Key Technical Levels

Forex (FX)

What started off as a day where there seemed to
be the possibility of some “one way” bets turned out to be yet another day of
range-bound, waiting-for any-piece-of-news type trading day.

Sunday evening was where there seemed to be some
indication that the Dollar was going to resume its downward move from Friday. 
It did, in fact, drift off to lower levels throughout the Asian and European
session and broke through the 200-day EMA at 90.87.  At this point, it seemed
like the EUR and
GBP
would be tradeable, the narrow range had been broken.

The Dollar continued to sell-off as the US
markets opened, but was suddenly thrust higher on word that sarin gas had been
found in Iraq.  Within minutes the Dollar rallied and we were stopped out of the
long EUR/USD positions.  Back to the drawing board.  As of now (Tuesday 10:30 AM
PST) the Dollar is trading back above the 200 EMA and I am waiting for a
re-entry on the EUR/USD to the long-side.  There can be little doubt that the
market is in the midst of one of the most “touchy” periods I have ever traded. 
Cash continues to be king, although patience has rewarded me with a handful of
good trades over the past week.  Given the price action, I consider myself
grateful.

HVT

Monday’s lower opening offered a few decent
Fade the Gap (a.k.a. Rubber Band trades),
one in particular, Fannie Mae (FNM) offered
a quick 25 cent scalp before the S&P’s rolled over.  Remember that a stock
simply opening much lower or higher than the previous days close is not a signal
to “fade” the move.  It is critical that you allow for the 1- and 5-minute
charts to synch up just like any other HVT trade.  

So while the 1-minute
FNM
chart gives you the go ahead, by simply cross referencing the
5-minute chart you will notice that the trade is not fully set-up yet, as
defined by the stochastics.

Sure, even if you had entered the trade early it
would have worked out, however, HVT is not interested in dealing with
draw-downs, we are attempting to be “sharp-shooters” in an effort to minimize
bad trade.  From time to time this selectivity will cause us to miss trades, but
in the long run it keeps your performance far more consistent.

The market is still struggling with key technical
levels, let’s review a handful as we head into today’s session:

S&P 500 Futures:

1076 – 200-day and 200-week EMA

1099  – bear trend line from early May

1116 – 200-day EMA

1084 – Wave low from mid-March

As always, feel free to send me your comments and
questions.  Let’s let the market settle out here, do not force trades.

Dave