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.
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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.
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