Thoughts on USD/CAD?
The ACD Method
- Thread starter sbrowne126
- Start date
Thoughts on USD/CAD?
Nothing to do there. It's coming up close to the monthly A up at 1.0358. It spent the entire QTR below the QTR A down which it has now rallied back to the A down level there. It failed earlier in the year at the Yearly A up and appears range bound. It confirmed a monthly A down last month with some nice follow through. I would be inclined to sell it if it failed at the monthly again.
I'm leaning bullish on the week. All the risk assets are at or near the bottom end of the range and it's a holiday shortened week. This has historically been one of the most bullish week's of the year. Honestly man I just don't see the fear in the currency markets. It's not there. My prediction is we get failed A downs tomorrow across the risk asset spectrum that marks the swing low for the week.
Watch the currencies!!!!
Look for commodities to bottom this week as well.
I would love to see VIX get back to 40. XIV knows I'm watching her.
Monthly A down in the ES is 1165. My guess is the weekly A down will be somewhere between 1165 and 1175. One big level to key off of.
Going forward, I want to spend more time going over spread markets. Using ACD to locate and execute spread trades with solid edge. Nominal price alone has always been a terrible way to evaluate a given market. Everything must be evaluated relative to something else.
I'm going to give a simple example here. Being long the SPY against a short XLF, the financial ETF. While many are trying to top pick or bottom pick the market, the irony here is that both sides can put on this spread and express two completely different points of view while making the same money. There is two ways to look at this spread. One could say he is expressing his view that the market is going higher led by the large cap stocks. And she can be expressing her view that the market is going lower led by financials. Both have the same trade on, both sitting at or near the high of the year. This is how you find edge. Not by getting short SPY because you think the market is going to zero or getting long SPY because it's a new bull market.
I'm going to give a simple example here. Being long the SPY against a short XLF, the financial ETF. While many are trying to top pick or bottom pick the market, the irony here is that both sides can put on this spread and express two completely different points of view while making the same money. There is two ways to look at this spread. One could say he is expressing his view that the market is going higher led by the large cap stocks. And she can be expressing her view that the market is going lower led by financials. Both have the same trade on, both sitting at or near the high of the year. This is how you find edge. Not by getting short SPY because you think the market is going to zero or getting long SPY because it's a new bull market.
Quote from Shanb:
Mav you looking to sell some vol?! I guess everyone has a little bit of fader in them
No, not in isolation. As part of a spread.
Ok nice...now we are getting to some good stuff! Just to clarify you are not looking for strict mean reversion here...more of the a trend trade of the spread?
So how would you address the position sizing in this scenario. Equal dollar weight, or a vol based measure? Exits based off the price action at the A levels of the individual components or wait for the spread to get to widen to some level?