Trading Excellence

Financial Reform


Ever get dismayed by mounting misunderstanding between economics, finance and politics, I sometimes do...

Heard someone say, yesterday, that Hank Paulson's plan for reform doesn't address the main concerns with housing markets' issues.
The plan entails the creation of a commission (from The Economist) that would overlook the bundling of various types of debt into a pack more easily sellable... this is a blow right at the "epicenter" of this financial crisis. Goverment oversight would certainly help taking away, from mainstream, all those packs that contain things like NINJA (No income no job and assets) loans that were sold with high ratings, when in fact they accounted for C-Z ratings...all it was needed was a very natural correction in house prices to see the whole financial system "down on its knees". The State will focus on eliminating the bundles rated C-Z from the markets and S&P, Moody's and the like would take care of distinguishing the A's and B's. Seems very appealing to me...
After all it wasn't a housing crisis, but more a mortgage innovation propeled crisis...a "Demon of Our Own Design", that once understood and dealt with will seem more like benign innovation for better risk distribution and management.
 
April 3 (Bloomberg) -- Billionaire George Soros called the current financial crisis the worst since the Great Depression and said markets will fall more this year after a brief rebound.

``We had a good bottom,'' Soros said yesterday in an interview in New York, referring to the rally in stocks and the dollar after JPMorgan Chase & Co. agreed to buy Bear Stearns Cos. on March 17. ``This will probably not prove to be the final bottom,'' he said, adding the rebound may last six weeks to three months as the U.S. moves closer to a recession.
 
Quote from Galactisol:

Trade on 1st of April

U/CAD

Entered at 1.0255 (unable to surpass upper bollinger weekly band resistance)
Stop: 1.0355
TP: .9755 (lower bollinger band, weekly charts)


Purely technical this trade, as oil prices were coming in bellow 100.
More...

Very nice swing trade so far, almost like a position trade! Basically that is what I'm working toward doing(in case it wasn't clear enough yet) but often end up daytrading. U/CAD has just hit 0024 which seems like a temporary bounce up before further drop.
 
U/CAD


I have the same problem! Always try to go for intraday trades when I'm away from my account 4 and 5 1/2 hrs, each day. My trading "adversary" within me!
I'm still thinking of exiting before NFP.


S&P

I have a short position on S&P but only going for the bottom of a narrow ranging to come I think, as the trending cycle is almost over for now, since I take note of Soros' (I too think until the end of the year we'll have plenty of unpleasant news and a hard year ahead for earnings) opinion, just waiting for the next catalyst.


NFP

Anyway today's a big day, we have NFP but the movement is always too crazy and unless it's full-time, my skills are not good enough to predict what will happen (as I have access to my account during reporting time).
 
NFP - 80, expected at -50 according to one source. The whipsaw effect happend.

The spike up on EUR/USD helped complete an Elliot set nicely from 5650, could extend higher into larger pattern though so a buy below 5700 might have been good... missed it while multi-tasking, now at 5714.
 
U/CAD (short)


It's going ok to the short side, though not very convinced on oil prices endurance to give a hand. Besides, FED minutes should send a bullish signal for both USD and Stocks, since FED officials have been saying they believe that monetary policy undertaken lately should be (almost) enough to support markets up to the point of averting a recession.


U/JPY (short)

I think the upside here will be short lived because even FED minutes might influence significantly for a couple of days but in the end S&P is approaching triple resistance point between the 1390-1400 range, plus 100 day SMA and the upper bollinger band, 100 week SMA. Also, the probability of any report or news coming on the bear side is significant.
In purely "economy V economy" sense it also favors the short side, some of it may have been priced, but I find it hard to understand if it's carry money going back to origin or pricing in of economic elements.


Eur/Aud

Short entry: 1.700 (strong probability of pattern repitition of regression to the mean, 15-25 week SMA)
TP: 1.63 (using both the 20-week SMA and Parabolic SAR as potential TP points, though furthered short-side not discarded, since it is not an appealing candidate for carry and in economic-fundamental perspective it is the Aud to be favored (mostly due to grains and to a lesser extent other commodities).
It should be interesting to see in the future which currency gets the first rate cut.
Stop: 1.72-1.73 (is the upper weekly bollinger band)
RRR: 2-3 (these weekly trades are much more volatile and event influenced prone, so rarely expect them to unfold as foreseen)
 
Just sold EUR/CHF at 5952 as it should retract soon from its upward move in a downward W4 of 5 wave set up on a certain scale. Target is 5905ish.
 
USD/CAD may be done an ABC up from last weeks bottom and could head down to double bottom or better.Would have taken a safe sell at 1.0125-30 if I had been at computer and now as the pair seems like it may double top there I may sell with target .0025ish
 
EUR/CHF dropped 20+ pips so part postiion out and stop to 0 on remainder. It should go to 5925 at least however the remainder willl be left to 5905 or sacrificed at 0 stop.

Next entry will be sought for in another pair.
 
U/CAD (Short)

I think most of us have no idea where to lead this pair. By the end of today, depending on day's action I might take half out just to keep some 100 ish pip profit, to safeguard against possible runs against the position.
Though there is still some margin as the pair is approaching range-bound trading on weekly charts.


Carry Trade

(U/JPY; Eur/CHF)

Carry trade is here to stay! I'm just trying to figure effective approaches to understand where this money is actually going, what are the dynamics that might make one pair more popular than the other, where is the turning point...
In the daily charts I see strong correlation with stocks, and where looming closer to the momment where uncertainty turns into certainty, if S&P can't break 100 day SMA (and all the other resistance points I've mentioned yesterday we might have a nice short side play insight if it breaks it will a matter of when it will encounter significant resistance later on.
Technicals favor a bear slide and fundamentals don't bode well for stocks either. Unemployment prospects are not good (though still historically low, the figures are worsening at an alarming pace). The FED has tried almost everything. Earnings are not providing reasons for bullish sentiment and PE's are not really at bargain levels (specially taking growth prospects under consideration). Any disappointment could, without much effort, awake the bears.
We've got the first bottom in the S&P, now my bets are on the next slide and not in a recovery so soon. Still timing will be key because these bear movements in stocks happen at breathtaking pace.


Eur/Aud (short)


I'm playing this pair based on a weekly pattern and this usually takes time to develop. Remaining confident on this one due to very strong support (1.5550) resistance (1.7300), during the past 2.5 years. And in my view it won't change until we have rate cuts (entailing further softening) from any of these central banks.
 
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