What goes up, must go down.
On the heels of terrible data yesterday (see CHIPM aka Chicago Purchasing Manager's Index and the new orders and employment index) and the home price index and consumer confidence - that's a lot of bad news!
Well, add to it today's ISM Manufacturing number (check out the new orders index and employment component). As I have been saying, I am interested in selling rallies. I was already short from Friday (I like to enter 3 day weekensds with some protection) and I was looking to cherry pick and get another "false rally" today before adding more protection prior to Thursday's claims and Friday's non-farm report. It would be too good of an opportunity to pass up if we rallied 5 days in a row. Check out the short term picture of the SPY as we were up 3% yesterday afternoon in that same time frame:
Now look at the SPY over the past few months, not much movement, so who is recognizing that sellers have been just as much in control as buyers, which makes for great income strategy trading:
Moving into forex, one of my clients correctly pointed out that we are not moving in lockstep. I supported him by saying, "total disconnect". Yesterday the GBP/USD broke hard, the EUR/USD stayed sideways, the AUD/USD broke hard and the USD/CAD broke hard - so some commodities strenghtened others didn't and pairs that usually move together didn't and more importantly, the relationships between the USD and equities left us for the day!
Why do I call my Interbank FX Webinars "Back to Basics"? Because if you can't read a chart and understand the trends and what fundamental factors are driving those trends, you are in big trouble!
Looking forward to the opportunity to speak about all of this including trader psychology, account risk and trade risk this evening at the Salt Lake City Trading Post meeting (6:30pm at the West Valley Library).
Happy Trading and Be Environmentally Cool
Coach Brian
No comments:
Post a Comment