One Change You Might Consider…
Today’s commentary
will be brief. It has been a chaotic day (Tuesday) and keeping it
short and to the point is sometimes the most effective anyways.
First off, gold stocks continued to
get beat up yesterday. As I had said on Monday, I still feel a few more days
are need before I can contemplate adding to my position. In the meantime, their
tradability has also waned. This may be attributed to the quadruple options
expiration or simply because we are nearing the end of the year and their are
many cross-currents as positioning take center stage. At any rate, the game
plan remains the same, if nothing perks up, do not trade, it is that simple.
Continue to watch gold (the metal) and the currencies, specifically the dollar
for clues on timing your entry and exit points in the underlying stocks.
A theme in my column recently has
been adaptation. I would like to think that in terms of my HVT as of late,
there has only been one change in what I look at to time entries and exits.
Rather than focusing on the S&Ps (whose price action is pathetic) to determine
entry and exit points, I am simply taking that same concept / approach and
applying it to different sectors and stocks. No magic, no radical change. If
you cannot allow yourself to make these changes, your task as a trader will be
far more challenging.
So outside of the HVT set-ups on the
opening, I continue to stalk and execute FX trades. Yesterday, Yra Harris
provided his first installment on the FX market. I suspect that he will be
sharing some of his many years of experience in relation to FX, it should be a
great column. In addition, TM is now offering an introductory FX Course, which
will bring you up to speed on all the fundamentals of the FX market. My aim is
to build upon these two new features by providing actual trading ideas (swing
and position) in the spot FX market both here in the column and in an upcoming
subscription service targeting FX. For now, let me share this one current
position I have open, as well as give you a heads up on another trade I am
seeking to enter.
Short $/Yen (JPY)
I entered this trade yesterday
afternoon at 107.39. The “big picture” here is the daily chart (technically
speaking) as well as the fundamental backdrop that favors the Yen vs. The
Dollar. The dollar is simply in a jam, there are many structural issues that
need to be sorted out. What I did in this case however, was put on a position
based on the hourly, the daily as the back-drop. My main concern on this trade
is the ever persistent risk of BoJ intervention, so my stop is tight.
I used the same logic on Monday when
the $/Yen came right back to down to my entry point from Friday on the heels of
the Saddam news. Again, the hourly was weakening, I went short at 107.84, and
closed it at 107.60. A 24 pip gain, the pair rallied shortly thereafter. So,
hear we are again:
– The trend is down on the daily
chart
– The stochastic is rolling over on
both the 60-minute and daily
– The dollar index (DXC) continues
to weaken
I will keep you posted.
The only other trade on my radar
screen is this one:
Short EUR/AUD
I trust that these thoughts and
observations on the FX markets are helpful. Please feel free to send any
questions you may have.
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