For those who read my blog regularly I am sure you figured out that I was likely to go long the Dollar based on my recent comments. The above chart shows that long entry and where the trailing stop is for today. I had also mentioned currencies were setup for sells. I did also short the Pound, but bailed out of it a bit early because I did not think the bar pattern was that great. Since I was already long the dollar, that was basically the same bet anyway, so I did not want too much riding on the same trade. I am also short Crude Oil which I will show below.
As I stated very clearly yesterday, I trade on technical patterns not on my opinions. I doubt many people were long this trade where I was, but there are some piling in now. Also, the world is short this market and long commodities, so some of this is short covering as well. Let's be honest, being long the dollar and short commodities in recent weeks would not exactly have been the recipe for longevity as a trader. This is exactly why I railed yesterday on not trading on one's opinions. I really have no opinion at all on the dollar and where it might likely go, I just don't care. Why in the world would I want to read a bunch of gibberish from armchair quarterbacks ( economists ) about their theories on where the economy is going? Has one single one of these guys ever made any money investing their money, or do they make it writing about what others should do? At least with me I put real money behind my ideas, and don't get paid by telling others what to do.
You can see on the chart there was alot of divergence in the timing indicator, and then we got a strong up bar in price. This was enough to take a swing on the long side for me. There are other things I look at as well that are not displayed, but this is the net reason I went long. A pattern based entry in a market that was setup for an up move, that simple. No arcane theories about QE, or Fiat currencies, etc, none of that crap. Maybe we just reverse back down and this does not work out, I don't care. I know if I take all these trades when they develop, in the end I will come out quite a bit ahead.
Obviously, for this trade to work, the stock market needs to decline some. We have seen recently one blatant move after another by the PPT to prevent any even 2 day decline, so we know they are lurking. They have micromanaged asset prices so closely recently, it makes me wonder if they are watching 5 minute charts! They are not going to like one bit this little decline that happened at the open, so we will see if they show up to try and reverse it. I expect they will, but at some point you would think they would at least let a healthy correction happen. We know from looking at institutional volume and how much it has declined during this recent run upward, that they are not the one's pushing this market up. You can be sure though that the PPT does not want any type of stock decline before the mid term elections are over, so don't anyone get too excited about the prospects for that here. I do think a down close in stocks today if they allow it, will setup a possible buy signal for tomorrow there. As to the DX trade, I will trail this trade with a stop and see what happens, no expectations, just rules about how to follow it and where to take profits if we get there.
I said above that I wold post the Crude chart. I have intermittent internet due to the rain here in San Diego, so I can't get connected to get a current snapshot of the Crude chart. You are not missing anything it is a marginal trade to say the least and with the PPT save that is going on as I type this, it is likely to be no good in the end anyway. They say death and taxes are the only guarantees in life, but I would add one to that list. If it rains, your satellite internet will not work, that is a guarantee!