Tuesday, November 15, 2011

Trading Thoughts on Nov 15

1. EUR/USD is weak again. Multitude of the same reasons: problematic peripheral debt (spreading to core now), and slow growth to compound that. It looks like Q4 EZ GDP growth is going to be negative. Traders are positioning themselves ahead of possible and final whoosh of the 2011. Or maybe it will be a slow sliding like the last two days. Who knows? Just take profits, trail your stops, and reload at higher levels if stopped out. Should be 2/3 out by now, with stop at just above 50dsma, and trailing.

2. "Buffett bounce" IBM short is working. Time to take 1/3 off and trail the stop down to your entry. Easy, and very low risk trade it was - double top with open gaps below. Thank you, Oracle of Omaha.

3. October US Retail sales did not disappoint. How could they? I do my usual weekend driving around my local malls and shopping centers. Past weekend I saw a lot of traffic everywhere. Granted, the seasonal strength is expected. But still, BIG, TJX, ROST, BBBY, KSS, DDS, DSW, PLCE, DG, DLTR, WMT, TGT, and GME were the ones I visited, which were all at full capacity. Amazing? Not really, I say. I attribute this strength to a few unorthodox reasons:

a) More women are employed than men at this time. Hence they are out there shopping more and men are at home watching their big screen TVs. No wonder I saw less traffic at BBY, HGG, and RSH. There was also a big screen "mom-and-pop" TV dealer, which was entirely empty - not a customer. Bummer!
b) Speaking of homes, less folks are paying their mortgages lately. Banks are not foreclosing on all of them, just can't keep up. So disposable cash ends up in the retail store. Simple and very wrong, but it's true. (I am going to get some angry comments now :))

Even with all of this bullish data, RLX is trying its hardest not to double top. There is an open gap 5.5% below @ 512. My view is if price does not take out Oct 24 high, we may see that gap filled soon. In order for that to happen, price would have to slice through 50 and 200 dsma on the way there. Final fakeout of 2011??
Should this happen, SPX will follow RLX down, without a doubt in my mind.

Update Nov 15 @ 11:20 pm
EUR/USD - too far too fast? It is @ 1.3460 as I type. At this session's low, we have fallen 374 pips from Monday's high. I am very satisfied with this trade. I am now trailing my stop down to just above the hourly 8 ema. Do not want to give any of this significant profit back at all :)
Higher levels for yet another short may present themselves.

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