Bonanza!
FX & HVT: A Nice Combination
For several months now I have been discussing how
I have cut back on the amount of time I dedicate each day to
HVT. Lower market volatility has a lot to do
with it, as well as the simple equation, “Where is my time best spent?” There
are occasionally some good trades in the afternoon session, but it is more the
exception, than the rule. I trade assertively during the first 90-minutes, then
take a step back.
The remainder of my day is spent keeping an eye
on the FX markets.
As you are probably aware, I do not apply “pure”
HVT strategy to FX, trading FX off of anything lower than a 60-minute charts
seems a bit challenging. I have found FX to be suited far better to longer time
frames.
Yesterday was one of the those days, where HVT
and FX were good simultaneously. You know from yesterday’s column that the FX
markets had been a bit range-bound and erratic of late; well yesterday that
changed in a big way. Myself and the subscribers of my
FX Service had been short the Euro
(EUR) since Monday morning. While the trade was working (short from 1.2444), it
was by no means getting anyone excited. If the EUR
traded as low as 1.2350, I was going to cover half. This area was critical
long-term support. I did get that chance, and what happened after was truly
stunning, the EUR and all other currencies
paired against the dollar got hammered. Needless to say, the
EUR trade turned out to be a bonanza, as of
last night we were still riding the last half (1.2186).
Euphoria aside, if you were able to keep your
wits watching the Dollar catapult to new 52-week highs, a fantastic short sale
was present in the gold stocks, for me, that was
Newmont (NEM).
The afternoon session offered a few solid HVT
set-ups, primarily in the Telecom Sector, and we traded stocks like
Verizon (VZ) and SBC
Communications (SBC). There was also a decent trade in
Genentech (DNA). Go back and look at the last
90-minutes of trading on these stocks on a 1-minute chart and notice the classic
pull-back HVT long entries.
So, after yesterday’s “something for everyone”
session, will today be a bit quieter? I really don’t know. Many currencies are
resting on support levels (50 and 200 day EMAs) so I suspect more turbulence in
FX. With regard to stocks, it is wait and see. The market remains too fickle,
you simply cannot force trades. Yesterday was a prime example — the morning
offered little outside the NEM trade, yet
the afternoon had opportunities.
As always, feel free to send me your comments and
questions.