Monday, November 7, 2011

Market Update on Nov 7

1. In never-ending EZ saga, we went from Greek govt collapse to Italy's possible govt collapse in a matter of days. This is just another one of many gifts for those who will be buying every SPX pullback on the way to 1320 - 1350 (in my view). Simple fact is that more monopoly money, which gets printed to reverse EZ political imbeciles' mistakes, will make stocks go up in the end. Even a slight hint of EZ debt crisis resolution will give the final push to the upside break out of the trading range on all risky assets.

2. Speaking of which, there are quite a few ranges in FX to discuss. Practically sideways box (for the last 4 sessions) has developed.

EUR/USD - 260 pips
AUD/USD - 240 pips
USD/CAD - 175 pips
GBP/USD - 200 pips

Box is one of my favorite plays, which extends by the same (inside the box) amount on breakout. Wait for confirmation of the breakout though, fakes are aplenty in this case.

3. Speaking of fakes, stock index futures are in symmetrical triangle. This chart formation creates the most confusion on breakouts. It is a sure nail-biter to the very apex, resulting in powerful move, but one to really wait for and not anticipate. Absolutely no idea where this thing goes yet. If I were to be guessing, whichever way we will break out of the triangle will not be the way we go, it will be a fake. There, you got an educated guess out of me :)

4. Gold is breaking above 1775 (my target from Oct 25th). Germany said that it will not touch its gold reserves for any bailouts in foreseeable future. I guess we are to believe them, GC is up 36 as I type. You want to trail this baby, because it can crater back to 1775 overnight, as it often does on "treasure stop hunt", as I call it.

5. And the last interesting topic for this post...
I am getting some ridiculous comments, probably from those who disagree with my view on markets. I respect everyone's opinion, and will publish comments from those who disagree with mine. This said, angry, idiotic, incoherent, unconstructive, abusive, non-market-related, and personally-directed comments WILL NOT GET PUBLISHED. It is that simple and I hope very understandable. Lets remember that this is my blog, in which I express my view on markets that I trade, and it is my duty to keep this place sane and clean. This means that I have to moderate and, unfortunately (or maybe fortunately), censor all of the comments. I would love to hear from other traders who would like to interact with me, even if they disagree with my view. But this is not a venue for fights between bears and bulls, not a place of hate, and definitely not a bashing wall for utter nonsensical remarks by those who perhaps lost their money and have nothing else to do but complain. We all trade at our own risk. This profession is not for everyone. Taking a stab at me will not help anyone's pain. Study and trade smart, or find something else to do!
I hope this clears up any misunderstanding.

Update on Nov 8 @ 10:05 am
We have an upside break out of symmetrical triangle on stock index futures. It is not a surprise for many, I guess, since symmetrical triangle is supposed to be a trend continuation pattern. But somehow I think in this uncertain environment it will be a fake. I think we see a failure and a turnaround in the 1270 - 75 area on ES, followed by a plunge below 1250, 1230, 1215, and eventually 1200. Just another one of my wild educated guess outlooks :) 
I will be buying with both hands below 1200.

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