JUST NOT SURE
Above is a chart of the EURO which is having a big up day so far today. I am not in this trade after pulling my hair out for an hour debating whether to go long or not. In the end, I passed because I want my trades to jump off the chart as obvious and I just felt I was forcing this one. Too bad, it has already gone far enough to guarantee at the very least a very small loss or breakeven, with plenty of upside potential. I felt my middle oscillator was giving me mixed signals on this, although there is a pattern that is a long entry that is there. The fact that this currency is one of the weaker ones of the bunch is the main reason I passed on this trade. There is another though in the next chart.
This is the SP 500 above and there a few things about this rally that are starting to bother me. ADX, the red line at the bottom is declining sharply on this rally, in most good trend moves it increases. Also, we are right into a good resistance point, and the main momentum oscillator is not in new high ground here. When I also add in the seasonal tendency, the blue line, this makes me very skeptical of how much further this will go. Since all markets relate to stocks for the most part now, I did factor in that if this were to stall here the EURO would likely decline. When I added that into the mix, it just became a No Go.
Was it a bad decision? It appears so. I might have overthought this one, but it was all driven by a mixed setup in my main indicators. Once I feel I am forcing something, I generally do not take the trade. It tends to work out over time even if it did not in this instance. I have repeatedly stated that the stock market is driving everything, and I think in time, and that could be a decade or more, it will come out what the PPT did here. This is no coincidence in my humble opinion the way this is all being orchestrated. However, there is not a single thing anyone can do about it, so just be aware of the relationships and act accordingly. It is not known by me or anyone else, whether this manipulation is really going to hurt or help in the long run. I fear it is just prolonging the bubble from inevitably bursting, but I do also admit if I were in a position to control things like this it would be hard to not do it, knowing voters would blow me out immediately if I did not, and also knowing that at the very least alot of short term pain would take place. The question of course is whether or not taking the medicine now would be better than taking it later.
What I am afraid of is that when this inflated bubble does burst, we will have no bullets left in the gun, and things might get shockingly ugly for a few years. I hope not and hope I am wrong. As you can see from the above, I am wrong my fair share, so I am not an expert in prognostication any more than anyone else is. So far the play is being acted out perfectly, all the actors deserve academy awards.
Here is the T Notes short I entered last week. You can see I exited during the night session last night taking profits. I thought I should show a chart with a profit since I spent the whole post talking about what a dumb ass I am. It is interesting that as I type this we are on new highs in stocks and Bonds and Notes. These markets typically have traded opposite intraday. Might this Bond rally be telling us stocks are running out of steam?
I am looking for the stock rally to stall here, so we will see if it does.