Today's trading activity could be far from over as we have Bernanke on the docket in about 1 hour. Could we also see the "famous Friday rally" where equity prices take back there losses and then some? I hope not as the 1350 equity level will hopefully provide some resistance for a few more trading day.
I still feel like the longer we stay up on our highs and the longer the buying comes in at the lows of the day to take us higher, we are setting up for a 500 point day to the upside where finally all shorts are squeezed (if there are any left).
Finishing off the fundamental picture, as mentioned, we have Bernanke today. Next week we have the regular international event/speaker onslaught, but in addition, we have:
**retail sales
**weekly initial jobless claims (trending down and backing up the upmove in equities)
**bernanke (again)
**philly fed
**inflation data (doesn't matter due to the Fed telling us that there isn't any worry of inflation, hence it is ok to maintain record low interest rates). Tell the Fed to buy food, diapers, health benefits, prescription meds, etc...
One important piece of information to remember is the Fed mentioned that the pace of growth will slow and will be well below their expectations - again, that is why interest rates are being held to very, very low rates. So watch the economic calendar to see if the recent growth starts to lag.
Technically, as mentioned, I am watching the 1350 level in SPX and hoping we hang below it for another 3 to 5 trading days. Technically, if you read yesterday's post, it talked about trends and the length of the uptrend and eventually the trend stopping. I am not saying the trend is stopping just because equities went down today, but, the higher it goes, the less your risk to reward ratio lines up. Bottom line: manage each and every trade with stops and have a trading plan that helped you arrive at the appropriate number of shares or contracts traded for your trading style, for your trading timeframe and for your account size.
To the charts: BP and its approach to resistance. Would it be far fetched to write covered calls, take buy puts or lighten up your position at these levels?
Past performance is not indicative of future results
Overall, you have to remember, backing off a few percentage points doesn't mean anything as far as a trend is concerned. We have gone up 100% in the stock market in less than 3 years. We are still in an uptrend!!
In forex, the USD is still in a downtrend. Just because the USD strengthened today (see inter-market relationships between USD and equity prices), doesn't mean the downtrend in the USD is over. Is it a retracement? Is it a sideways consolidation?
Happy Trading and Be Environmentally Cool
Link to Monday's Webinar on Moving Average Crossover's
Coach Brian
No comments:
Post a Comment