur, but again, volume is light and the moves can get tougher to read.

Will the other broad market indices breakout?

On the intraday side of things, volume is very, very light, so be careful trading. If you get a good one, nothing wrong with taking profits and then enjoying the rest of the day. Trading opportunities will likely thin out as we get later into the week. There are a few data releases Tue, Wed and Thur, but again, volume is light and the moves can get tougher to read.

There were two double fall line trades in the EUR/USD and USD/CHF this morning. I think we were lucky to get 2 quality trades in a short span of time during "Holiday Trading".

Happy Trading and Be Environmentally Cool

Locals Have More Fun is offering holiday discounts as well!

Brian

The Local''s Take: Mid-Day Forex Setup

Good Morning Traders and Investors,

Yes, I played hooky yesterday to take advantage of the Wasatch powder. Locals Have More Fun right? It wasn't as light as usual as temps went from -11 early in the week to the high-20's, but still a great day on the mountain. I gave my wife a "practice" mountain tour, which included her digging out of heavy powder "somewhere" in the trees.

Seemed like a pretty good day to take off as the forex markets were sideways as we get closer to more economic data (PPI this morning a non-event) and the Fed tomorrow (a BIG event!).

Today already provided one DOUBLE FALL LINE trade as the dollar showed early strength (on the back of weaker equities in Asia and Europe).

As far as longer term setups, the EUR/USD has weakened substantially and has now found the first retracement level at23.6% If the trend in the dollar continues to be weak, this may provide a point of support. None of the other currencies have weakened against the dollar this substantially:

A bonus chart - USO retraced significantly over the past few weeks and with oil prices depressed to just under $70.00, seems like oil and hence USO is catching a little bit of a bid:

Happy Trading and Be Environmentally Cool

The Local's Take: Evening Commentary

Good Evening Traders and Investors,

Twenty inches of heavy snow due to higher temps - but hey, we will take it. It is supposed to keep snowing so it may be a half day tomorrow!! Looking at the week ahead, we have the Fed meeting on Wednesday, so it could be un-interesting trading anyways. Got to get the snow while it is good!

Let's take a look at the overall markets - using the charts of the ETF's to see if we can find any interesting insights.

As you can see, the broad markets are showing a strong uptrend since March. Over the past few months we have been relatively sideways (COVERED CALLS!). NOTE: the trend hasn't changed - we are still making higher highs and higher lows, but right now we are in a consolidation phase. The key to remember is we are NOT going down. The closer we stay to the highs, the better chance we have of busting through to the upside.

It is the old 3 steps up, 1 step down theory. You can also see the downmoves have retraced very little of the upmoves. That means more buyers than sellers - meaning strength.

A number of things can change this including rhetoric from the Fed, so make sure you read the statement on Monday.

Happy Trading and Be Environmentally Cool

Brian

The Local's Take: Mid-Day Forex Setup

Good Morning Traders and Investors,

Finally!!!

The currencies broke out and had an above average range. Meaning the daily average true range was bigger than the past week or so which provided some great retracement trades. It all started with the USD/CHF and ended with the USD/CAD

I would have updated this earlier, but just finished getting out of a late day USD/CAD BUFFALO BOUNCE!

Let's go to the charts:

The AUD/USD came close as well!

The bottom line, a sound trading plan and discipline and PATIENCE will lead you to be profitable in these markets. I waited all week for the setups and they finally came. As I mentioned on Sunday, I was pretty confident that either Thursday or Friday would be decent if we had economic data that moved us. I am not sure if it was the economic data or pent up demand for volatility, but either way, HALLELUJAH!

If the trade didn't materialize, well it would be off to the St Regis for apres ski lunch and drinks with friends - to be a local!

Happy Trading and Be Environmentally Cool

Brian

The Local's Take: Morning Commentary

Good Morning Traders and Investors,

Can you say diversion?

Let's take a look at a chart of USO, where it has corrected pretty severly over the past week.

Now let't take a look at some stocks in the "commodity" sector:

You can also look at X and FCX - these stocks are at or near highs, yet energy is getting killed! Even BP and COP are only down 6-7%, whereas USO is down over 14% from its recent high.

Is there a buying point at the "line of death" in USO around 35 or are the aforementioned stocks ready to fail and make lower highs/go sideways?

Heading to the St. Regis for some apres, even though I am not skiing??

Locals Have More Fun is also looking for "street reps" to sell our clothing during our summer event schedule. Please contact us from our site if you are interested!

Oh yeah, pray for snow!

Happy Trading and Be Environmentally Cool

Brian

The Local's Take: Evening Forex Setup

Good Evening Traders and Investors,

The Steelers are very likely to go to 7-6 tonight against the lowly Brownies (thanks Myron Cope) and snow is in the forecast for the Wasatch range. BUT that doesn’t help the volatility over the past few days.

Pretty quiet, BUT we have retail sales (snails) tomorrow and maybe it can be an outlier (miss analyst expectations) and give us some movement prior to the close. Keep in mind Friday’s can be a “1/2 day” in the markets and if the number is a dud, no one is going to hang around trading when there is “holiday fever” and honey-do’s to do before the in-laws come in!

Most of the majors were in tight ranges and didn’t provide much, but there were two DOUBLE FALL LINE TRADES:

1. The USD/CAD
2. The USD/CHF

Let's hope for one or two good trades before the weekend and the 16″ of Utah powder they are calling for!

I will be posting an early morning market commentary and a mid-day forex update so until tomorrow:

Happy Trading and Be Environmentally Cool!

Brian

The Local;s Take: Evening Forex Setup

Good Evening Traders and Investors,

I am thawing out after a long day on the hill. It was negative 4 when I drove to the mountain and we reached a daytime high of 14 degrees. At least there wasn't any wind! Mother nature has not been kind to us yet, but the excellent snowmaking and grooming teams at Deer Valley have a great number of runs in top shape.

Just like mother nature is taking her sweet time to arrive, it seems as if volatility is taking its annual December hiatus. I know there are moves out there, but the volume and liquidity is dying off, so BE CAREFUL.

Back in Chicago, my trading firm shut down for 3 weeks. Why? Because the entire world is on vacation. Now don't get me wrong, if something causes volatility, the traders will return, but there needs to be a catalyst. So if there isn't a catalyst, don't try to force things.

If you had a great year, you are somewhere warm with the guys or with the family. If you had a bad year, you hope next year is better, but you definitely aren't going to try to get it all back in late December!

So that is the trading psychology lesson for the month. On to the charts:

As I mentioned in last evenings blog, we are at a pretty crucial area of support for the GBP. If the equity markets cracked, so would the support level. What did the equities do today in the US? We were up 1/2 percent in the DOW.

The GBP flirted through support and came back and closed above. And the dollar to equity relationship continues...

Happy Trading and Be Environmentally Cool!

Brian

Evening Forex Setup

Good Evening Traders and Investors,

It is a chilly -4 in Park City with a few more days of on again/off again snow storms. I will be sure to let you know how it schusses when I chime in tomorrow evening.

We have some very interesting charts to look at this evening - bringing into focus a key technical pattern that occurs often. Once you recognize it, you can use over and over and over and you can even use it in:

• indices

• etf's

• single stocks

You can also use it in various time frames as you will see tonight.

What pattern am I talking about? It really isn't so much a pattern as a formation. Let's go to the charts:

Look how the lows today were finally broken and we traded below the 0.00 line around 1.6275. What happened once we broke through? We retraced and came back up to the old support level of, you guessed it, 1.6275. We used it as RESISTANCE!

Old support becomes new resistance.

Now, let's look at chart 2:

We know the relationship between the dollar and the equity markets. If the equity markets continue to break, look for the GBP to break its suppot at 1.6250 and then use it as resistance like we saw in Chart 1.

How do we trade this? Easy, as we hae a few options:

1. Trade short into it - the "expectant" trade - I recommend this least of all, but for all of you antsy pants out there,e my guest.
2. Trade as it breaks it and use momentum to carry the GBP lower
   
3. Trade the "second chance" - in my opinion the best risk to reward trade of the three

As in chart 1, we broke support and then came right back to that level. If you are patient, you can wait for the retest of the old support level and get in as close to that level as possible. This way you have your risk built in -if it comes back above that level, you exit with a small loss. If it "touches it and kisses it good bye" you have a super risk to reward trade.

The same works for old resistance becomes new support.

Going into tomrrow, I wouldn't be surprised to see the strong equity market bounce, but then again I wouldn't be surprised to se a strong equity market breathe a little more to the downside. Either way, we have some plays to look for that provide a nice risk to reward and a well thought out trading plan.

Happy Trading and Be Environmentally Cool

Brian

The Local's Take: Daily Commentary

Good Morning Traders and Investors,

It is about 1 degree outside with a high expected around 13. It is snowing lightly, which combined with the cold temperatures creates that famous Utah Powder. A few more storms like this and more terrain will be open.

Just as the temperatures are below freezing, are the equity markets showing signs of cracking? If you are a true technician, then the trend in the $SPX is still up - higher highs and higher lows since March. We have a beautiful trendline coming in that has supported the lows since March. If we violate it, then look to see if we close below it. That still wouldn't get us post a lower low for the first time, but it may trigger enough stops to signal a change in sentiment which may drive us to post that lower low.

If that is the case, rallies can then be sold with authority, but again, this hasn't happened yet.

On the flipside, is it a buying opportunity near this trendline? Buying dops has worked as "the trend is your friend" is the old adage AND the risk to reward is in your favor.

We have resistance in the $SPX around 1115, so obviously there has been heavy selling at that level. If you are getting fidgety going into the year end and you want to take your family vacation without worrying as much, then it is a perfect time to lighten up your long positions (who is going to complain about the gains we have had this year!!??). A few other options:

• write covered calls
• purchase married puts

This won't protect you 1 for 1 on the way down, but it will create income in your account as the market drops. If the market goes sideways or up, you can exit these "protective" positions with proper money management/technical analysis.

As we get closer to the opening bell, it looks as the bears are in control and without economic data to drive us, it will be a technical trade today. It is very important to stick to your trading plan!

I will not post a morning commentary until Friday as the mountain awaits!

Happy Trading and Be Environmentally Cool,

Brian
Jupiter Peak Financial

The Local’s Take – Next Day Forex Setup

Good Evening Traders and Investors.

As the equity markets have rallied and have now gone sideways over the paste few months, the dollar has begun to show some strength. I know, I know, the trend in the dollar is still DOWN and the trend in equities is still UP (until further notice) but there are some signs of trend changes/reversals.

In the charts below, can you detect any chart patterns or failures in SEQUENCE that can be a safe entry going counter trend?

As you can see, there has been a direct relationship between the weakening USD and the strenghtening equity markets over the past 9 months, BUT there are signs of strength in the greenback. I am NOT saying the trend is over, but trendliens, double bottoms and overall sequence change are beginning to appear (see USD/CAD and NZD/USD.

The dollar is making higher high and higher lows against both the CAD and NZD. This clearly shows up in both pairs as the dollar is significantly higher since bottoming in October. The equity markets have gone relatively sideways since October – if you recognize this relationship, you can find low risk opportunities in the forex markets and cover your long portfolio in the equity markets with covered calls.

See you in the morning for The Local’s Daily Commentary and The Local’s Take: Mid-Day Forex Update

Happy Trading and Be Environmentally Cool

Jupiter Peak Financial

Mid-Day Forex Report

Hello Traders and Investors,

Bernanke is on the docket in a few hours so that may keep things calm.

The dollar strengthened overnight and now with the equity markets sideways, there seems to be pretty sluggish trading activity/volume.

The GBP/USD is retracing last night's move - to about 50% - could be a good DOUBLE FALL LINE trade if it gets a little higher, but that probably depends on equities.



Be careful trading around Bernanke.

Happy Trading and Be Environmentally Cool

Bernanke, Claims and Retail Sales

Good Morning Traders and Investors,

From the get go, it looks like overseas markets were primarily weak, commodities off and dollar strength. US Futures are down slightly.

As for the economic calendar - it is fairly light, but we will touch on a few key points. As for the weather here in Park City, it is cold. Single digits at night and teens in the day. Makes fore great, light, fluffy snow, when it snows. Looks like there is a dusting out there, but we could use about 16-20 inches and that should get more terrain open.

• Monday - Bernanke - just before 1:00pm Eastern - always important to pay attention to his rhetoric
• Thursday - unemployment claims - looking for an estimate around 467k
• Friday - retail sales - aside from Bernanke - this is the big one for the week, but be careful as it probably didn't capture Black Friday/Cyber Monday. Estimates are for a gain of 0.6%

$SPX still has resistance around 1115, until we go through it, the trend is still up but hasn't made a new high. If you are getting nervous holding longs, protecting your portfolio with COVERED CALLS/BEAR CALLS continues to be a solid play. If you want to be a little more aggressive, MARRIED PUTS are very cheap to purchase.

A fun little channel trade is USO - looks like $37.00-$37.50 would be a buying opportunity with low risk as the buying the dips in the channel has worked out to be a nice risk:reward trade.

I will blog about forex in more specifics in a little bit so be on the lookout.

Happy Trading and Be Environmentally Cool

Can You Say Resistance?

Good Morning Traders and Investors,

Does a positive jobs report mean the phones are going to be ringing off the hook at the ski resorts? Well, with 7 straight days of snow in the forecast, conditions are ripe for an increase in phone traffic for Wasatch/Park City resorts.
Does the jobs number point to an increase in retail sales and an overall continue to the recovery?

Let's go to the charts....


The $SPX still has resistance (lasting almost a month) at 1115.00. As we know, the trend is up, BUT the charts need to make a higher high to continue the trend. As of now, we have that new intraday high on the charts, but let's see how we close going into the last hour of trading and more importantly the weekend. I repeat, the close is important!

As I mentioned last week, Bear Calls have worked well as we have primarily been sideways over the past few months - slow growth is what we want!! Your out of the money calls (number one way to generate income in your 401K/portfolio) would have worked very well for most sectors/stocks.

The dollar is up over the past two days, but still very close to its lows overall against the majors.

Happy Trading and Be Environmentally Cool

Not Yet!!

Good Morning Traders and Investors,

No the title n of this doesn't have to do with the weather in Park City and the 10 day forecast being bleak in regards to new snowfall until the end of the week.

Take a look at the chart below. I know, I know, WE DID 226 POINTS TO THE UPSIDE YESTERDAY. As I mentioned in yesterday's post "Dubai Daily", the uptrend is intact until something fundamentally or more importantly, technically changes.

BUT, look at the highs in $SPX. Traders are selling the _____ out of it at just below $1113.00.
AND the dollar remains the same - trend down and near lows, but NOT going lower.

A great way to play the equity indices, ETF's or individual stocks is if it breaks above $1113.00, go ahead and trade the momentum to the upside with a tight stop below that level. Use the old adage, old resistance becomes new support.


Again, as I mentioned in yesterday's "Dubai Daily", bear calls at the top of the range have worked well as over the past 3 months we are almost more sideways than higher - REALLY, take a look!

Oh by the way, the Financials are lagging and NOT making new highs as the equity markets have climbed higher over the past 6 weeks. Check out JPM, MS, BAC, C...

Happy Trading and Be Environentally Cool