RANDOM PRE HOLIDAY THOUGHTS
We are now winding down the year with the markets typically quiet for the balance of the year. However, at times a sharp move happens so I am still staying on top of things. I do not currently have any trades on, this month has been a very good one for me, so I will not force anything. If a fish wants to jump right into my boat I will oblige, but will not be doing much casting.
Here is a trade I was recently in that got stopped out today for a very small gain, basically a scratch, Lean Hogs. You can see where I have labeled the break below the trend line and quick reversal TRAP. This is a common pattern that we often see in trending markets. The price breaks enough just to get all the suckers short, then they reverse it back in the direction of the main trend quickly. When I saw yesterday that after one close under that trendline, we had a reversal bar right back up, I tightened my stop just in case it was one of these traps, and sure enough it was. Now the question becomes, what if we break back down again quickly? There is an awful lot of divergence in the momentum oscillators and a ton of commerical selling going on here, so I am still on the lookout for another entry here. This was just basically money management today. I like to move stops to breakeven once I have X amount of gain on a trade. If they come back and stop me out for a scratch, so be it. The good trades just typically go right away like the Bean Oil and metals trades I posted in here. When they don't I am content to scratch them and look for the next opportunity.
Let's take another peek at the Dollar Index.
As I have mentioned, I am short term bearish here in the Dollar and long term bullish. I would love to see a sell signal show up for a quickie down toward the lows. We do have some divergence beginning to show up here. It is not enough to take action on at this point, but it may be soon. We have the one accumulation oscillator just racing ahead ( the green line ) and one kind of lagging, the purple line. We are into heavy weekly resistance and commercials are selling this up move so far, so it is setup very well for a decline, we just need a pattern for entry.