I have posted a few charts regarding how the buyers are definitely in charge. This is just another day that proves this. Down 100 points and now down only 20 - we still have to see where we close, but I will post a chart of the past few weeks where we have some red days, but none of them have closed on their lows.
Before getting into the charts - and we have many to discuss, esepcially in forex, I want to provide you with the link to the webinar page where last night's free webinar will be posted shortly. If you haven't received it via dropbox, email me to get a link to the file.
Let's go to the fundamentals. The initial unemployment claims came in above the 400k and even more so above the expectations of 380k - makes sense that a measly 100 point drop (although some look at that as a huge drop) is now bought back up to where we are only down 20 points. As I mentioned, buyers are in charge! Even more interesting is the PPI number - the ex-food and energy component came in higher than expected but the headline number that includes food and energy came in below expectations. Wow - someone please make sense of that for me!
Regardless, as I mentioned in last night's webinar, we get the fundamental news, then absorb it and see what the markets are doing with that news on the technical side. As I mentioned, here is the SPY with buyers taking advantage of any dip:
As I told one of my clients, I am bearish to neutral, but with an understanding that the risk is to the upside as long as the fed is in play. Looking at the banking sector, we have JPM
Is the current retracement enough to be bullish on or would you look at the larger picture and wait for a price point closer to the low 40's. Again, the trend is your friend and the trend is up, but you still have to have a "what if" scenario in your trading plan in case the trade goes against you. If you are bullish, what strategy? Purchase calls? Sell cash secured puts? Bull puts? Again, have a trading plan that involves a chart based exit for a loss.
Moving to forex, we had so many DOUBLE FALL LINE trades as the equity market sold off and then began its rally, which meant dollar strength into doallar weakness. Remember, those inter-market relationships are in play at times and when they are, you need to take advantage of them.
Again, you can clearly see how the markets opened weak, the dollar opened strong, markets make their comeback and dollar loses its strength. Got to love those inter-market relationships.
Happy Trading and Be Environmentally Cool
Coach Brian
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