SPX - If It Can't Go Down... and European Euphoria!

Good Morning,

Let's pound it into our heads one more time - if you a chart can't retrace, it will keep going. 

Rule Number One: The Trend is Your Friend

Rule Number Two: A big move followed by a small or no retracement is followed by another big move

Let's face it, there are too many shorts and there was too much risk priced in that fair value is obviously higher. Let's compare it to an earnings event. Have you ever seen a stock go to the moon after reporting earnings? If so, and that move is warranted, then the stock goes sideways and maybe retraces about 23% (this is why I love Fibo's because they tell me where I am in space) and then, ultimately, the stock shoots higher. 

This is the same thing we are seeing with the markets: a huge "earnings event" (Europe) where people were expecting the worse and the markets shoot higher and then, you have today. 500 points up in two days on top of a 15% move to the upside over the past few weeks and then you get a "down day" and that down day is either taken back the very next day (see Wednesday/Thursday) or the downmove is reversed that very day. 

We have seen this over and over and over - relentless, relentless buying. The bottom line is there are more bulls than bears and no body knows how far this thing can go - all we know is the following points based on the charts:

1. 1300 (nice psychological round number and right around the 200 moving average - more on the 200 ma in a bit)

2. 1340-1350ish - our old highs

Why am I not "excited" about the 200 ma and not putting too much weight on it? Because as I said in my webinar on Wednesday (click here for a link) and as one of my clients put it so eloquently: TECHNICALS SCHMECTICALS. Nothing matters other than European Euphoria

And another thing you can throw out - economic data. I have said this a thousand times - the Fed is the biggest player and can play "forever" and definitely much longer than you can stay solvent.

To the charts:

A nice modified BUFFALO BOUNCE  combined with old resistance in the GBP/USD:

Past performance is not indicative of future results

And of course the SPX. People will draw the Fibo's differently, but the move is so big that however you draw them, the 76.4 line (the line of death) will come in pretty much the same. Again: TECHNICALS SCHMECTICALS so take it for what its worth.

Past performance is not indicative of future results

We are going into the weekend with our reasonable hedge still in tact and will reassess at the end of next week.

Speakin of technicals, the webinar in 11 days will be on Fibonacci's!

A look ahead at next week shows a packed data calendar including the Fed. Trade the economic data at your own risk...

Happy Trading and Be Environmentally Cool

Coach Brian

Forex trading is one of the riskiest forms of investment available in the financial markets and suitable for sophisticated individuals and institutions. The possibility exists that you could sustain a substantial loss of funds and therefore you should not invest money that you cannot afford to lose.

SPX Still in Flux

Good Morning,

Just a quick update as fundamentally, we are still in a state of flux. Claims are coming tomorrow so keep an eye on them "in the background".

Technically, the SPX is still dangerously close to its recent high of 1254, so the risk is to the upside. If Europe falters or some other "shoe" drops such as elevated claims or a poor earnings report, some support may come in around 1200 - I may look to pick up some sectors depending on the percentage they dropped in that area.

Forex has a fun day - even with oil up big (oil complex hurricane warnings), the dollar has found "some" strength over the past 36 hours. Still, just like the SPX, the dollar is so close to lows that you have to be very, very careful buying it intraday and you have to be careful buying it if you are using it as a longer term equity hedge. Technically, we had a big reversal day, so there may be some carry through into the overnight session, but again, would be looking to profit if long the dollar and maybe start to sell the dollar in extreme locations. Again, a lot of it depends on international discussions.

Here was the one intraday trade - based on Standard Deviations, leading to a BUFFALO BOUNCE in the EUR/USD:

Past performance is not indicative of future results

Free Webinar tonight at IBFX - I will be talking about fundamental and technical events with a look forward. Click here for the link.

Happy Trading and Be Environmentally Cool

Coach Brian

Forex trading is one of the riskiest forms of investment available in the financial markets and suitable for sophisticated individuals and institutions. The possibility exists that you could sustain a substantial loss of funds and therefore you should not invest money that you cannot afford to lose.

SPX - Old Support New Resistance? Yeah Right...

Good Morning,

First off, let me say that I don't think technicals from a few days ago, let alone a year ago matter. 

You know I like to start with fundamentals, so I will use my fundamental analysis to explain that first statement. We are in a very, very strange time for traders and investors (although the investors may like the recent 16% move up more than traders). Traders react to news and volatility and economic data, but when you have governments interfere, it can be very difficult to decipher the meaning and to react to moves that are so big, so fast and so unwarranted. That being said, we have great intraday trading opportunities, you just have to be SUPER patient to wait for them and NOT get caught up in the emotion and trade in poor locations. Just because the VIX is high doesn't mean we have to trade more frequently - just the opposite as your trade has the potential to move a large percentage (for you or...against you!)

So again, there you have my trading pshychology rant. 

Fundamentally, we don't have to mention Europe and tomorrow also brings durable goods (could be a snoozer in the light of, there, I said it, Europe).

Technically, here is just one of those intraday trades, a BUFFALO BOUNCE on the USD/CAD - a huge move up in the USD even though oil spiked higher (for all of you inter-market relationship focused people):

Technically, here is the longer term chart of SPX, but again, I am not sure we can use "old" technicals:

Below is the link for the webinar that will catch you up on fundamental and technical analysis with a look forward for traders, investors and hedgers.

Free Interbank FX webinar tomorrow night.

Happy Trading and Be Environmentally Cool

Coach Brian

SPX STILL at Resistance and the BADABING TRADE

Good Morning,

I reached my goal with 2 BADABING TRADES. 1% of the portfolio and I am not waiting around for:

**options expiration trade

**rumorvill

**end of day/week lack of trading trade

What is the BADABING TRADE? I will give you this one as it is a bit of trading psychology and you know I always include that in my writing. In Chicago, I would turn around and look for ______ at about 8:30am and he was gone. I figured out that he was green and took off. He didn't care what was left on the Friday trade. He made money and he was out already enjoying his weekend. The days that I saw ____ at his terminal towards 9, 10, 11, were the days where he was beat up early and he was trying to get some of it back or maybe even get flat. Even on those days, if he got some or all of it back, he wouldn't push to then try to make it positive. He was already "positive" by grinding back towards breakeven and working very hard to get there. 

The lesson: trading can be very, very emotiionally taxing and the last thing you want is to have 48 hours to stew about the stupid mistakes you make. That is why I am writing you this article. 2 trades, two winners. One of them was a BUFFALO BOUNCE  in the GBP/USD:

Past performance is not indicative of future results

Again, getting long the dollar in very, very specific locations with proper risk to reward and trade management can be successful. BUT, it is going against the trend and you have to be realistic about your overall goals, both in timeframe of trade and pips gained. 

This is true for any trade these days. As long as we have news bombs on the horizon, be realistic about the length of your trade, the location and the potential reward. Be realistic!!!

The next chart I want to show you is the long term chart of the GBP/USD and this is why I have been so bullish equities and so willing to ONLY get long the dollar in very, very specific places, mostly as a hedge versus an actual trade:

Past performance is not indicative of future results

The double bottom pattern you see has me thinking that we have more room to run and that may be the result of Europe's vote next week. It gets the SPX up towards 1260-1280 and then, again, as protection, I will be willing to buy the USD as this double bottom/news event is satisfied.

So I will carefully start working on where to work in Oct-Nov protection and what percentage of the portfolio I deem necessary to hedge.

So overall, I do expect equities to bust through to the upside and more shorts that are paying attention to the "typical fundamentals" will have to puke. I just hope I do have some protection on, but even if not, I am not expecting a massive move to the downside and may actually look for a buying opportunity. 

See: there are always opportunities, you just have to be patient and focus on location and quality of the trade!

Thanks to the Park City Trading/Investing Club - another solid meeting with some new faces. The new room really made a difference. Data on next month's meeting date will come soon.

Happy Trading and Be Environmentally Cool

Coach Brian

Forex trading is one of the riskiest forms of investment available in the financial markets and suitable for sophisticated individuals and institutions. The possibility exists that you could sustain a substantial loss of funds and therefore you should not invest money that you cannot afford to lose.

SPX - Nothing Has Changed...

Good Afternoon,

What has changed lately? A lot or a little?

Fundamentally, very little when it comes to the US economic calendar. Jobs data in the form of weekly claims are leveling off and some may even say "improving".

Fundamentally, a LOT given international intervention, austerity, easing, etc... whatever you want to call it is fine by me.

Trading and investing wise - a lot! You have to be on your game to trade these markets as things can change in a hurry! Playing the ranges are working, except for when there are news bombs. When you are trading leveraged products, these news bombs can affect the markets in a big way and as you know, you don't need a big move to take you out if you are over-leverarging your positions. That is all I will say about trading psychology today - I promise!

Let's just talk about the big picture for a moment. The "professional" money managers think there is a lot of cash on the sidelines. Companies ARE making money. Earnings are GOOD! The markets are "undervalued" and at good "ratios" as most analysts are saying. So, if everything goes as planned overseas, we should see a breakout to the upside. I said it months ago though, I think by the time we get towards the 1300-1350 level, we will see sellers come into play. After that, I think we will be further downt the road with economic data and will be able to see if that is a great level to play the short side. In between 1200ish and the 1300 level could come quickly, so I am not sure how I will play it - I will decide as we rally.

BUT, do I think we SHOULD be rallying up there? NO. Will we? Chances are we will as the markets are reacting to government intervention, not reality. 

Fun stuff!!

Technically, very little. The markets are sideways - for months and for the week. Here is just one of many examples, the EUR/USD:

Past performance is not indicative of future results

For some intraday trades (and there were lots), here is the DOUBLE FALL LINE on the AUD/USD:

Past performance is not indicative of future results

And a short term DOUBLE TOP on the GBP/USD:

Past performance is not indicative of future results

Remember, I am a buyer of the dollar in good locations as a hedge, not necessarily as a money making trade. If it works, great!

These are trying markets, trade according to your situation!!

Happy Trading and Be Environmentally Cool

Coach Brian

Forex trading is one of the riskiest forms of investment available in the financial markets and suitable for sophisticated individuals and institutions. The possibility exists that you could sustain a substantial loss of funds and therefore you should not invest money that you cannot afford to lose.

SPX - Same Exact Spot as 3 Days Ago

Good Morning,

I am not posting any charts, just a quick commentary on a couple of things. Before I get to those things lets discuss fundamentals.

1. Gov't intervention (or rumor thereof) is a daily occurence and has to affect your trading size and trading length and how you manage the trade

2. Earnings are still around daily and claims are coming tomorrow

3. Options expiration is Friday and typically options expiration weeks are up weeks in equities

Technically speaking, the reason I am not posting charts is we are exactly in the same place right now as we were on Monday at the open. Look at your USD currency pairs and the SPX. A lot of chop, some intervention, some intervention rumors and there you have it, SPX is still on its highs.

I don't know what will keep it from breaking out to the upside, I just hope it doesn't happen until Monday...

Overall, I am quite happy with the equities heading towards their earlier year highs. I think it just provides a big trading range and the government intervention just delays the onset of years of stagnant equities (zero growth) and stagnant price pressures. Read: stagflation. I have been calling for this for 2.5 years now and the only reason equities are on their highs is the "can being kicked down the road" intervention/easing is still in play. I do expect unemployment to stay elevated or rise. I do expect traders and investors who pick their spots to do better than the long term investor. 

My big hope that governments stop interfering. Think about it. Has the Fed stuck to its mandate of:

1. creating jobs

2. controlling inflation

Intervention in any industry changes the playing field and traders, if you haven't realized it yet, you better now. Pick your locations and trade with a plan on each and every trade.

Park City/SLC Trading and Investing Club meets 10/20 at 7pm

Happy Trading!

Forex trading is one of the riskiest forms of investment available in the financial markets and suitable for sophisticated individuals and institutions. The possibility exists that you could sustain a substantial loss of funds and therefore you should not invest money that you cannot afford to lose.

SPX Resistance - Still Apparent!

Good Morning,

We have a packed week of data. Earnings, Bernanke, inflation (blah!), and claims.

Technically, we ended last week with a BUFFALO BOUNCE and began this week with a BUFFALO BOUNCE  in the EUR/USD:

Past performance is not indicative of future results

Regarding equities, we still have resistance in tact. I can't stress enough about waiting until resistance or support is approached before entering your trades. The risk to reward is at a very good level and if the resistance or support is broken, you have stops in place and money proper trade management in place. It is always nice to hide behindthose levels!

Here is the chart of SPX with resistance holding in:

Past performance is not indicative of future results

Park City and Salt Lake City Trading/Investing Clubs meet Thursday!

Happy Trading and Be Environmentally Cool

Coach Brian

Forex trading is one of the riskiest forms of investment available in the financial markets and suitable for sophisticated individuals and institutions. The possibility exists that you could sustain a substantial loss of funds and therefore you should not invest money that you cannot aff