What a week to take vacation! I last traded/focused on the markets on Monday and had a positive day (started off with a loser and was able to get green on the day). Then! the trading began. Finally, today I am back in front of the markets and after having missed Tuesday, Wednesday and Thursday, and with family all around, I knew that it wasn't time to "make up for lost time" It was time to trade small due to market volatility, use patience and discipline and look for one to two opportunities. That opportunity came in the form of a DOUBLE FALL LINE TRADE on the AUD/USD:
It took about 20 seconds to log off and shut down as soon as I exited the trade at my pre-determined gain. After all, it is vacation! Trading on vacation can be stupid and costly if you don't have the right frame of mind. So just like going into the backcountry, the avalanche mitigation work is done before you leave the house. In trading the pshychology is determined before you turn on the computer and engage the markets.
In equities, we are about halfway back from the 105 to 135 move. Any rallies that occur that are significant will be sold into, I am just not sure how long it will take to get that significant rally as it seems that this break is large enough to prevent us from making a higher high. I would be shocked to see us above 137 in SPY any sooner than months from now. I just don't think that lean, mean corporations who will lay off more workers are good enough. I don't think cheaper gas prices are enough to get people to spend significantly more. The bottom line: we were too low at 6600 in the DOW and too high at 12,800 in the DOW and we will find a trading range at some point. I hope that the trading range we find is large enough to provide great trading opportunities with overbought and oversold sectors and stocks. Here is the SPY and the 50 percent retracement followed by one of those sectors (oil) that I think is getting oversold. Taking ownership of the August 31's gives you one percent in 2 weeks - very, very attractive!
Ownership at 31 is a 20 percent discount on top of May's 20 percent discount.
Happy Trading and Be Environmentally Cool
Coach Brian
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