CUP A JOE?
The above chart is that of Coffee and a long trade I am in and I think a bunch of you readers are also in. Sometimes keeping it very simple is best. If you just look at a basic trend line here, and a break of it at a time when a seasonal low is due to be made, you get a reasonable probability trade. Of course this could roll over and take us out, that we never know in advance. The longer term trend is still clearly down here. One thing that seems to have changed at least for the time being is that highs and lows seem to be made on a dime now without much screwing around. If we wait for basing or right shoulders so to speak, many moves take off without us. The only remedy that I can see to this is that you have to be aggressive in the direction you think moves are going to go. At times it can make you feel like a fool but remember that this is a numbers game. You have to take the trades that meet your criteria and sometimes you just lose, get over it.
The biggest challenge for me personally is always how to be aggressive but at the same time not careless. I have yet to find that zone completely, but I keep trying. We do have reason to suspect that Coffee might rise here, so time to try and trail this with a stop and see what happens. The next chart is that of Natural Gas. I had mentioned recently I was looking for a decline, then a buy. We are in the midst of the decline now, and we are heading into a time zone here in a couple of weeks where the seasonal and cycles favor a rally.
The one thing to keep in mind here is that overall this market is in a huge down trend on a larger time frame basis, so it would not be a surprise to see it continue downward. My view on this is that I am looking for my shorter term techniques to give me a buy signal in the next couple of weeks.
The next chart is that of the VXX. I had mentioned as we were dropping like a stone recently, that a sell the VIX trade might be setting up. It never did by the rules I use even though we have had a bounce in index prices, this has not declined much. As oversold as we got, we did not get oversold enough for my entry to trigger in this, so I suspect on the next leg down we might get there. I will be watching this one closely once the next selling wave hits for a reversion type of move once panic sets in. For now it is no trade and on the radar.
I still expect we are going to drift upward here in the artists formerly known as the Bernanke's ( the stock indexes for new readers ), for a couple of weeks, then........clank! Remember that I have said I thought this bounce was going to be a bit messy and make the timing of the next sell tricky, that seems to be playing out right now.
Good trading to everyone