SPX Resistance Holds!

Good Morning,

Nice to see SPX resistance holding in at the 1220-1224ish range. No pressure to trade as the monthly protection looks a lot better today than it did yesterday at 2:30pm Eastern. We are still well within striking distance of highs and we have retail sales tomorrow. I imagine they will be good as people are still spending, but since the survery period was during the market "crash" last month, maybe some of the shine will be off just enough to prevent us from a stupid and unwarranted Friday rally. The only people that want to go into the weekend long at these elevated levels are the ones hoping for a weekend resolution. So yes, I will be looking to sell rallies tomorrow and one way of doing that will be to buy the dollar.  

Today, buying the dollar worked in GBP/USD as we had a triple top. It was a fairly rangebound day, so playing the edges of the ranges, believing they would hold worked pretty well. See the chart below:

Past performance is not indicative of future results

I will try to provide a weekly wrap up tomorrow depending on activity. Watch out for earnings over the next few weeks and get ready to manage your October options as expiration is next Friday.

Last night's webinar should be posted soon to this page where you can review recent ones.

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 - Can't Go Down...

Good Morning,
When you have a large rally and then you can't sell off, that is a good sign for the bulls. Think about it, if we were fairly valued down below and now we are 3% higher after yesterday's move and sellers don't come into the markets, does that mean that sellers are on the ropes and buyers know that?

If you have a big move up followed by a small to no move down, look out above. Again, we have the 1200 level in SPX and then the famous 1220ish level. Here is the chart:

Past performance is not indicative of future results
So we have had a 12% move from 1080 to 1200, will we test the 1220 level? Economic data and international news has been "positive" and technically, it seems like we will at least test the top of the range.
Moving to forex, we had numerous opportunities today, even though it was overall a rangebound day. So it was a very technical trade where you could go against the moves and play the "edges of the ranges". First up, a support line where a big move down came to rest and moved back to the upside in the GBP/USD:

Past performance is not indicative of future results
Next, a DOUBLE FALL LINE TRADE in the EUR/USD and the USD/CHF:

Past performance is not indicative of future results

Past performance is not indicative of future results
Let's see what happens tomorrow as we are light on the data front and based on past performance, the equity markets like to go up when there isn't any data to block its path.
Free Webinar Tomorrow Night - click here for link

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 Moving Into Really Overbought Territory?

Good Afternoon,
Fundamentally, earnings begin and we have claims as well as retail sales later in the week.

Technically, we still have quite the range in SPX and I think that before we get to the tops at 1220, we may see some selling come in at the 1200 range - but a lot of that depends on the Europe "Bail/Fail Trade". Bail we go up, fail we go down.


Past performance is not indicative of future results
Next up, we have the forex charts. Was the selling of the dollar last Friday a hint that we were going to explode up today? There were two opportunities for BUFFALO BOUNCES today. One in the NZD/USD and a second in the EUR/USD, but because of the relentless action to the upside in equities, the dollar stayed weak.

Past performance is not indicative of future results

Past performance is not indicative of future results
I really am enjoying the markets rallying, but could now use a little sideways action for the remainder of the week. With 9 trading days until option expiration, getting through to Monday at these levels would provide some nice time decay!
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 Heading Towards Overbought?

Good Morning,
I am pretty glad to see the SPX heading into overbought territory again and if we get a good jobs number tomorrow, hopefully we get an early pop before profit takers and short sellers come in ahead of the weekend. There you have it, my trading plan for tomorrow. And to throw in the ever-important "inter-market relationships", if the USD weakens further, I would like to buy it at a discounted price. IF these inter-markets relationships work.

That is another point! Every day is different. I have been saying this over and over!  Today both the GBP and EUR initiated more QE. I have a feeling the markets are going to be fun for many, many years as QE gets extended.
Forget QE causing inflation, it may cause stagflation. I called stagflation in July of 2009 and I am sticking to it - the beginning of it has just been extended due to QE 1 (TARP) and QE 2.
To the charts we go and let's start with the SPY. Come on 1170ish, as I am ready to throw on some more October protection! The first chart is the 3 month so you can see support and resistance and anyone who puked or shorted at the bottom is not feeling so good. And if there are some more shorts out there, hopefully they puke on a good employment number tomorrow and that get's me to the second chart - using Fibonacci's to set protection at "the line of death":

Past performance is not indicative of future results

Past performance is not indicative of future results
To forex and I jumped the gun today. There was one good trade - sellilng the weaker GBP/USD when the stronger EUR/USD stopped rallying. I just got a little focused on the EUR/USD and jumped early - didn't get hurt, just didn't get anywhere. But love the DOUBLE FALL LINE TRADE on the GBP/USD. Both charts starting with the EUR (arrgghh!!):

Past performance is not indicative of future results

Past performance is not indicative of future results
I may update after the jobs number tomorrow. If not, have a great weekend!

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 - 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.