SPX - Whipsaw!

Good Afternoon,
My head is spinning, but honestly, I am glad that happened! I don't want us to break and break and break. I want us to hang in there. We have so much more news to digest this week (see yesterday's post), so we aren't out of the woods yet, but the move this afternoon could have shaken some shorts out. If we can rally again tomorrow and get into the 1140 range, things could get iteresting.
They will be interesting nonetheless due to a flurry of data in the next three days, so as mentioned yesterday: let the trade come to you and trade the appropriate size!
To the forex charts. We started off with a DOUBLE FALL LINE TRADE in the GBP/USD, which I didn't take as Bernanke was speaking. As Bernanke spoke and the markets rallied, the dollar weakned and you know that if you are seller of equities, you can also look to buy the dollar as it eweakens and that scenario happened, giving us a BUFFALO BOUNCE  in the EUR/USD:

Past performance is not indicative of future results

Past performance is not indicative of future results
Then, the insanity happened. After having a few clients and talking about not buying puts down here, the markets turned. I guess I should have just had the markets do the lesson. Risk to reward folks, risk to rewawrd!! I am exiting puts today, not entering new ones. I guess the retail investor got short today or dumped some of their positions!!
More fun tomorrow!
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.

SPX Nearing Lows - Expect a Break Through!

Good Morning,
Sorry for not posting for a few days. The mid-week holiday in addition to a stomcah bug that hit all 3 of us kind of put a damper on the writing. But, I am back and I have a ton of charts to go over.
First, as always, the fundamentals. We just received some "recent" data in the form of ISM - the headline was higher than expected, as was the employment component (more on that in a moment). New orders stayed a hair below 50 (contraction/expansion level).
Tomorrow, we have Trichet and Bernanke on the docket, followed by ISM Services on Wednesday and claims on Thursday. In addition on Thursday, we get interest rates/statements in the UK and the ECB.
This all leads up to the BIGGY of them all - unemployment on Friday. Remember, in "normal times" when there isn't intervention, a big miss can move the markets in one direction for days... So, with analyst expectations around 50k, what are the chances we come in way above (+150k and above) or way below (-50k and below)? I am guessing that it is a 50/50 chance either way with seasonalities (remember, this is a September report and we could have back to school seasonalities). So, I am overall OK with the 50k and I am not going to go into the number with any additional protection as:
1. guessing it is a crapshoot
2. guessing the move in equities based on a big miss either way is a crapshoot (see government intervention)
OK, enough of the fundamentals - let's get to the technicals. First up, long term charts in forex. First USD/CAD (so you can see the drop in oil prices and the strengthening in the USD (due to not only oil prices down, but "flight to quality").

Past performance is not indicative of future results
Note this is an 11 penny move in about 2 months. Now the AUD/USD:

Past performance is not indicative of future results
Note this is a 14 penny move in the same timeframe. We will look at Gold in a moment to see if Gold prices are finding support and maybe if that translates to some buying opportunities in the AUD. REMEMBER (AND NOTE): MANY OLD RELATIONSHIPS BETWEEN EQUITY SECTORS AND CURRENCIES HAVE CHANGED, SO YOU MUST RE-ANALYZE BASED ON RECENT FUNDAMENTAL SHIFTS!!!

In other words, here is the trading psychology part: BACK TO BASICS - know what is driving your stock, future, currency, etc... and how to develop a trading plan using technical analysis and the correct fundamental background data.
Alright, sorry for the trading psychology tangent, but you know it is coming - like a left hook!! I will never present, write or talk about trading without bringing in trading psycyhology.
OK, day traders, here we go. Let's zoom in on two double fall line trades (thank you ISM number) for boosting equities and thus weakening the dollar (momentarily). So we had equities up, AUD up and then equities overbought, so AUD overbought. The first chart is a DOUBLE FALL LINE TRADE on a 15 minute chart and then, as equities sold off from up 61 points to flat and stabilized, AUD stabilized. So the second chart is a DOUBLE FALL LINE TRADE on a 5 minute chart:

Past performance is not indicative of future results

Past performance is not indicative of future results
Since this writing, all currencies are weaker against the dollar as equities have sold off and gone back towards the days lows (hence the title of today's post).
So, in SPX we have 1110 as the low and we are only about 11 points away:


Past performance is not indicative of future results
As you can see we are dangerously close to the lows. Also, if you remember my last post, titled "Line of Death", take a look at this picture. Any time we retrace more than the 78.6 level, chances are very, very high that we will retest the lows.




Past performance is not indicative of future results
So first up, 1113 and then the big low closer to 1100. Some traders and investors will use it as a buying opportunity. There will be a tug of war (maybe) and we will see who wins (buyers or sellers). Me personally, I am looking to put some money to work, but not until we get to more attractive levels. Depending on the heavy fundamental calendar, I will decide where "attractive" is.
With Gold, support is coming in just below the 160 level - again, I am not a huge fan of trading GLD, so aside from posting the chart, I have no comment on future direction!! If USO drops a bit further, I may comment on picking up that commodity.





Past performance is not indicative of future results
All told, we have a very, very busy week ahead of us. Trade the appropriate size and most importantly, wait for your spots - we should get some good intraday swings that set up low risk, high probability trading scenarios. ALWAYS USE STOPS IN THESE MARKETS as things can change in a heartbeat!
Follow intraday at Interbank FX Connect - "thelocalstake"

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.

SPX at "The Line of Death"

Good Morning,
Another busy day.
Fundamentally, the fireworks continue and there is always the possibility of more.
Although our economic calendar is definitely "in the background", keep an eye on durable goods tomorrow and initial claims on Thursday. I don't provide expectations, but I gather the risk is to the downside in durable goods and for initial claims to stabilize/even get a bit better. "Getting a better" is relative as the 400k number and above is consistent with little to no job growth every month.
Technically, SPX is well off its lows and heading back to pre-Bernanke levels, but still have a little bit to go - 78.6 retracement of the move from 1224ish to 1124. This retracement is "the line of death" as it is the last retracement level. If we get above it, there is a very, very good chance we will approach old highs at 1224 - then what? Are there enough shorts out there to squeeze us through those highs?

Past performance is not indicative of future results
I talk about "is a deal really a deal" a lot. I wasn't salivating over SPX but I was salivating over some others that were oversold. Yes, Gold went up, but is anyone confident they can call the direction of gold lately? I feel much more confident with oil as a true commodity. Check out the support level that held. By the way, you could get 4% for sellilng puts 10% below the market as of yesterday morning.

Past performance is not indicative of future results
Moving to forex, there was a rough DOUBLE FALL LINE TRADE in the EUR/USD:


Past performance is not indicative of future results
I chose the BUFFALO BOUNCE in the NZD/USD:

Past performance is not indicative of future results
Thanks to all who attended (and Skyped) at last evening's Park City Trading and Investing Club. Another solid meeting!!
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.

SPY Support Holds and Lots of Intraday Forex Trades

Good Morning,
Lot's of action today!
First, fundamentals. Earnings are still somewhat around and news "bombs" from around the world can take place at any time. The biggies this week on the calendar (that we can somewhat prepare for" are:
**durable goods
**initial claims
**CHIPM (check new orders and employment sub-components)
Technically, SPY support still holds:


Intra-day, the SPY provided so many DOUBLE FALL LINE TRADES in forex. Here is the intra-day volatility with moves, countermoves and counter-counter moves:

Moving into forex, there were numerous DOUBLD FALL LINE TRADES and even a PARALLEL TRADE. First the GBP, then the EUR, then the AUD:






That's the quick wrap up today. Overall, I am looking for Europe or the jobless rate in the US to
worsen - whichever happens first could get us through the lows in SPY.
See you tonight at the Park City Trading and Investing Club
Happy Trading and Be Environmentally Cool
Coach Brian

SPX Sitting on Support and BIG Worries!

Good Morning,
We are chart heavy today. I don't think I need to address the Federal Reserve as I addressed it in the past two commentaries (and nailed it) and in last night's webinar. The bottom line, our economy is flirting with recession, depression, stagflation, deflation. You name it, you got it and you better be savvy on your trading, defense, protection, income generation, because your investments aren't going to perform like they did in 2008-2010. Welcome to the NEW ECONOMY - one of majore worries and major hurdles and Volatility - yay!!
To the charts. First, forex and the chart I mentioned in last night's webinar, the GBP/USD on long term support:


Next up is equities and the SPX. I don't think support will hold if our labor data worsens (which the Fed told us it will)


Stocks that are getting to more attractive levels, XLF, JPM and my favorite, USO:






Finally, did you notice claims today? Not good! Oh yeah, if I didn't mention it, the Fed told us that this data would be bad and probably get worse. Employment data rules as reality sets in!!
Happy Trading and Be Environmentally Cool
Coach Brian

News Drives Traders (Drives Traders Nuts!)

Good Morning,
I truthfully don't know if I want to trade during the Fed. Ever since 1998, I don't know if it has been a profitable event to trade, so I ALWAYS cut my size and usually make one or two trades IF that.  Look back over history and you get about 15 minutes of action and then all of a sudden, the price stops, goes sideways and inexplicably is in the same exact place it was prior to the announcement.
Personally, I think this will be a dud as they have said over and over: rates low through 2013 (can't change that statement today) and that inflation and growth levels are below expectations. Those last two statements could be changed. Bernanke could have "inside info" on unemployment data and could give us a warning shot to temper the markets if the September unemployment report is horrific!
I will say it again, I believe the Fed gets data early and they try to temper the blow if it is a major dissapointment. So if we are expecting 100k jobs growth and we get 0 or a negative print, Bernanke will try to tell us that subliminally in the statement - that is MY opinion!
We also have Europe on the docket as far as fundamentals, claims tomorrow and that wraps up the week.
Technically, SPX is still in the range and closer to the top. Will we break through it? Disney (DIS) has a small trendline of resistance:

Past performance is not indicative of future results
Technically in forex, we had the day's highs in the EUR/USD tested and proved to be resistance (at the time of this writing):

Past performance is not indicative of future results
We await Bernanke....
Free Webinar Tonight
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.

SPX Resistance Holds...

Good Evening,
A last minute trip and it didn't allow for postings, but I am back in action.
Fundamentally, and I can't stress this engough, things are hard to read. There is no one who knows what direction the market will go in 3 days from now as we are so dependent on reading what comes across the newswires.
So, my trading psychology tip of the day: book winners. Think in percentages people and take profits!! We have markets that are gapping up or down every day and lots of times they are triple digit moves. So book your profits and on to the next good location/opportunity. Also, fundamentally (and technically) we have an uncoupling of the Gold/Equity trade. It is the best traders who understand this and stop trying to buy Gold when the equities are downa and selling Gold when equities are up.
Technically, we have SPX in a range. Support is eas(ier) to pick out at 1140. Resistance, not so much. 1218 to 1230 with 1218 being a better bet these days.
Sector wise, the financials are still week with XLF off its lows, but not by much. Technology is where it is at with the QQQ's outpacing the other broad markets and AAPL leading the way. Can anyone say 450?
Forex markets were a bit sideways today, but yesterday provided some nice chart patterns. An inverse head and shoulders in the EUR/USD followed by a DOUBLE FALL LINE TRADE in the GBP/USD as equities rallied mid-day yesterday:



Past performance is not indicative of future results

Past performance is not indicative of future results
See you tomorrow evening for the free Interbank FX Webinar, titled Trading Psychology.
And I will be back tomorrow as "thelocalstake" on Interbank FX Connect.
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.