I was out of town yesterday and not trading, so that is why you didn't hear from me. There was some good movement as equities rallied early on the news from the Middle East and then backed off to finish flat on the day. Notice though, we didn't finishi on the lows as we had a very, very late day rally of almost 20 points.
That is the major point I want to make. If we can't go down, the only way to go is up. The first chart I will post is the SPY - again, notice the red bars and the low of those bars and then the high of those bars. Anyone out there who is using a line chart doesn't get to see this same data, so bar charts (otherwise known as open, high, low close) or candlesticks are crucial. I caution though on candlesticks. I use them because they show the open, high, low and close, just like a bar chart. I don't want people to open up a candlestick chart and use it for the candlestick patterns, unless you know what each pattern look like and how to use it for your trading strategies.
OK, to the SPY chart and as I mentioned, with the VIX near its lows, it seems that equities are pricing in more good news ahead. By the way, to prove that fundamentals are improving, I flew, dined and "researched" the San Francisco economy. It seems perfectly healthy so for the time being, money is flowing freely and the up-trend in equities should continue.
Let's move to the commodity sector, which finally has had a little bit of a retracement given the stronger dollar yesterday and maybe even more importantly, just overbought technicals. Silver Wheaton (SLW) has been in the news alot as silver gets close to 50.00. There are some attractive price points coming up and this brings up a good point. The trend is up, fundamentals and technicals are backing the trend, but you still have to pick your locations. I stress patience and if I miss a move, I am OK with it, but I really am picky in where I go long as I understand the vast moves to the upside these stocks have already made.
Let's move into the socially responsible realm with Whole Foods (WFMI). You know that I was worried about the vast move to the upside and the potential for a double top, so bear calls, covered calls and even married puts were discussed over the past few weeks on this blog. Has the double top been satisfied? Is it enough of a dip percentage wise to go back in?
Moving into forex, let me begin with yesterday's BUFFALO BOUNCE in the EUR/USD, which proved to be a large winner as equities hit there highs and then retraced:
Today, we are again getting good movement and a DOUBLE FALL LINE TRADE came up in the USD/CAD:
Lot's of economic data to get through as we head into the unemployment report on Friday. Yes, I am hoping for a downside surprise, BUT I am not going to tell you which direction the equities will go if that happens. So far, the average is about 185k, it would be nice to see a 100k or less print.
Happy Trading and Be Environmentally Cool
Coach Brian
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