Sunday, September 4, 2011
EUR/USD update
1.41 is almost here. A lot of weight on euro's shoulders due to econodata, ECB, and German court ruling this week. Trailing the stops down is a must though, any positives can set of a vicious short-covering rally. Next support after 1.41 is at 1.4050 and then 1.40 below that. I am in a bear camp, but one has to be less bearish at 1.41 and 1.40 for sure. Scale your shorts out, imho.
Market Thoughts for week of Sep 5
Buckle up and hold on to your seats, next holiday-shortened week will be a wild one. From central bank meetings, to econodata, to European votes, to president's speech, it will be loaded with enough information for market to take the cue from for the rest of September. Next week market may even decide where it goes the rest of the year.
We begin with hurry up and wait on Monday - Labor Day. Exchanges in US and Canada will be closed. US Stock Index Futures trade until 11:30 am edt, and reopen at 6 pm. Enjoy extra day off. Believe me, you will need that rest. No significant developments, except Eurozone econodata: retail sales, Svc PMI, and investor confidence. Can't be anything but disappointment there.
On Tuesday adults come back from summer vacation. This is the day we start getting big money positioning for the rest of the year. SPX is down 6.6% YTD. Funds which underperformed will be looking to gain their lead on a possible rally into the end of the year. I do not want to be too bearish due to this fact (on SPX technicals later in the post).
The day's fun literally begins 30 minutes into it, when RBA decides on rates. I expect nothing, and language can't be anything but dovish. Australia is not immune to world economic mess. Following that is Eurozone revised GDP, recession is imminent there I bet. Shortly after, we will see how Germany's factory orders are faring, I say they cratered. In the morning we get US Svc ISM, better stay above 50.
Wednesday's fun begins the same way. Right after midnight BOJ decides on rates, or lack thereof :) Watch that meeting closely for major Yen announcement. Wait a little before going to sleep, we may see some fireworks. New prime min, new fin min, new beginning number umpteen. Lack of political continuity in that country is mind boggling. BOJ may just become the govt for a while.
Day continues in Germany with industrial production. Second negative number in a row will send DAX to its knees, better be above 0%. More important event in that country later in the day will be the decision on legality of EFSF by constitutional court of Germany. Better be Ja with no major restrictions, or world stock markets are going to hell for a while. Canada picks up in the morning with BOC rate decision. BOC holds, and holds, and waits for US to recover. It isn't coming, eh... Fun continues with Beige Book in the afternoon. I am going to go out on the limb, and predict at least half of US regions contracting. With nailing a negative NFP (0 is close enough), I may be on a hot streak. Fedspeak of the day comes courtesy of Mr. Evans. The gentleman's speech will begin with the words "I told you so!"
Thursday is the most important day of next week (if German court does not steal the spot on Wed). ECB rate decision and Trichet presser are starting the day. I am looking for definite end to the rate hikes, and perhaps a hint of a cut, if not an outright cut. Trichet will sound apologetic, accommodating, and less confused, I bet. What is there to be confused about now? Recession, sir, recession. US claims are out then as well. The President's speech comes way after US cash market close, but futures will trade at that time. Shorts may cover just in case. The day concludes in Asia - Chinese inflation and production data out then. Their CPI is extremely important for decision on further tightening by PBOC.
On Friday I think we are so exhausted that we may just meander. Some econodata out of Europe, Canada, and US, but nothing earth-shattering.
This brings me to SPX technicals. I am a bear, have been for a while, but do not want to be a hunter-became-hunted. It is important to note that should SPX stay above 1100 longer and higher, it is a shorty's nightmare to continue to hold the short. So many will decide to cover, and longs will sniff the rally fast, they will pile on sending SPX to 1250. At that point all those under water for the year will sell, and so we have a range in place perhaps - between 1200 and 1250 to continue into Q3 earnings. Support levels on the downside are: 1170, 1160, 1150, 1120, 1101. Resistance levels on the upside are: 1190, 1200, 1208, 1220, 1230. We have a trendline to hold about 20 points below here, should 1170 fail. That t/l from 1101 low, coming in around 1150 - 60 currently, could just become a base for yet another short-term leg up into 1250. Like I said, I am a long-term bear, but have become a short-term bull. My outlook is that after the year-end choppy hiatus, we are back where we started the year - at 1250ish, but in January we start the retest and eventually a break of lows below 1100. I am so sorry to sound so bearish, but the beginning of 2012 is not going to be good at all. We may join Europe and find out that we are in recession then. But let's just get through the next week first :)
We begin with hurry up and wait on Monday - Labor Day. Exchanges in US and Canada will be closed. US Stock Index Futures trade until 11:30 am edt, and reopen at 6 pm. Enjoy extra day off. Believe me, you will need that rest. No significant developments, except Eurozone econodata: retail sales, Svc PMI, and investor confidence. Can't be anything but disappointment there.
On Tuesday adults come back from summer vacation. This is the day we start getting big money positioning for the rest of the year. SPX is down 6.6% YTD. Funds which underperformed will be looking to gain their lead on a possible rally into the end of the year. I do not want to be too bearish due to this fact (on SPX technicals later in the post).
The day's fun literally begins 30 minutes into it, when RBA decides on rates. I expect nothing, and language can't be anything but dovish. Australia is not immune to world economic mess. Following that is Eurozone revised GDP, recession is imminent there I bet. Shortly after, we will see how Germany's factory orders are faring, I say they cratered. In the morning we get US Svc ISM, better stay above 50.
Wednesday's fun begins the same way. Right after midnight BOJ decides on rates, or lack thereof :) Watch that meeting closely for major Yen announcement. Wait a little before going to sleep, we may see some fireworks. New prime min, new fin min, new beginning number umpteen. Lack of political continuity in that country is mind boggling. BOJ may just become the govt for a while.
Day continues in Germany with industrial production. Second negative number in a row will send DAX to its knees, better be above 0%. More important event in that country later in the day will be the decision on legality of EFSF by constitutional court of Germany. Better be Ja with no major restrictions, or world stock markets are going to hell for a while. Canada picks up in the morning with BOC rate decision. BOC holds, and holds, and waits for US to recover. It isn't coming, eh... Fun continues with Beige Book in the afternoon. I am going to go out on the limb, and predict at least half of US regions contracting. With nailing a negative NFP (0 is close enough), I may be on a hot streak. Fedspeak of the day comes courtesy of Mr. Evans. The gentleman's speech will begin with the words "I told you so!"
Thursday is the most important day of next week (if German court does not steal the spot on Wed). ECB rate decision and Trichet presser are starting the day. I am looking for definite end to the rate hikes, and perhaps a hint of a cut, if not an outright cut. Trichet will sound apologetic, accommodating, and less confused, I bet. What is there to be confused about now? Recession, sir, recession. US claims are out then as well. The President's speech comes way after US cash market close, but futures will trade at that time. Shorts may cover just in case. The day concludes in Asia - Chinese inflation and production data out then. Their CPI is extremely important for decision on further tightening by PBOC.
On Friday I think we are so exhausted that we may just meander. Some econodata out of Europe, Canada, and US, but nothing earth-shattering.
This brings me to SPX technicals. I am a bear, have been for a while, but do not want to be a hunter-became-hunted. It is important to note that should SPX stay above 1100 longer and higher, it is a shorty's nightmare to continue to hold the short. So many will decide to cover, and longs will sniff the rally fast, they will pile on sending SPX to 1250. At that point all those under water for the year will sell, and so we have a range in place perhaps - between 1200 and 1250 to continue into Q3 earnings. Support levels on the downside are: 1170, 1160, 1150, 1120, 1101. Resistance levels on the upside are: 1190, 1200, 1208, 1220, 1230. We have a trendline to hold about 20 points below here, should 1170 fail. That t/l from 1101 low, coming in around 1150 - 60 currently, could just become a base for yet another short-term leg up into 1250. Like I said, I am a long-term bear, but have become a short-term bull. My outlook is that after the year-end choppy hiatus, we are back where we started the year - at 1250ish, but in January we start the retest and eventually a break of lows below 1100. I am so sorry to sound so bearish, but the beginning of 2012 is not going to be good at all. We may join Europe and find out that we are in recession then. But let's just get through the next week first :)
Saturday, September 3, 2011
Learn how to read charts
To me nothing compares to weekend chart analysis. It is my favorite time. Yes, actually I enjoy the analysis more than trading. Surprised?
Art of charting is the best skill a trader can possess. Without being able to identify what a chart says, trader is not ready to battle. I have been able to study and perfect this skill in detail over the years, and quite frankly, the learning process never stops. I highly suggest that beginning traders concentrate all of their spare time to this most important aspect of this profession. Patience, perseverance, dedication, hard work ethic, and high attention level are important during this study time. If you have a full-time job, and have other activities during the night and weekend - it will take you a lot longer to learn. But once you acquire this powerful skill, nobody will be able to take it away from you!
Stay tuned to my thoughts for next week tomorrow...
Art of charting is the best skill a trader can possess. Without being able to identify what a chart says, trader is not ready to battle. I have been able to study and perfect this skill in detail over the years, and quite frankly, the learning process never stops. I highly suggest that beginning traders concentrate all of their spare time to this most important aspect of this profession. Patience, perseverance, dedication, hard work ethic, and high attention level are important during this study time. If you have a full-time job, and have other activities during the night and weekend - it will take you a lot longer to learn. But once you acquire this powerful skill, nobody will be able to take it away from you!
Stay tuned to my thoughts for next week tomorrow...
Friday, September 2, 2011
SPX - where to from here?
Regardless of what one's long-term view on SPX is, this 1170 - 75 level is holding so far, and is very important to the upswing structure. I think that should 1170 - 75 hold (on closing basis) we may make a new high for this short-term upswing structure somewhere around 1250. After that all bets on the long side are off, and perhaps we trade in 1200 - 1250 range really choppy until the Q3 earnings roll out.
So my action here, based on the above observation, is to close 1220 and 1230 shorts and to start initiating longs.
Why am I abandoning 1150 - 60 short target? Reward-to-risk ratio is just not so great to hold on to that trade here.
Good luck traders!
So my action here, based on the above observation, is to close 1220 and 1230 shorts and to start initiating longs.
Why am I abandoning 1150 - 60 short target? Reward-to-risk ratio is just not so great to hold on to that trade here.
Good luck traders!
Thursday, September 1, 2011
Europe going into recession without US?
Quite possible. This morning we got better-than-expected ISM. We also have gotten a generally flat to better econodata this whole week.
It is no surprise that all of European econodata was horrific today. Their austerity is really taking a major toll on the economy. We could just be lagging them by 3-6 months, but it looks like we are bumping along the bottom with no recession imminent. This fact may help the dollar against the euro. Ugly competition continues, I think EUR/USD is heading to 1.41 - 1.40 within a week.
It is no surprise that all of European econodata was horrific today. Their austerity is really taking a major toll on the economy. We could just be lagging them by 3-6 months, but it looks like we are bumping along the bottom with no recession imminent. This fact may help the dollar against the euro. Ugly competition continues, I think EUR/USD is heading to 1.41 - 1.40 within a week.
EUR/USD gets absoutely killed after ISM
It is no QE3 for now. Market's interpretation of the better-than-expected data over the last few days is boosting the dollar. I am a dollar bull, have been for the last month. I am definitely thinking that Fed is on hold. All this possible talk of QE3 will be diminished (if not already) by better data. Of course just as I say this, we may get a negative NFP tomorrow, and it will all reverse. This market is bipolar at best...
SPX stop hunt update
We did get ISM above 50 so we may still get that SPX stop hunt above 1230. Be ready...
DXY is FINALLY breaking out
It is the umpteenth time that I mention this, but DXY is breaking out. All of this is due to EUR/USD breaking down, of course, as other DXY components are asleep. But, and it is a big but, if equities decide to retest the lows of Aug, DXY will put in a strong month in September. How high it goes I do not know yet. It will all depend on Euro. I will update the progress of this rally here, but seriously think it just started.
President's Job Speech and $SPX
Well, does anyone still think that President's speech on jobs will matter as much as it did before it was pushed one day further? What the heck is this? Now we are going to have a fight over when President is going to address the congress? I wish they continued their vacation for another month. This does not look very promising on any agreement about anything serious in this congress. Market is worried now...
Quick "never mind" on my last night's SPX comment about a possible stop hunt today. While I continue to think we are heading to 1150 - 60 area from here, I thought we would get a classic stop hunt to 1235 today. European econodata and Obama/Boehner catfight cancelled that scenario. Unless ISM comes in very hot, we are just going to continue this 1230 short from yesterday unobstructed. And all this talk about NFP surprising is so wrong. August was the worst ever for stock market. You telling me someone felt like hiring?
Quick "never mind" on my last night's SPX comment about a possible stop hunt today. While I continue to think we are heading to 1150 - 60 area from here, I thought we would get a classic stop hunt to 1235 today. European econodata and Obama/Boehner catfight cancelled that scenario. Unless ISM comes in very hot, we are just going to continue this 1230 short from yesterday unobstructed. And all this talk about NFP surprising is so wrong. August was the worst ever for stock market. You telling me someone felt like hiring?
SPX stop hunt before reversal?
SPX futures and cash traders (especially those who shorted 1230 cash on recommendation here), I am tracking a scenario in which we may have a stop hunt above 1230 tomorrow before the reversal of the short-term uptrend. If we trade above 1230, I see a push against 1235 and possibly a top there for the near term. That 1235 rejection may start a move down to 1150 - 60 area.
Good luck!
Good luck!