News in Charge

Good Afternoon,
Just like "Charles in Charge" (I know you remember the show), the News is in Charge. Today we "bail" so equities go up. Tomorrow we could "fail" so equities may go back down.
Fundamentally (and sorry for going over this, but I have to), we have a very busy week in the US, culminating on Friday with jobs. The jobs report, pegged at a 115k increase seems fair, but regardless of fair or not, does it really matter? I am just saying, keep an eye on the US economic data to see if it is still improving.
Fundamentally, the news is in charge and it causes me to have a very, very light conviction every single trading day. I just don't get too excited to enter the realm given leverage, the size of the moves and the fast pace that they are occurring out of nowhere. So, it all goes back to trading management - discipline, patience and correct trading size.
Technically, I am very interested in seeing what happens at the 1150 level. If that doesn't hold, I think we may be headed towards 1100. Until then, it doesn't matter and the strategy of selling puts I talked about last week would be looking good given today's equity rally. Still though, you have to be willing to buy back options you sell and take away the obligation of assignment if you see your technical levels break. Again, I stress the importance of a trading plan prior to hitting the "go" button. If the charts do this, you do this. If the charts do this, you do this. A trading plan is a flow plan.
To the SPX. We bounced off the "famous" 61.8 level and now let's see how far we can climb back up of the Fibonacci's I drew from top to bottom:

Past performance is not indicative of future results
Given how the dollar strengthened today, I am not sure who to believe, the dollar or equities. Will we see som decoupling? You always have to watch out for that, but for now, equities seem to be close enough to their lows, that the risk is to the downside.  Notice how the USD gained back almost all of its early morning losses against the GBP:

Past performance is not indicative of future results
Only 14 more trading days left until Dec options expire. I think that 1225 is the upside resistance point and I am happy with current equity protection in place until we breach that level.
Free IBFX Webinar on Wednesday afternoon - click here for 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 and USD - Mirror Images II

Happy Pre-Turkey Day.
First off, the early and late games tomorrow are going to be fun to watch. I will NOT sit through another New York Kennel Club Show on NBC with my wife (I say that every year...) And while on the subject of NBC, I think I think I have finally outgrown the Macy's Day Parade, maybe...
To the markets. Let's start with the longer term charts of SPX. All along, 1150 is my "level" based on two things. One, the Fibonacci Retracements and two, satisfying the head and shoulders (boy that was an ugly right shoulder). And again, since this is for education purposes only, my opinions can change at any time due to interantional news changing (seems like a very long time since we have heard something out of Europe). To the SPX and then right after, to the GBP/USD on the same timeframe:




Past performance is not indicative of future results

Past performance is not indicative of future results
Intraday, it makes sense that we sell off today ahead of the "long" weekend. It is classic bear market, don't go home the weekend long in equities. That being said, since I have been long the USD for so long, today, I was looking to actually sell the USD in specific locations. Those locations showed up, 2 BUFFALO BOUNCES (one in the EUR and one in the GBP) and then a double bottom in the GBP. Again, I always use limit orders to enter and I pre-set my stop loss and target and then move my stop accordingly as the trade goes in my favor.
Here are the charts from today's action. The second chart is the GBP/USD with the double bottom:

Past performance is not indicative of future results

Past performance is not indicative of future results
Opposite of the double bottom is the double top, shown here in the EUR/USD from Monday's trade:

Past performance is not indicative of future results
Now for a bit of trading psychology. These markets are tough, violent and volatile and you MUST have a trading plan for each and every trade. I made 4 trades this week in 3 trading days. Do NOT over-trade as you are probably forcing and trading without a plan.

Looking forward, I am thinking that equities are getting closer to fair value in some sectors. I am not saying I am bullish, I am just saying the downtrend has a chance to pause a bit and using options and time decay may provide good opportunities to pick up fairly valued sectors and stocks. Fundamentally, we have a very, very busy week next week with the culmination on Friday and the monthly jobs number.
These markets are providing great opportunities, but you must have patience to wait for the correct location and then discipline to execute the trade and mange it from beginning to end.
For a webinar on the above mentioned entry plus stop plus target, please visit this link.
To learn more about Fibonacci's, join me next Wednesday for a free IBFX webinar at this link.
Happy Trading, Happy Holiday's and Be Environmentally Cool. Eat a Tofurkey!!
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 and the USD - Mirror Images!

Good Evening,
I haven't posted in over a week as I actually enjoyed my vacation versus trying to work through it. The South Florida temps were just too good to pass up and now that I am back in the mountains, with temps in the teens and snow in the forecast, I am glad I took full advantage of my time down there.
I also was at ease because I went away with light protection on the long portfolio using SPY and the USD. Both trades worked out and the risk management part of the portfolio picked up some nice performance in the Oct-Nov period. I did do some light trading on vacation and we can begin looking at charts with this one. This was a quasi trade/hedge as I love when commodities get out of wack and run up too much given the demand for them. Here you have USO reaching old resistance near 40 and turning around for a 50% gain in the bearish put play. Knowing that there aren't any guarantees, I risked about 20% on the swing trade/hedge. Again, for the most part, I am very happy taking  a trade that seems to be too rich given this very, very sideways equity environment over the past few weeks. More on that as we get into the similarities between the broader equity indices and the USD.


Past performance is not indicative of future results
Staying with the short term trading theme, here are the myriad of DOUBLE FALL LINE TRADES that occurred today as the equities opened up an then retraced off their highs, bringing strength in the USD with it:
EUR/USD:

Past performance is not indicative of future results
AUD/USD:

Past performance is not indicative of future results
OK, so I am a bit off track with the shorter term trades being discussed prior to the big, macro fundamental picture. So here it is:
**USD fundamentals getting better - claims, retail sales, manufacturing
**Earnings - companies are making money and a lot are still fairly valued****
****Obviously the international picture can put a wrench in the "farily valued" description
Other than looking at the facts (economic data), guessing what will happen internationally and with governments stepping in at their will, it just is a really, really nerve wracking environment that makes me take caution when entering the markets. ESPECIALLY given our entrance into the HOLIDAY period. Lighter volumes, ligher levlels of conviction can mean very thin, big, unforseen moves. The bias is still to the upside fundamentally and tecnically.

Segway into technicals:
We are still within reach of the highs and governments and corporate buybacks are feeding the bidding of the lows. What I mean by that is any time we seem to get momentum to the downside, technically, the buyers see good levels and scoop things up. Until that disappears, buyers are in charge.

Let's move the charts. Check out the daily view of the GBP/USD. This was my hedge  - staying long the USD through Greece and Italy and it really made for a relaxing vacation as the USD picked up about 4 pennies:

Past performance is not indicative of future results
Now look at the SPX over a similar time frame - mirror images - hence the INTER-MARKET RELATIONSHIPS that are crucial to providing trading edges. If you have an edge, use it until it goes away then look for another!!

Past performance is not indicative of future results
So the HUGE rally in October in the GBP and USD is starting to be retraced. Moreso in the GBP as the whole European "bail/fail" play takes shape. Looking at the SPX, you can see, we are still well within striking distance of old highs at 1300ish.
Looking to next week, I will approach it cautiously as I mentioned. Lots of economic data, but I don't think that that can move the markets much as larger forces are at play.
I will be sure to update you throughout the day through the IBFX Connect page with the tag of

"thelocalstake".
Also, take note of the new time for the webinar on 11/30 on Fibonacci's: https://www1.gotomeeting.com/register/305170576
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 in the Accumulation Area

Good Morning,
Today was a day you could buy the dips in the USD. Here is a great example of the GBP/USD satisfying a double bottom and at the same time, lining up with the first fibonacci retracement:

Past performance is not indicative of future results
With the poor news out of Italy, you could stay with the trend. You just have to be realistic about your profit targets because as we have seen before, the "V" can happen, where the GBP rallies all afternoon on a rumor. I am not sure we will get that today and I was confident taking a chance going with the trend at a "discounted price". Again, I had stops in place and traded the correct amount of contracts as we know there are no guarantees. Anything can happen at any time.
Let's see where the SPX closes today. My recent posts have talked about the 1240-1220 area being support. We are in that area as we speak. It will be interesting to see how we trade going into the long weekend.
To reiterate, I am still long the GBP/USD looking for the 1.57 handle, but as we know the GBP has been the "flight to quality" as the problems are centered in the Eurozone.  I also have the light hedge in place on the broad indexes and will leave that in place through the weekend given current levels.
Tonight I am hosting a free IBFX webinar and we will have lots to talk about. There are a lot of people signed up so bring your questions as the crowd can benefit from them! Here is the link:
https://www1.gotomeeting.com/register/717515353
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 Above the Line of Death

Good Afternoon,
Fundamentally, earnings, corporate issuance, international news, interest rate policies, and economic data has been positive. We get some more fundamental data tomorrow with the potential for international headlines (as always), but more specifically, Bernanke is speaking (not positive it will be market moving). Then on Thursday we have claims. That is the bulk of it for the week, so as I said yesterday, whent there is little economic data and no bad news out of Europe, we move up.
Technically, we were up yesterday and closed on our highs today. We are very, very close to the recent highest high of 1285ish.
Technically, there are fun patterns shaping up. First in forex, look at the ascending triangle in the GBP/USD:

Past performance is not indicative of future results
As you know, when equities move to the upside, the dollar moves to the downside. Which one is leading which? I am not sure, but if equities rally further, you would expect the dollar to lose this support line that it has been using.
Moving to equities, let's look at the SPX, which is above the "line of death".

Past performance is not indicative of future results
This means that the downmove has basically been totally retraced and all that is left are old highs. Will it be a tug of war at 1285 or will we go through it with ease. Either way, you would expect it to be tested/broken the way we have been moving as of late. If traders don't step in now, where will they become bearish again? Seems to be much higher than where we are at now, say 1300 and above. I am still sticking to my guns that by the time we do get to 1340/50, we will have exhausted ourselves and that could be a multi-year high.
Moving to one of my favorite sectors, commodities. We have USO. If it heads towards old resistance which matches up with 100+ per barrell of oil, I may choose to use that area to protect the portfolio.

Past performance is not indicative of future results
If you have been long this sector - which gave us a very fundamentally oversold situation a month back, you should be locking in profits or slowly taking some gains.
Free IBFX/JPF webinar tomorrow evening: https://www1.gotomeeting.com/register/717515353
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 Sitting on Accumulation Area

Good Morning,

Hard to believe we only have 9 more trading days until November expiration. 

Fundamentally, aside from the European news, we have a very light economic calendar in the US. Highlights will be Bernanke and claims. 

Technically, we are rangebound in SPX and the currency pairs. In currencies, it was a day to fade the moves as the overall trading ranges were small and we had an "inside day". There were two nice DOUBLE FALL LINE TRADES in the GBP/USD as the dollar got too strong when equities bottomed at down 50 and then the dollar got too weak as the equities rallied and ultimately topped out:

Past performance is not indicative of future results

Past performance is not indicative of future results

Moving into the broad equity markets, we have a longer term view of the upmove in SPX. Arew we conslidating sideways waiting for a burst to the upside (big move up followed by small retracement) or are we creating a head and shoulders?

Past performance is not indicative of future results

Here is the shorter term view with strong support in the 1220-1240 range. Hard to say what will get us to go below that as typically, data-less weeks have been bullish for equities.

Past performance is not indicative of future results

Webinar Wednesday evening: https://www1.gotomeeting.com/register/717515353

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 Bullish!

Good Afternoon,
You have heard me say it before: if you can't go down/retrace a HUGE move to the upside, there is only one way to go and that is UP.
Until we retrace a more significant percenatage, I am staying in the bullish camp. Again, on a Friday, the equity markets prove that the risk is to the upside. From down 170 at the low to down 60 on the close, the bulls bought all the way to the end signaling "fair value" at these levels.
In "normal" markets, when you have good news all week (ISM unemployment, claims data...) and then you get a headline number to miss (it didn't miss by that much), the markets go the other way - hard. We saw that this morning early, but by the end of the day, we were barely off at all.
We have 48 hours for Europe to fix things and if so, we should be off to the races on Monday. Looking further ahead, we have Bernanke on Wednesdsay, but other than that, a very, very light economic calendar as most earnings are behind us. Past results have shown that when there isn't any data, the markets roar to the upside (or at least they don't go down).
Technically, interest rates are still low, SPX is still in striking distance of its recent 1270-1280ish high and there are more buyers than sellers.
Technically today, we had a beautiful BUFFALO BOUNCE in the GBP/USD. By the way has anyone looked at how strong the GBP is against the dollar when compared to the other currency pairs?

Past performance is not indicative of future results
Technically, the SPX has a possible head and shoulders, but again, "technicals schmecticals" in this news heavy environment.
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 Head and Shoulders? Not So Fast!

Good Morning,

The biggie is tomorrow. Or is it? Aside from the Fed, the biggest economic calendar event is unemployment. Not only for the US, but for world markets as the USA is the big bad dude out there and all other regions follow our lead. 

BUT, and this is the first of 2 (two) BUT's today. But number 1 (one) is does unemployment matter in the face of the European bailout? And does unemployment matter in the face of massive easing on the part of world central banks?  Not too likely. 

It may though add fuel to the fire on the upside as any good news has been explosive. So if we get a print above the 100k, do we have another Friday rally? If we have a poor print, markets may break, but they will be supported as they have been by the macro easing/stimulus.

Overall, hard to say what will happen, so aside from my light equity hedge using bear call spreads and staying long the dollar (maybe) through the weekend, I am going to look for the BADABING TRADE tomorrow.

Technically, and here is the second BUT. Technically, we may have a head and shoulders forming on the SPX, BUT "technicals schmecticals" in this easing/government news driven arena.

Here is the chart, take it for what its worth:

Past performance is not indicative of future results

In forex, it was the usual, inter-market relationship driven trade, where equities weakened and the dollar strengthened and when the equities rallied, the dollar weakened. It provided an early DOUBLE FALL LINE TRADE in the NZD/USD and then found quieter, choppier ranges. I held off after that and will wait for tomorrow's excitement!!

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.

European Woes

Good Morning,

The "bail / fail" trade is back on. Europe fails, we break. Europe bails we rally. Overall, when there isn't bad news, no news at all or an inkling of good news, we rally hard. We still are very much in reach of highs, so I am going to have to say this is a buying opportunity.

The SPX could trade a little lower - towards 1200, but overall, I think it is a nice buying opportunity in certain sectors.

One of those sectors is commodities/energy. Here is a chart of USO, where old resistance may become new support. If you are going to get into any trades, you have to have trade management, meaning, you hvae to know where you will get out for a loss. If the line is violated, you may be getting out of your long investment due to a technical pattern being violated:

Past performance is not indicative of future results

Moving to forex, we had a huge rally in the dollar - look at the EUR/USD on the daily chart. You know I love those DOUBLE FALL LINE TRADES, especially when they are protecting the equity account:

Past performance is not indicative of future results

Intraday, we had a BUFFALO BOUNCE in the USD/CAD:

Past performance is not indicative of future results

And finally, we had a DOUBLE FALL LINE TRADE in the EUR/USD:

Past performance is not indicative of future results

Fed tomorrow, claims on Thursday and Unemployment on Friday. Could it be that we get a huge upside surprise in the job market on Friday and that gets us back to 1260+ in SPX?

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.