Monthly Archives: August 2013

More Downside?

I wasn’t completely blindsided by this pullback, but the head-fake after bouncing off the 50% fib scared me off my short trades. That’s the way it goes. What could have been a beautiful setup falls into the category of live and learn.

Here’s part of the bearish argument; here’s atleast one reason not to jump back in long, yet.

  1. Rising Historical Volatility – the last 3 times we passed this HV level there was more downside.
  2. Testing the 50% Fib, again
  3. The upward channel works until 1600.
  4. That 1600 falls at the 23.6% fib

S&P 500 Futures ChartI’m expecting some churn here, we’ll see.

Good Trading.

 

Euro-Dollar, Dollar-Yen Curiosity

I watch this EUR.USD – USD.JPY curve, on a weekly chart, just because…  The trend is consistent usually, the Euro rises the Yen rises (I’ve inverted the USD.JPY to see the effect against the Euro), back and forth. I’ve yet to seriously trade this but still watch the curve, looking for something ‘abnormal’. This morning I notice a divergence. Here’s a few examples from early August of how the 2 pairs normally trend.

EURUSDJPY ChartAnd another:

EURUSDJPY Chart 2Then today, things look a little different.

EURUSDJPY Chart 3I’m looking today for a logical explanation, if you have any ideas drop me an email.

That spike in US Treasury yields?

Jeff

The Working Lines

Wanted to share a few of the ‘lines’ which have been working for me this week. They represent my entry or exit points along the chop.

S&P Futures ChartSurprisingly only the 50% and 76.4% Fib lines correspond to my trade lines. I would have expected otherwise.

The other surprise for me is the VIX.

VIX ChartHere the VIX is just hanging out like there’s very little risk and judging from all August lazy trading we see, why not? Though I’m struggling to ignore a long list of powder kegs, and Hindenburgs.

Europe and specifically the CAC40 is another strange one. While the US is churning around waiting for Ben or Taper or who knows what, the CAC40 is screaming to new highs. No European risk in sight…

CAC40 Chart

Good Trading. Watch those lines above, I think they’re good if you like trading ranges.

 

In the Absence of Insight

Claiming to be a trader is like claiming to be an artist; you might as well claim to be an astronaut.

The difference is, that unless you’ve been in space it’s nearly impossible to support that 3rd claim. As for being a trader well there are all kinds of traders, even my grandmother might stake that claim. She’s also an artist…

Knowing that the markets are a rigged game (for retail traders), is like knowing as an artist that the gallery scene is a rigged game. If you get in, you’re good, if not well… The expectation that there will be successful disruptive outsiders makes for a romantic story. Think Banksy.

When I see that JP Morgan had ZERO trading losses during the first quarter and then ZERO trading losses during the first half, it’s time to reflect on why we play this game. I’m sure the story is more complicated, maybe only partially true, but still, JP, if I could take this moment…

Day 6/365