The Local's Take: Morning Commentary

Good Morning,
This is your typical bull market summer day. Volatility is in the mid teen's, no economic data and the bulls are still clearly in charge. It defenitely isn't a good sign for the bears if our down day after 500 points of going up is around 10 pionts. 

I could definitely use some soft economic data and a few down days, but not srue there is a reltionship between poor economic data and down days.

We have weekly claims staying well above the 400k mark, meaning little to no job growth (again), but this time, the forecast of 85k jobs scares me. Why? Because we could see a 100-150 print which will look GREAT! compared to the estimates, but overall, very, very paltry and unmeaningful in the long run.
So with the massive run up in equities last week, are we seeing some sectors get top heavy?
I am focusing on percentages gained and USO may be ripe for a bear call after we caught in on the long side by selling puts and now I want to see if the rubber band has stretched too far to the upside. Look at this 10% move:




Past performance is not indicative of future results
In the forex markets, the dollar is a bit stronger against most currencies, but overall, it is an "inside day" with very quiet ranges during the American session. Again, the first paragraph mentioned quiet markets, so trader discipline is key. Are you going to bang away today or in a few days when we have unemployment data and the opportunity (no guarantees) for larger trading ranges.
Happy Trading and Be Environmentally Cool!



Online currency 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

The Local's Take: Afternoon Commentary

Good Afternoon,
Just a quick reminder that next week's Interbank FX webinar will be focusing on support. What better way to introduce support then USO:

Looks like 35 was the spot - we have moved almost 7% off that level in about 4 days.
The most recent webinar was on trends, click here for the link. 
What better way to introduce that is the short term chart of the SPY:


Past performance is not indicative of future results
I could really use some bearish data from unemployment claims and CHPM tomorrow. I have a hard time believing that we will rally 5 straight days into a holiday weekend, but QE2 doesn't officially end until Friday!
In the forex markes, we had some big retracements in the GBP/USD and EUR/USD. The EUR/USD found resistance that was pretty clear and thus, was a fun scalp to the downside late in the day:


Past performance is not indicative of future results
Let's go bearish news tomorrow!
Coach Brian

Online currency 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.

The Local's Take: Afternoon Commentary

Good Afternoon,
Since I last wrote, we have had the Fed, Bernanke's conference, Greece and unemployment claims. Lots to digest. I have been warning you of this for weeks - lots and lots of data to constantly digest and if the Fed is out of the picture, then economic data matters and the markets will react to it. I am not sure if the Fed is totally out of it, but at least they are in the background as of now regarding QE3.
Next up, we have earnings, durable goods and GDP and then a two busy weeks around the July 4th holiday.
Overall, the forex markets saw smaller volatility during the USD session until late, when the equities went from down 231 to down 78 to down 125 to down 58. This gave us DOUBLE FALL LINE trades in the AUD/USD and the EUR/USD:

Past performance is not indicative of future results.



Past performance is not indicative of future results.
In last night's webinar, I discussed trends. In two weeks, we will go over support. For all of you longer term traders, check out the support level in the GBP/USD:

Past performance is not indicative of future results.
Staying on the support theme, 1260 in SPX is still our level:

Past performance is not indicative of future results.
Moving into our socially responsible play, but sticking with support, let's look at FSLR:

Past performance is not indicative of future results.
You will like this segway. From FSLR and solar to oil! How do you like that. I like oil at 93 and I liked it even more at 90 - especially to get paid to be in it. Selling puts on USO doesn't feel good but the money in my pocket does!

Past performance is not indicative of future results.
Look for a week in review tomorrow.
Happy Trading and Be Environmentally Cool

Coach Brian

The Local's Take: Afternoon Commentary

Good Afternoon,
Were Bernanke's comments an excuse to carry through to the downside? Remember what I posted on Friday - a shockingly bad number can cause the markets to trend down for days (the opposite is true as well). Also remember, the markets usually react to economic data, especially the big daddy of them all: unemployment. We had a lot of bad data over the past week and finally, with the fed out of the picture (for the time being), we reacted to it (and in the correct direction). No more missing expectations on the jobs report (badly) and the markets rally (big). That is until the fed comes back in...
Before we go to the charts, webinar tomorrow evening and here is the link.
To the charts. Not much excitement over the past few days in forex. In fact, quite dismal trading ranges. Which is fine because the options markets are giving us everything we can handle. One opporunity though is in the EUR/USD. Check out the rally it has had - is it time to DOUBLE FALL LINE TRADE?

It will be interesting to see if it can push towards the double top. If I remember correctly, didn't Trichet say they were keeping their interest rates low? That was at 1.4900 back in April. Hmmmmm....
To the equity/option markets. Selloffs are providing some lick your lips deals out there. Remember though, we aren't married to anything and can take that obligation off at anytime using technical analysis and trade management/discipline.
Some to ponder: VLO, RIMM, CSCO. BUT, the markets are bearish and sellers are in charge and they can fall a lot further!!!
See you tomorrow evening on the Interbank FX Webinar

Happy Trading and Be Environmentally Cool

The Local's Take: Unemployment Wrap-Up

Good Morning I Guess,
Finally getting around to do some work.
The wrap-up: in normal markets, a terrible week of data culminating with a horrible jobs report would have the markets follow through to the downside on Monday and Tuesday. That would be expected, but as I have said many times before, these are not normal markets (see Federal Reserve policy).
Many people have been asking me where the next level of support in SPX will be. I have a chart with Fibo's, moving averages and trendlines to show my analysis.
Before we get to the chart, let's talk risk to reward. If you weren't already short, are you going to now? Has the train left the station? Is there enough downside movement to come to justify entering a bearish trade at these levels? From the other side, who is bullish? I am "getting" bullish, but only in very specifc sectors and specific stocks and by getting bullish I don't mean buying. I mean selling puts on stocks I want to own at levels I like - but I always put a catastrophic stop in and use tecnhonolgy to alert me well before it gets to my stop price so I can make a decision on whether to stay in the trade or not.
I am very picky as to my levels and I am not bullish yet (see job's report).
To the charts we go. Let's start with forex and the GBP/USD and the DOUBLE FALL LINE TRADE my student found for me:

And the BUFFALO BOUNCES that couldn't stop the market today:


Here is an interesting chart: the EUR/USD. The EUR is up big time and the equities are down- back to basics anyone? This isn't the "inter-market hedge" trade, just a nice opportunity to see if the EUR is overvalued. Plus, it looks like the double bottom is exhausted.

To the SPX:

You can see we haven't retraced much at all - so next up, the pink line, then the 200 ma and then the Japan low.

An additional chart on old support becoming new support? Does VALE have another wave down?

Local Tip: Classes at the U start Monday

Happy Trading and Be Environmentally Cool
Coach Brian

The Local's Take: Morning Commentary

Good Morning,
What goes up, must go down.
On the heels of terrible data yesterday (see CHIPM aka Chicago Purchasing Manager's Index and the new orders and employment index) and the home price index and consumer confidence - that's a lot of bad news!
Well, add to it today's ISM Manufacturing number (check out the new orders index and employment component). As I have been saying, I am interested in selling rallies. I was already short from Friday (I like to enter 3 day weekensds with some protection) and I was looking to cherry pick and get another "false rally" today before adding more protection prior to Thursday's claims and Friday's non-farm report. It would be too good of an opportunity to pass up if we rallied 5 days in a row. Check out the short term picture of the SPY as we were up 3% yesterday afternoon in that same time frame:

Now look at the SPY over the past few months, not much movement, so who is recognizing that sellers have been just as much in control as buyers, which makes for great income strategy trading:

Moving into forex, one of my clients correctly pointed out that we are not moving in lockstep. I supported him by saying, "total disconnect". Yesterday the GBP/USD broke hard, the EUR/USD stayed sideways, the AUD/USD broke hard and the USD/CAD broke hard - so some commodities strenghtened others didn't and pairs that usually move together didn't and more importantly, the relationships between the USD and equities left us for the day! 

Why do I call my Interbank FX Webinars "Back to Basics"? Because if you can't read a chart and understand the trends and what fundamental factors are driving those trends, you are in big trouble!
Looking forward to the opportunity to speak about all of this including trader psychology, account risk and trade risk this evening at the Salt Lake City Trading Post meeting (6:30pm at the West Valley Library).
Happy Trading and Be Environmentally Cool
Coach Brian

The Local's Take: Evening Commentary

Good Evening,
Just a quick post with SPY and the trendline we have been eyeing. Two consecutive closes below it - will that signal more selling?


Next up we have our forex chart and due to the huge comeback in equities today, we had yet another DOUBLE FALL LINE TRADE, this time in the GBP/USD:



With the furious rally, I still have to give the benefit of the doubt to the bulls, but I am looking forward to the May unemployment report if claims can average 425k and above.
Happy Trading and Be Environmentally Cool
Coach Brian

The Local's Take: Afternoon Commentary

Good Afternoon,
I had a feeling the markets would find a bottom as the bulls are still in charge. BUT, I am not a buyer. I hope we do rally so we can have a positive April-May period, but I don't want us to rally every single day as we did after the correction during the Japan episode.  We still have a lot of time until options expire next Friday and I could use some time decay. Remember, as of right now, the SPX is only about 30 points from its high - that could be taken out in a half day of trading. So I could use some "indecision", but as I have always said, the risk remains to the upside.
The "BUT, I am not a buyer" is an important statement and I will get to that in just a moment, but that is basically the theme for today, which is PATIENCE!
Let's quickly talk fundamentals:
**retail sales - I expect them to be supportive of the markes as people are spending
**tail end of earnings - it has been a very good earnings period
**CPI - I don't think this can have an effect on the markets even if it does come in high (I hope it does come in high and does have an effect on the markets - here's to wishful thinking!)
**Bernanke - ever the dove (dove means accomodative and hawkish means inflationary). Think of a dove as flying up (equity prices go up due to low interest rates) and think of a hawk as swooping down (equity prices go down as the fed raises interest rates to fight inflation).
To the charts we go and first up is the SPY with local resistance around Friday's high's, which is also the "Line of Death" in the Fibonacci Retracement around 76.4:

So the question is, do we buy the dip or sell the rally. Well, so far buying the dip has been the correct trade and the selling the rally trade remains to be seen. I think it will work on a number of stocks, especially ones that corrected very deeply. The SPY did not correct deeply and is very close to its highs, even before the rally began, so I am not ruling new highs out.
To prove to you the "sell the rally" game, let's see if WFM (also one of our socially responsible investments of the day) can get back above the line of death - not so sure and as a holder, I am looking to generate income.


Let's move to the "patience" part of the talk. Remember, these commodities have run and run and run. So ask yourself: "Is a deal really a deal?" If you ask yourself that, you understand:
**the big picture
**patience

First up, CNX:

Not liking it? I think you would have liked USO at 61.8 and a 14% discount.


Moving to a real laggard and RIMM and I do have a Blackberry and I can attest that product wise, it is brutal. See the text box on the chart below, but 1.2% isn't bad in 39 days and I actually may want to own RIMM in the mid 30's.


Moving to a true retailer, EBAY:

Retailers have been very strong and the trend is up and we do get retail sales later this week. I expect them to be good, but is this enough of a buying opportunity at thest high levels? It definitely is in reach of taking out its old highs.
Finally, on the equity side we arrive at our second socially responsible investment of the day with Ford (F). Again, read the text box as this is a classic uptrend:

Again, is this buying opportunity as good as it was a few weeks ago or have fundamentals changed (they haven't), but have technicals?
Let's cruise into the forex realm - a very, very active day where you needed your Fibonacci Retracements for your DOUBLE FALL LINE TRADES:



And since volatility picked up, our average daily ranges have picked up and we got a nice BUFFAL BOUNCE out of the EUR/USD today:

Click here for the link to Wednesday's Free Webinar.
Happy Trading and Be Environmentally Cool
Coach Brian

The Local's Take: Afternoon Commentary and Week End Wrap Up and Look Ahead

Good Afternoon,
Yes, that is a long title to this article, isn't it!
Who is having fun in these markets! You have to love a market that reacts to news, moves too far and then retraces. I haven't said that mouthful in one day in a long time. Until a few weeks ago, it has taken months to complete that sentence. I will break it down:
**a huge miss in the non-farm payrolls as more jobs are added
**a market that reacts to it and jumps up and then, oops, are things really that rosy?
**retracements as the marets moved too far
These are great markets folks! You should be taking advantage of them!
Let's first talk fundamentals and then take a look to what's coming up next week regarding those fundamentals and then we can fly into the charts.
Non-farm payrolls came through. We had initial claims pointing to a lower than expected report, but then, somehow, we blow expectations out of the water. Doesn't make sense to me, but let's go with it. BUT, I think in 4 weeks, there will be a lot of tension, especially if the markets are at new highs, which, wait for it....puts an emphasis on the economic calendar. Yahoo!! No, not the stock, just the excitement!
Earnings are for the most part behind us and we are getting closer to summer. As I said earlier in the week, if we are at or near highs, it could be a low volume, leak to the upside as we have seen during past slow periods (last summer, the summer before and Christmas time).
Next week, we have:
**retail sales (should be supportive according to what I see out and about)

**Bernanke and
**CPI - could CPI give us an inflation scare?
To the charts and let's look at the SPY. I don't care how high we got as I was selling that rally by buying the dollar. So that high is resistance and it comes in at 61.8 - let's use that for local resistance with local support at 1330ish.


Hey, let's all buy commodities. No, that is not a recommendation, that is a segway to the next chart: Silver (SLV):

As they say in Bravehart, hold, hold, hold hold, NOW! What do you think?
To our socially responsible play: Ford (F). Got to love the trendline - who can argue with 10 to 20 percent moves in the stock - imagine your option you savvy option traders!



Into the forex realm we go and as I said at the beginning: moves, countermoves and counter-counter moves.
Let's start with the DOUBLE FALL LINE TRADES:

And onto the BUFFALO BOUNCES:



Let's hope the economic calendar gives us enough surprises and let's hope the volatility stays in this range. Remember, we still have 2 full weeks left until May options expire and the SPY is only 30 points from its high - that could happen Monday morning.
Local Tip: Inter-Market Relationship Webinar on Wednesday

Happy Trading, Be Environmentally Cool and Have a Safe Weekend,
Coach Brian

The Local's Take: Evening and Week End Commentary

Good Evening,
Let me point out the obvious:
**Initial claims were higher than expected every week this month, culminating with a 427k print yesterday
**The Dow traded above 12,800
**Gold cleared the 1550 level
**Silver almost touched 50
**The dollar continued its decline
**The AUD climbed to an all time high - almost hitting 1.10
**The Fed came through with: extended and extremely accomodative

More than point out the obvious, I really want to make sure that traders out there understand what it is they should be looking for. They should not be looking for "the next big thing" or listening to CNBC (or any other analyst, software program or "educator") for the holy grail or for ideas.
I will put this in CAPS: UNTIL YOU KNOW WHO YOU ARE AS A TRADER, IF YOU LISTEN TO OTHERS, YOU WILL FAIL.
I can prove this by a few questions:
**How many of you know what type of trader you are: meaning, what style you are?
**How many of you know the proper amount in dollars and more importantly, percentages to risk of your account on any one trade?
**How many of you know the proper dollar amount or percentage to risk of each individual trade you put on?
**How many of you can look at your entire portfolio which includes all assets, trading accounts, retirement accounts and have a good understanding of how to maximize your profit and income generation while sleeping well at night because you are protected correctly given YOUR situation and what the markes are telling us to do, both fundamentally and technically?
**How many of you can put together a fundamental and technical picture of the market(s) that you are trading?
If you can't answer YES to these questions, then you are in dangerous waters if you think that someone out there is going to make you profitable.
Between this blog and the bi-monthly webinars and in some cases, one-on-one coaching, you can cut out a lot of the crap that's out there, focus on who YOU are as a trader/investor and move on with safe, high probability, low risk, high reward trades, IF you have the emotional control and discipline to implement your trading plan when you see an opportunity, stick to your plan as an un-emotional trader and let the charts tell you how to manage the trade.
Have a great weekend and Be Environmentally Cool
Coach Brian

The Local's Take: Bullish Commentary

Good Afternoon,
Just for the record, since I have started this blog, I haven't had a "Bearish Commentary" when it comes to the broad markets and I am definitely not bearish now. I basically put an "all out buy" on the blog yesterday and the markets cooperated. As we will see, the SPY broke out today and is at a new bull market high.
Why was I so bullish? We have lots of data tomorrow with Durable Goods and the Fed.  Look back at the markets and do some research to the few days leading up to a Fed announcement. We rally (hard) about 90% of the time. It seems that the markets are daring the Fed to NOT say EXTENDED. Basically, the closer it gets to an announcement, the more the markets rally as they are saying: "don't dissapoint us Ben!" because we will fall hard if you do anything but stay accomodative. So my expectation is: we will see the Fed say that:
**inflation isn't proven to be a consistent problem (go buy some milk!)
**rates will be low for an extended period.
If we don't get that message, look out below! In addition, we have public appearances by Ben as well as initial claims and GDP and then we are only a week away from the unemployment report. I estimate that we will add no more than 200k jobs.
To the markets we go and I want to show you that breakout in the SPY:

Moving into the forex markets and this is why I title my webinars (next one tomorrow evening) BACK TO BASICS because every currency pair is acting differently. We had a beautiful DOUBLE FALL LINE TRADE in the GBP/USD:

Look at what the EUR/USD did during the same timeframe:

Not too similar on a day trade, but overall the pattern is weak USD as shown in both charts on a daily timeframe (GBP/USD is on top and EUR/USD is on bottom)

The dollar smashing continues as equities leaked higher today. USD/CAD is around .9400.
Let's wrap up with our socially responsible investing plays starting with WFMI - I have been calling for protection due to a severe increase in price and the potential for double tops: covered calls at resistance anyone?


Cheap LED's anyone with the worldwide leader, CREE:

Not sure are you? This is a good example of a LAGGARD. The markets rally hard and this stock gets pummeled - this is where you know fundamentals are in charge and it can be dangerous to trade it to the long side, but you may want to invest in it as its yield may become more attractive.
Happy Trading and see you tomorrow night for the webinar,
Coach Brian

The Local's Take: Afternoon Commentary

Good Afternoon,
And the beat goes on! We have more "mediocre" economic news but higher equity prices. Surprised? You shouldn't be. This is to be expected in the "the fed is in charge" economy. Remember, they promised extended low rates at their last meeting, so even with higher initial claims and lower Philly Fed, fundamentals are just good enough and the Fed is still in the picture enough to get us to new highs in the Dow Jones.
If you missed my inter-relationship market webinar and want to catch up on a little trading psychology and fibonacci retracment introduction, please click here for the link. Wow! Now that I see that, I did cram a lot of information into my last webinar!
Whether it is a live class, a webinar or a market commentary post, I always start with the fundamentals. So here they are (notice the revisions to last week's unemployment claims number). I won't even go on the ramble about what these "misses" used to do to economic marktets, but with volatiliy at extreme lows, no matter how "off" a number comes in at, it isn't getting the markets excited. So as I said, the beat goes on. Let's look at volatilty and then the fundamentals.



On to the charts and let's start with forex and the absolute pounding of the dollar. The GBP has truly broken out against the USD, so here is a daily chart showing the breakout and then a 15 minute chart showing a BUFFALO BOUNCE  and a DOUBLE FALL LINE TRADE that I was getting into and out of while talking to a fellow trader about trendlines in the EUR. We realize, hands off unless you have very specific entries and exits as the dollar doesn't want to do anything but go lower.





So there you have it, Breakout! The 6 pairs I keep an eye on are killing the dollar. Inflation anyone? Let's look at silver, hopefully you have already bought your Mother's Day presents!

Our socially responsible stock of the day gives a good look at good time to get defensive? Using the Fib's in conjuction with a potential double top gives you a low risk area to sell and/or buy protection.

Hopefully you are stocked up on your commodity plays as they have had a nice run this week.
Happy Trading and by all means, don't look at the economic calendar, just buy, buy, buy!
Coach Brian