Back form short break for the Week Preview!
Cable
Pretty erratic movement on this one, probably a reflex of better than expected readings over the past two weeks on US manufacturing activity (Trade of physical goods and exportable services) & the inception of a narrow range scenario on the E/U daily charts suggesting, since it came right after the last narrow range, that we could see more than just a slight correction on daily charts, specialy taking under consideration that both weekly and to an even greater extent, monthly charts portend an overbought scenario that could push prices lower when compared with previous occasions (historic correlation).
Closed a short position on about a 100 pip profit (though target was about 200 pips lower).
E/U (Long)
Entry: 1.5545
SL: daily price close bellow bollinger bands (but significantly below)
TP: this is a very short term play devised at getting some money from prices bouncing off of daily bollinger bands, plus a potential bullish slow stochastics break.
This type of system is very effective in terms of winners/losers ratio but very hard to handle in terms of RRR. Even so, I like this system it has yielded nicely during a recent small test on 5 pairs, but for only the past year and exclusively daily charts.
U/Chf (short)
Entry: 1.0150 (entered during my vacation)
SL: any daily close above the high of the past 3 sessions will probably make me stray away from this bet
TP: BATSL, my best alternative to a spectacular loss: stochastic may be on the brink of providing a bearish signal on daily charts and if it does so will try get out at marginal loss or even a small profit. If all this forecasting happens not to be true, still got BATSL to back it up.
Here is why shouldn't trade when we take some days off to... enjoy and have fun. entered this trade based on one chart (daily) and one idea about it, and just let it run for two days (without cheking it for once, up to yesterday!).
S&P / Carry Trade
First resistance milestone set at the start of last week has been crossed (100 day SMA). But my guessing is on price action around the second resistance lvl (100-Week SMA), also considering the 200-day SMA (third lvl of resistance for S&P), but more "enticed" by the former, up to Fed decision & statement and only then expect to see a break (depending on what we get and follow up reaction).
We might see some further rate cutting but there is not much room left. The statement will probably be more "tradable" than the decision itself:
1- Any stronger return of inflation fears to the statement (which is extremely likely since all inflation readings are coming in way off of expectations, around the Globe) can push the dollar up and shun many part-time currency traders or full-time stock traders, out of carry positions.
2- Some sound Fed insight into economy picking up predictions might lay the ground for the market's tone in the next month or even months.
3- The "dollar weakness" debacle. It could well be a statement that makes a difference on this issue since it's probably one of the most commented topics for pegged currency countries'/ strong currency countries' officials.
4- What about savings? Bernanke had (from my point of view) a strong and demanding speech where it was argued (rightly to me) that savings rates in the US are worryingly low. This will probably not yield anything in the short run, but could pave the way for more conscious and involved household role in the economy. Reserves (country) and savings (consumers) are buffers that would help any downturn or contingency. If both Government (Budget deficit and National debt) or consumers (savings and to a much lesser extent, assets), have no room left we would need fresh credit to revive the economy (and this won't trick most of us traders in the long-run, for sure (besides, with enough to counter recessions we could get longer and sounder bull markets; and frankly speaking it is much easier to make money on bull rides rather than bearish slides, regarding stocks and consequently significantly correlated carry trade pairs
)
Reports
Some nice reports for this week (in total contrast to last week). GDP, ISM and PCE from the States. Still some numbers coming out of EU on inflation and confidence indicators. GB is quite calm for this week with special focus on M4 report. Also got retail sales for Japan and Australia. Canada has inflation and GDP numbers looming our way.
For this week, since we're testing possible new price action on E/U & carrytrade (stocks) and with such a "flood" of fundamental reports, it semms to be faring for a week of news/events-driven markets.
Commodities
Even more an influencing fact for both stocks and currencies, since oil prices have broken the range from past weeks and other commodities remain strong.
Credit
Credit crunchs should take longer than asset price bubbles to correct. The reasoning is that prices can be corected in relatively short-time (most of the time), whereas credit crunches are mostly based on default risk, and that takes longer because we're talking about trust between parties involved in any deal, trust in future economic prospects and in the respective business... Just don't think it should be a swift stroll from "total distrust" to "reasonable trust".
Wishes for a week of opportunities!
