The Local's Take: Weekly Wrap Up and Look Ahead

Good Evening,
Let's start out with a little trader psychology discussion. Because volatility is still rather low, I basically wake up each day saying: if they come get me, great. Meaning, I don't have any pre-conceived notions of volatility or opportuinities. The past year of equities grinding higher and years of experience in understanding that the markets breathe in and out and sometimes, they rest! Today was one of those days that you go into thinking: Friday before a holiday, very light economic data, overall the VIX is low. My mindset is to play it carefully. Maybe wait for that extra pip or two, maybe cut back in the trading size as you may only get one opportunity the entire day. That opportunity did come and I was glad to take it, but with smaller size, the eagerness went away, the relaxed nature of how trading should be was evident.
So the bottom line is, if you have discipline and are realistic of what the markets provide, you will trade accordingly, both in your frequency and in your size, allowing you to be in check with your mental state and trade witha clear, un-emotional mind. I am not saying it doesn't come without practice, but that is what experience gives you. You have to be willing to get the experience, which for a new trader means easing into things.
OK - you know I am big on pshychology, so with that out of the way, let's look at the SPY, first with a few months of data and then just the past few days of trading.


You can see how we are bumping up against a trendline that is providing resistance and  directly above that is an old supportive trendline that may act as resistance. Selling rallies anyone? If you wanted to sell rallies this was the week. Twice, we were up over 75 points and both days, we finished well off our highs. I am used to saying that we finished well off our lows - well, we are doing that as well. So overall, a relatively technical, choppy week of trading that did provide for good opportunities, both with standard deviation trades and retracement trades.
Today in forex, here was your BUFFALO BOUNCE:

The look ahead part: I protected the portfolio as we have 4 days until unemployment data is released. Lots of data before that, so stay on the economic calendar folks.
Happy Trading and Be Environmentally Cool
Coach Brian

The Local's Take: Matchmaker: SPY and EUR/USD

Good Afternoon,
This is the second post of the day as we had some great intraday movement in both equities and forex.
First up, an intraday look at the SPY:

Past performance is not indicative of future results

Next, an intraday look at the EUR/USD on a 5 minute bar:

Past performance is not indicative of future results

Understanding the inter-market relationships between the USD and equities is crucial!
Local Tip: Free Webinar tomorrow evening at 9pm Eastern.
Happy Trading and Be Environmental 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.

The Local's Take: Inside Day Commentary

Good Afternoon,
We had a relatively quiet day in the financial markets, but with the "above average" volatility, we still saw some action in the forex markets.
Overall, I am still to neutral to bearish, knowing the risk is to the upside. As I was talking to a trading buddy, I told him I am not trying to call the direction of  the markets from their current levels - I am just looking for really oversold opportunities or to play defense at the right levels.
Here is a look at the "above average" VIX:

Since it was an "inside day" and pretty quiet in the equity markets, let's go right to the forex markets and show the BUFFALO BOUNCE that occurred:

Let's see what happens over the next few days - maybe we get a "false rally" heading into next week's unemployment report which would be just fine by me!
Happy Trading and Be Environmentally Cool
Coach Brian

The Local's Take: Chinks in the Armor Commentary

Good Afternoon,


A quick update is in order as I have been absent from the blog as I had a quick vacation to New York - looks like good trading markets though.
We had the whipsaw effect with the bottom trendline in the SPY, which gave us good retracements. Ultimately, the trendline failed and the bulls took over, but are the buyers lurking as they have been? Or are "chinks in the armor" starting to show up. Go ahead and look at trendlines connecting the bottoms as this one does on the SPY. Are the support lines becoming resistance? Again, you can see the headfake in the SPY, but in many inividual stocks, the trendline is acting as resistance, providing a nice bearish opportunity with low risk, high reward and best of all, chart based reasons.


Another point supporting the "chink in the armor theory" is that commodiites have sold off so hard, you may be able to use fibonacci retracements as a bearish entry as the commodities will "fail" in their bullish sequuence, giving us a lower high for the first time. Are lower lows next?

Moving into forex, as I stated above, all of the whipsaw action in the equities has given us great retracements and DOUBLE FALL LINE TRADES. And add in some volalitility and the Average Trading Ranges pick up giving us BUFFALO BOUNCES. The GBP/USD chart shows DOUBLE FALL LINES and BUFFALO BOUNCES on Friday and a BUFFALO BOUNCE today:

The AUD/USD shows a BUFFALO BOUNCE today:




You know that I am looking forward to next week's unemployment report, but will the fun be taken out of it if we continue to sell off?  Is a larger percentage moving to cash/defense these days?
Local Tip: Free Wednesday Webinar on Average Trading Ranges on Wednesday at 9pm.

Happy Trading and Be Environmentally Cool
Coach Brian

The Local's Take: Evening Commentary

Good Evening,
Just as I suspected in last evening's post, the bulls took control. There is no lack of "good levels" for the buying to come back in and support the markets, We are now back above the trendline that we broke for the past 2 days - talk about whipsaw! I am glad I wasn't a part of it in the equity markets, but the whipsaw/headfake action has been giving us great moves in the forex markets.
Let's start with a look at the AUD/USD where we had a DOUBLE FALL LINE TRADE:

We also saw the GBP/USD get massacred today - probably due to the change in unemployment count for the past month.
Moving into equities, let's show that all important (cough, cough...) trendline in SPY that has been support, then violated, then resistance, then violated. Which way did he go....

Let's see where the US unemployment claims come in tomorrow. It it is a big miss to the upside, we could see another change in direction if the markets listen to fundamentals.
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,
First off, I am not related to the Kahn who is making the headlines.
With that out of the way, we are getting dangerously close to a trendline on the SPY, so buyers beware or buyers jump in? With a relatively light data week, technicals will take over, so trendlines and chart patterns are of key importance.
Over the last few weeks, we have seen volatility creep up, so it is great timing that next week's webinar will be on average trading ranges.  Here is the link. And if the markets have you worried, then you better jump over to YouTube to see last week's all important webinar on inter-market hedging!
To the charts we go. Let's start with forex, with BUFFALO BOUNCES first and DOUBLE FALL LINES second:


And into the equity markets we go. Let me show you that trendline on the SPY:

Speaking of trendlines, will the long term trendline on Ford (F) hold? Let's look at chart of the socially responsible investment of the day:

Let's go from highs to lows and start with AXP - is it satisfying a 5th wave and maybe the target won't be taken out? Will there be a double top? If nothing else, a good place to buy protective puts and/or generate income with covered calls.

Now the lows and we will move into the commodity sector. First VALE and then SLW.  VALE may be looking good for some cash secured puts to pick up a stock at a 27% discount. Boy am I glad I sold some ITM calls when it was in the mid 30's. I think I made up the entire move down in 5 months of covered call selling.


With SLW, you can see the trendline has been broken. Will it act as new resistance?


Finally, to the really, really lows: RIMM. I think I should do a blog about how every single day my Blackberry malfuntions in a new, interesting way. Can you say: DROID?

Is there a bottom in sight here for RIMM? Is there a chance of support at this level? Would selling puts be a way to pick it up cheaply? I am liking the June 37.50's for 1.5 percent in 32 days. BUT, I would put stops in place (like all trades).
Happy Trading and Be Environmentally Cool
Coach Brian