UP AND RUNNING
I mentioned the Aussie yesterday as a possible short trade, but that I was not doing it because my account was not opened yet at the new place. It is open today, but I am just going to wait until Monday to start again. Had I been short the Aussie yesterday, I would have been stopped out for a scratch this morning. After that good sized break down, that quickly reversed, with the market still in a daily uptrend, I would have had my stop at break even or a bit better than that. The stock market is really oversold, and this correlates pretty highly with stock indexes. I would not want to be short on any strength there in this situation.
This is where you have to think about what you are doing at times, and kick the systems aside. You can see on the weekly above, we are in a good sell zone. We had a decent sell pattern on the daily, with a lower short term high and a break of a trend line. However, the market by it's price action told us it was not going down. This is more important. The markets are very highly correlated. You have to be careful about shorts, when they occur after the stock indexes have already gone down a good bit. The Aussie was the last guy to the party, so he would get a very short leash. Chances are very good that currencies will rally along when the indexes do, and the DX will decline. There is no sense just holding onto a trade that is swimming up stream, just to pat yourself on the back and say you followed your system.
I hope this makes sense, it is just an example of how you have to mix together sound judgement with mechanical methodology. If a car is coming right at you in your lane, and you can either swerve across a solid line to save yourself, or follow the rules and be run over, cross the line.
I had a very nice conversation with a guy from the NFA this morning. I am not going to dwell on this anymore, but I wanted to give his name and number in case anyone wants to talk to a real human being, who will talk to you and not read the play book. He is non committal of course, but at least he will talk to you. There isn't any more new news on this today that I am aware of. My gut feeling at this point is that we are looking at some time here before anything comes back to us. Apparently, statements are coming out now showing positions were liquidated as late as yesterday with some accounts. I am skeptical that this is correct, the accounting could be messed up here. In any event, everyone should be out at this point. I suspect, but am not sure and have no facts at all on this, that most trades were liquidated pretty fast and the statements are wrong.
Here is the contact information for the guy from the NFA I spoke with:
He might be hard to reach, and there is not any new information as of 6 am PST, but if you want to have that conversation with someone, he is a good choice. This is a mess and it is going to take time for them to figure all of this out unfortunately. Hopefully the balance sheet is real with PFG but I suspect it is not. This guy went pretty far in what he did, so there is no reason to believe he did not doctor other things as well. I suspect we will be going after the accounting firm in time here legally. There will also be people in line in front of us when it comes to things other than segregated funds even though there should not be. Also, there could be some claw back stuff that takes place like settling that one problem with our money and not customer money. This could take years and will likely not represent much to us by the time it is all said and done.
I don't have much else for today, I did not see any new trades to do, and the BOND Systems did not trigger anything either.
Have a nice weekend