In a nutshell, the "bail/fail" trade never left and is more evident today then ever. Will Europe or won't Europe, that is the question. Behind the scenes, the US economy is firing on all cylinders, so if things go well across the pond, we could be off to the races and 1350 in SPX is next!
First off, let's look at today's forex trade, with three BUFFALO BOUNCES. The USD/CAD, AUD/USD and EUR/USD. Then the EUR/USD came back and provided some late day fireworks as it did its "bail" rally near the close of the day. It was clear to see that the USD was strongest against the USD/CAD and AUD/USD - so commodities were killed. Here is the AUD/USD followed by the USD/CAD:
In the equity markets, take a look at SPX - new highs are on "bail" away and heading back towards the 61.8 area is a real possibility with a "fail". I am looking for us to stay below 1250 for another 3 trading days - but it is anyone's guess!!
If you aren't using USO as a hedge, get on board. Check out SPX resistance at 1260-1265 and USO resistance at 40ish.
Whether it is shorting USO, buying puts or bear calls, all neutral to bearish strategies are working, BUT, as is the case with any strategy in any financial market, you MUST use technical analysis to create a trading plan and have defense (GO STEELERS) and a trading plan in place - see Dick Lebeau and the 2011 version of the Iron Curtain!
Link to next week's webinar
Happy Trading and Be Environmentally Cool
Coach Brian
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