YES THE CAPTAIN WENT DOWN WITH THE SHIP
Once again the reality nature of this blog is proven, I do talk the talk and walk the walk. Of course when you do this you need to be prepared to be humiliated like this. This is why I constantly stress how honest and straight forward I am about how I approach things. This is not false hype, techniques that never lose etc.. This is real trading. As I had detailed, my analysis was telling me that the DX was ready to make a rebound and I was looking to get long this market. Monday I showed where I was going to go long if we traded there, and we did so. That order was filled on Tuesday. I had my stop at the 3 day low and that was picked off last night, so a loss. As is the case with most losing trades, this looks like a stupid trade and perhaps it was. Trading against the trends is never a high percentage thing to do. I did this more because I felt the risk to reward on the trade was very high if we got going on the upside.
In terms of trying to critique this trade, I probably should have waited for a few things to turn up first. It can be as simple as waiting for a moving average to flatten out which this has not. Then we can go to price structure to guide us. I would say that is the take away from this one. It is behind me now so be it, it won't be the last losing trade of the year, that is one guarantee I can make. We have to see now if this does consolidate or just craters. We are at a critical level for this market being back to where we were 2 years ago now.
I am sticking to my guns that I think we are due for a setback in the stock indexes even if that means a small one setting up a buy entry. Next is the Bernanke 100 previously known as the Nasdaq 100. It is lagging both the Bernanke 500 previously known as the S & P 500 and the Bernanke 2000 previously known as the Russell 2000. This market is technically still in a down trend.
The way this market is lagging I find interesting and it is not a dire development, it just tells me we are about to have a retracement. I know the FED wants about 70% of the days to close higher, that seems to be their mantra, but that still leaves a few days they will allow down closes for congestion periods. I think we are going to see that right now. This should setup a buying opp which should be done in the Bernanke 2000 which is by far the strongest index. Those inclined to short should short the Bernanke 100 which is the weakest.
The one other market I want to review today is the Swiss Franc. We have a bullish COT situation here and this has been probably the strongest currency overall for awhile now. However, on a daily chart it is in a middle position that could very well lead to a sell situation. You can see on the chart my indicator is working it's way down into the sell position. It is not there yet. We also have the moving average beginning to roll over here. I tend to like these rollovers in the 20 period moving average where the price comes up from underneath and kisses it. That might be developing here. Based on just highs and lows traders should be long from a short term perspective today when yesterday's high went, but it is not a trade I am in. This market just bears watching over the next few days.
It may or may not setup the way I like it for a short but it is on the watch list.
Good Trading to everyone, Captain Nemo Out!