Saturday, June 27, 2009

I said in my last post that I thought the bond market has a ways to run and as you can see it is doing so. Pullbacks are a buy in this market now likely through October. I had stated that we needed a higher low to confirm the trend change and as you can see we have gotten that now, so the trend is up, buy the dips. Do not get tied up in this bullshit from the gold bugs about how interest rates have to sky rocket based on all the money we are printing, blah , blah, blah. I would bet I make more money on one good trade than these clowns do in a year. Although they do charge a 30% commission, so I guess they are not that dumb. They can snooker the public better than most people.

Regardless of any fundamental analysis we might do the price action needs to confirm that or it is all bunk. The trend is up now so until it breaks back down, buy the dips and tune out the noise.

Also most currencies look like they are topping here which means the dollar is likely to have an upleg here which would be consistent with the long term cycles.

Wednesday, June 17, 2009

After finishing my last post I scrolled and saw than in the first week of June I did mention that long setup in Bonds. Here is the trade I made just exited this morning. I do think that this market has a long ways to run on the upside. This trade was exited simply because it hit a profit target objective and was against the trend.

We still do not have a higher low or retest point yet which would confirm a trend change. All we have so far is a sharp counter-trend move. When you trade aggressively against the trend like this you need to take profits sooner to stay alive. I am looking for a dip now that forms a higher low than the one on this chart, and will look for a buy spot if that happens.
I mentioned in my last post that a minor sell signal showed up for the SP 500 and was worth taking. Displayed over to the left is the result of that trade. I used a smidge of discretion exiting as it technically fell 1 point shy of where my limit order to take profits was, then started to bounce. No time to be greedy when something like that happens, so I just quickly went to the market to exit. It may not look like much on that chart, but that trade made quite a bit of money.

However, the bigger portion of the last post was on the dollar and it's potential long setup. That was also triggerred and the dollar has moved up somewhat, but not as quickly as I thought it would with the stock drop that occurred. There is some international jaw boning about world reserve currency etc.. Maybe that is why the dollar which appeared to be going gangbusters, has stalled. I have no idea, I do not trade on that kind of nonsense anyway. However, it does appear that we have a major top at hand in many commodity markets, probably for the rest of the year. As a result, I expect the dollar to continue to move up overall.

I heard an intersting comment about all the money the government is printing now and how inflationary it is. The comment basically said it is the velocity of the money that causes inflation, not just the supply of it. If it is being horded, it will not be inflationary. I think in general that is what is happening and why we are still in a deflationary environment that should continue for awhile.

I have also been bullish on bonds and made a nice longside trade there that I just exited today. I am not sure if I ever posted anything on bonds here or not, but traded some emails with some readers of this telling them I was bullish. I continue to be and will be hoping for a pullback to enter on the long side again. Also hoping to sell a rally in stocks if we are lucky enough to get it, this could waterfall here.

Monday, June 08, 2009

Well right on cue, a minor sell signal showed up for stocks, and we got a bounce here in the Dollar. I had stated previously that there was not a sell signal in sight for stocks, then all of the sudden it showed up quickly. Is this a really strong sell signal ? No. However, we are in an area where it is worth taking.

This bounce in the dollar is a good enough bounce, when tied into the larger picture cycles and major support, to signal a buy now here if we move back down as indicated by the line on the chart. All this means is that we need to form a higher short term low now, then we can buy a break out above it.

Will it happen? you never know. If for some reason we get a sharp stock decline this could just shoot right up out of here without a pause, but odds favor somewhat of a retest of the low, which will be our buying spot. If the cycle is ready to kick in again, this market could really move up quickly from here. If these lows do not hold, you can probably kiss the dollar goodbye for awhile. This makes it worth a shot on the long side due to the possible big move that could happen, good risk/reward ratio.

Friday, June 05, 2009

Here we have Bonds, a market that is setup to make a low. We have the seasonal low time period at hand, commercial buying, and very negative sentiment.

This does not mean just run out and go long this market, but what it does tell us is that we need to be looking for signs of a trend change to get long here. Seasonals are simply a guideline for us to look for something, they are far from a holy grail for trading. However, this is one of the most consistent seasonal patterns that exists in the futures markets.

There is no question that there is more government manipulation of markets going on now than what we have seen in the past, but there is always this type of thing going on somewhere. One thing we have certainly had proven to us without a shadow of a doubt, is in alot of industries the last honest man has left town quite some time ago. We cannot believe virtually anything that comes out of a CEO or Senators mouth nowadays. Just accept this, it is what it is. This should not preclude us from making money trading.

Monday, June 01, 2009

Here is the battered US Dollar Index. This is a market that I have been wrong about. I have mentioned the long term bullish cycle that kicked in last year and seemed to support price right on almost the exact day it should have to be valid. After that prices did rise nicely for quite awhile. However, we have gotten into quite a steep downtrend here. The commercials have been buying, but not an a super aggressive rate, and not enough to support the price yet.

We are now in a zone where if the long term up cycle is going to be valid, the price needs to be supported somewhere in the area of where we are right now. Since alot of the dollar strength has come from stock market weakness and a flight to quality situation, it is doubtful that this market will find support unless we have a stock market decline.

I have stated in here that we are due for a stock decline, and I still feel that way, however, there are no immediate sell signals apparent. So, until that changes, I do not expect much to change here. There are alot of people who focus on economics who say this move is caused by all of the deficit spending, the fallacy with that is that none of it has been done yet, it has just been approved. Be that as it may, you cannot trade based on large macro-economic views due to how inefficiently those views translate into daily market bias. Even when you are right, timing a view of the next several years into daily activity is impossible.