On The Chin

Here is a trade I put on yesterday in line with recent comments, that I am taking it on the Chin and likely to get stopped out on.

It is easy to just show all the good trades one makes but that hardly has credibility to me. I have losing trades also, and this is one of them. You can see where my stop is sitting just above where the price is as I type this. As you can see I only have 3 contracts on this one, a small position. I do have the trade in multiple accounts in the same size, so a very small percentage risk per account. Anyone who reads here knows I always preach risking 2% or less, this is far less.

One of the things we are seeing in this bull market is any news good or bad lifts the market. This is a sign of a very strong trend. There are so many ways to define trends, but you really don't need anything fancy in this case. Just look at how small this recent correction is, really just a sideways move. In the other indexes it is even less pronounced than this one. This is why I shorted this in lieu of the others, it has been relatively weaker.

With my stop just resting above, it may be stopped out already by the time many people even read this. I really don't care. This trade had my parameters for a valid setup so I took it, albeit it with small size which was a discretionary call. Yes you do have to think about what you are doing. It is going to take something very unusual to knock this trend off it's feet, so there is no sense in getting too excited about getting short at this point, hence small size here.

We are getting an across the board liftoff in commodities also and a corresponding dip in the dollar. Now that the dollar is lining up with stocks in general, it is interesting that today it is diverging back against it again. This lift off does give credence to the big inflation so many people are calling for. They could very well be right, I have no idea. I am generally uncomfortable being too enthusiastic about a view that 90% of the people alive share. There are just too few examples of any predictions that 90% of the people share that turn out to be correct for my taste. However, there is no sense of being a contrarian just for the sake of pissing people off. There has to be a technical reason to have a viewpoint on something. My technical studies do still show the Dollar in an uptrend.

As a result, I am still of the view that the Dollar pullback now is temporary and that we are right into a buy zone for it. If it happens to blow right through these levels going further to the downside, I will change my view. For now I think we have a buy the pullback situation in the dollar. This should mean that in general, these commodity moves should be running into some resistance very soon.

Below is another trade in the 10 Year Notes that is setup in my view

Certainly if you buy into the inflation argument, you should be looking to get short the bond market here. The only thing about this setup I do not like is how strong the purple line is, the POIV indicator. It is saying this market is strong underneath since at the recent low it's reading is far above where it was the last time price was down at the same level.