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.
No comments:
Post a Comment