Monday, May 6, 2013

Trading Week 06/05/13

Friday 10th (5 pm)
Both indices are now trading above their daily Ichimoku Cloud:


Stocks: Most Asian markets were up and Europe has opened higher too. US stocks are up in pre-market. So, we have a stocks bias towards 'risk on'!  

Some TS signals kicked in after the 3pm candle but they are 'risk off' type signals due to the cheer over good US data and the consequential rally with the USD:

E/U: just a faint signal BUT I'd be waiting for a close and hold below the 1.30 level:


A/U: I'd be waiting for a close and hold below the 1.00 level 


Kiwi: another new signal:

U/J: gave an earlier signal: 

Swissie: I missed this as I'm not watching it as closely now but this gave an earlier signal too:

Friday 10th (1 pm)
Still no other 4 hr signals.

Aussie markets: Our Aussie stock market has rallied today, along with many other Asian markets. I noted earlier in the week about the significance of the 5,200 level for our market. We are at 5,215 at the moment. A hold above the 5,200 level will be a very bullish signal. I'd be wanting to see the May monthly candle close above 5,200 first. Remember, our market is very undervalued. Great shopping here....better than shoes and handbags!
All Ordinaries: XAO

S&P ASX 200: XJO

So, we've got 'risk on' today with Aussie stocks. I wonder if the A/U will continue to trade 'risk off'?

EURX: the Euro index is STILl trading between the Cloud and the 108.5 level!

Friday 10th (10.45 am)
I find it quite interesting that, even after these big moves, I don't have any TS signals on my 4 hr charts except for the U/J! That might change after the 11 am candle closes BUT I have to race out to the airport now. I'll update when I get back. The U/J has given a BUY signal. No surprises there though!

Friday 10th (9 am)
Conundrum: A rallying USD usually is generally associated with 'risk off', rising fear and market concern, falling stocks, falling AUD, Euro and CAD etc. That is, the USD usually trades inversely to 'risk' and the S&P500.

The issue now, though, is that the USD is rallying due to reduced fear and improved market sentiment! This is because traders expect/suspect that there will be a reduction in US monetary easing sooner, rather than later. Thereby increasing the value of the USD. So, recently, the USD has been trading directly with stocks and 'risk' NOT inversely. 

I have discussed this issue over recent months at length in my weekend reviews and wondered whether we are heading into a period of a new paradigm. That is, a period of a direct relationship between the USD and 'risk'. Given the state of the Euro zone it would not be too hard to see how the USD, by comparison, could become the preferred 'risk' or 'growth' currency! Kind of a 'least worst' situation here! The problem I see with this though is that, at some point in time, an increasing USD will have to hurt both the US economy and stocks. Hmmmm.

So, there is no clear new, longer term trend just yet. Thus, the situation remains where better trading is to be found from the shorter term charts during the US session, as per last night.

Friday 10th (7.55 am)
Well....have a look where the USDX is heading to....back to test that 61.8% fib level of 82.59/82.60:

Friday 10th (7.50 am)
A walk helped ease the frustration from missed morning path...It is Autumn here but temps today expected to be 24 degrees C or 74 F! Hard to stay down for too long around here!

Friday 10th (6.20 am)
Some positive US jobs data has sent the USD soaring. This would most likely be due to thoughts of fading out US monetary easing:
USDX: rallied hard after the data and is trying to close up out of the Cloud:

EURX: still wedged between the Cloud and the 108.5 a nd it seems to be refusing to budge! 

Stocks didn't know what to do after recently hitting new highs so they chopped around: 

I mentioned last night that until this divergence ended it is still better to look for 30 min chart trades during the US session. Well, if you were able to do this, then you could have been happier to the tune of around 620 pips! 

E/U 100 pips

E/J: 150 pips 

A/U: 150 pips 

G/U 70 pips 

U/J: the star of the night @ 150 pips 

It is most frustrating for me to have an algorithm and a system that work but to struggle with time zones to apply them!

For the longer time frame trend trades: we are now back to having significant Index divergence with all index charts trading above their respective Clouds. Don't expect smooth sailing just yet.

Thursday 9th (7.30 pm)
Well, we're getting the choppiness I asked for!

A/U: I think the H&S has been voided now:

E/J: looking very interesting. Any re-newed bullish momentum might just take in the 130 level. That would be 'poetry in motion' for me!

As I've said many times, failure of the EURX to crack the 108.5 level might prove to be a tipping point though. I'm simply watching and waiting for any new Index alignment and for new TS signals. Until that time though, expect better trades off the 30 min charts during the US session.

Thursday 9th (6.40 pm)
EURX weekly: this chart show just how significant the 108.5 level is.

Stocks: I have made a brief update on my Stocks:May page.

Thursday 9th (6.30 pm)
What I want now is for some further choppiness to enable some TS signals to set up, especially on the E/U. 

Thursday 9th (6.10 pm)
USDX: this is the only index chart still embedded in the Cloud. I believe that a movement of this index down and out of the Cloud will trigger a 'risk on' rally with currencies.

Thursday 9th (5.20 pm)
EURX: struggling at the 108.5. It may prove to be too strong a resistance level.

Thursday 9th (11.30 am)
A/U: Positive AUD and CNY data just out

The picture seems to be building towards that of index alignment again. The current trend is pointing towards a 'risk on' alignment. This has not occurred yet BUT should this continue and evolve fully then, I believe, it will be 'hang on to your hat' stuff. Previous periods of this kind of alignment have resulted in lengthy, strong trends. The fact that we have been choppy for over 3 months now suggests to me that this trend would be even stronger. Not 'rocket science' here but still 'science': the more tightly coiled the coil then the more spring in the release. I believe the 108.5 level on the EURX holds the key:

Thursday 9th (8.50 am)
Kiwi: hooley dooley...much better data result sends the Kiwi flying!

AUD data out in e few hours.

Thursday 9th (8.30 am)
EURX 4hr: I mentioned the other day about the safety of, not 'paint by numbers' but, 'trade by colours'. The EURX needs to break out of the pink! Upwards breakout is the closest one but not guaranteed!

There is important NZD and AUD employment data out today. Soon, in fact!

Thursday 9th (7.30 am)
Many of the stocks I've been stalking and posting about here, and here, are doing really well.

Check them out at Yahoo Finance: AA, CLF, AMD, GES, JOY, AVP, X, AAPL, INTC, BTU, NTAP, ACI, NUE and GD.

Thursday 9th (6.30 am)
The indices are continuing to track with 'risk on'. It seems now that some traders think that Sell in May and go away not be here this year.

USDX: this continues to show weakness and choppiness within the Cloud. The point to note here too is the ADX. Momentum seems to be on the rise for a continued fall:

EURX: This is still struggling to get above the 108.5 S/R level but, here too, note the ADX. Momentum here also seems to be shifting upwards: 

S&P500: stocks had another good session and gave a good SPY trade opportunity: 

E/U: the triangle breakout is still holding and a TS signal is trying to form. It would need the EURX to break the 108.5 first: 

E/J: very close to a bullish triangle break AND a new TS signal: 

A/U: neck line break hasn't evolved yet and, if the EURX takes off, it might not happen:
G/U:  a little behind the others

Kiwi: hasn't fallen much further. It might not if the EURX takes off.

Swissie: it is worth noting that this pair is close to forming a SHORT signal.

Gold: close to forming a LONG signal. A continued fall with the USD would help to boost this, and all commodities.

Oil weekly chart: any continued fall with the USD might prompt a triangle break here too:

The pairs all seem to be lining up with the same momentum and towards the same directional move. 

So, what am I seeing and thinking? It FEELS, to me, that 'risk on' will not only continue but take off. This depends on whether the EURX can break up through the 108.5 AND if the USD continues to move down and out of the Cloud though. So, watch this space!

Wednesday 8th (8 pm)
EURX: looks to be picking up steam:

E/U: looking bullish.

S&P500: looking bullish too. I would be looking to buy Spy Call Options IF this trend continues at US market open. If I was awake then that is!!!!!

Wednesday 8th (7.40 pm)
EURX: seems to be on the march

E/U: might be a triangle break out?

U/J: the LONG has faded for a small loss (-40)

I would expect an upward break of the EURX through the 108.5 level would be quite bullish as it has been knocking on that door for quite some time now. If so, I'd be looking for any 'risk on' instruments. I also would not be at all surprised to see stocks really move then too.

Wednesday 8th (5.40 pm)
A/U: a bit like its Kiwi cousin? A 'H&S' here too? maybe I'm stretching this a bit. I'm still not keen to SHORT here though with stocks keeping on with current momentum:

Wednesday 8th (5 pm)

Aussie stocks: up again today and aiming for the 5,200 level it seems. A break and hold above this level would be a bullish signal:

CurrenciesIn general: I don't believe we will see any lasting trends with currencies until:
  • the EURX breaks out of the boundary formed by the Cloud and the 108.5 S/R level AND:

  • the USDX gets out of the Cloud

Wednesday 8th (2.50 pm)
A/U: hasn't gone too far:

Kiwi: The H&S pattern gave a quick 100 pip trade but has now started to pull back a bit: 

Some positive Trade Balance data out of China seems to have added some support to these two today.

E/U: a new trading triangle here:

In general: I don't believe we will see any lasting trends with currencies until:
  • the USDX gets out of the Cloud AND:

  •  the EURX breaks out of the boundary formed by the Cloud and the 108.5 S/R level:

Wednesday 8th (9 am)
A/U: It seems no one is too sure about shorting the A/U just yet. We've had a daily candle close below the 1.02 level but price is just hanging there:

Kathy Lien had to this to say in a recent FX commentary:

What Rally in Stocks Says About Currencies

Over the past week, all of the action has been in equities. U.S. stocks powered to new record highs while currencies consolidated quietly.  The U.S. dollar weakened against the euro and Japanese Yen and strengthened against the British pound, Swiss Franc, Australian and New Zealand dollars.  This divergent price action confirms that there isn't one directional interest in currencies.  Part of the reason why currencies have not enjoyed the same type of strong trend as equities is because this is a QE driven rally and with central banks around the world engaged in new rounds of easing, the availability of more stimulus has been ambiguously positive for stocks.  Unfortunately these simultaneous easing programs has also clouded the outlook for currencies as investors wonder which central bank will win the race to debase.  The rally in stocks and consolidation in currencies also tells us that investors are much more interested in joining the trend in equities than try to figure out whether support or resistance will be broken in currencies. Eventually this will change but for the time being we can't ignore the fact that the big moves are happening in other markets.  However what stocks have done for currencies is keep them supported - if not for the equity market rally, we would have probably seen a deeper sell-off in the EUR/USD and AUD/USD.
I'm still not too keen to short the A/U here given the broader appetite for 'risk' as seen with stocks. Even though this rally is mostly due to the 'Bernanke Put'. I also think any rally with Aussie stocks might drag the A/U with it. So, the XAO, which seems undervalued and nearing a possible bullish breakout, might get some interest here:

Wednesday 8th (6.45 am)
The indices can tell you what's happening with stocks. It doesn't take long either. "Choppy"! It's 'gambling' trying to call a direction here!
USDX daily: stuck in the Cloud. There won't be much or any momentum in any direction until this clears the Cloud.

EURX daily: this is still stuck between the Cloud and the 108.5 level:

EURX 4hr:  this chart show the sideways choppy action pretty clearly.

E/U: choppy. No surprises there based on the indices above!
G/U: down BUT no TS signal
U/J: choppy

A/U: testing the 1.02 level:

A/J: the earlier LONG signal has now closed for a loss. There was a SHORT signal overnight BUT this is fading:

Kiwi: the bearish H&S neck line is being re-tested. No clear SHORT signal though.

There are bearish tendencies on the A/U, A/J and Kiwi BUT I am not confident taking these just yet. Especially with the bullish action across many global stock markets (see below).

S&P500: As per usual, this choppy action continues to give better trades during the US session. Last night was just the same. A signal came through during the London session but I noted that the S&P500 was at around $1,615 at the US market open:

Thus, I would have looked to buy the May $162 Call Option. This rose 0.39 cents during the session: from $1.07 to $1.46:

ROIC: (0.39/$1.07) x 100 = 36% for one session!

Aussie stocks: The news from stock markets this morning has the various European and US markets making new highs. This prompted me to see where the Aussie market was in relation to previous highs. The Aussie All ordinaries seems wedged between two S/R levels; 5,000 and 5,200. Previous highs are around the 6,800 level. One would think that a break and hold above 5,200 would be quite bullish as it has a bit of room to move and catch up to achieve:

Many of the stocks I posted about yesterday have been on the move. I'll update them later. Apple though has yet to make it out of the Cloud. The Cloud (Kumo) is a zone of support/resistance and price needs to break through this to confirm, for me at least, continued bullish tendencies:

Tuesday 7th (5 pm)
A/U and A/J: I actually don't have confirming full TS signals to SHORT either of these. Hmmmm! This does not mean they might not evolve later though. It's just info I'll file away and that would also keep me out of jumping in SHORT here just now.

BTW: I don't have a BUY signal on the EUR/AUD either. Hmmmmm.

Tuesday 7th (4.40 pm)
There isn't a lot happening on the currency front but the same cannot be said about stocks. There are some bullish signals setting up on quite a few of the mining/resource/commodity stocks that have me very excited. Take me 'stock/options' shopping ahead of 'shoes and handbags' ANY DAY. I've noted them on my Stocks:Triangles page. They may not evolve but if stocks continue to push higher then these should forge ahead too. I also wonder how this might impact the Aussie pairs.

I'm continuing to track AAPl too and this is noted in my Stocks:May page. Other trades I'm tracking are noted there as well.

BTW: I'm out for the evening at a trading meeting. I'm trying to find some 'like minded' local buddies!

Tuesday 7th (3.15 pm)
The RBA cut rates and the A/U has fallen below the 1.02 support level. I don't have a TS signal as it tracked sideways for so long. This could be played as a trend line break trade though. I'm going to see where, and how, the daily candle closes:

Kiwi: the H&S is looking more formed here now:

Tuesday 7th (12.30 pm)
Not too much happening ahead of RBA data.

EURX: trading sideways above the Cloud:

USDX: chopping upwards but still in the Cloud: 

Tuesday 7th (7.15 am)
No new signals on my 7 am candle close. 

There was even more talk of negative interest rates from ECB Mario Draghi overnight BUT still the EURX is holding up. Not even a spike!

Tuesday 7th (5.30 am)
The indices continue to chop around:
USDX: still in the Cloud

EURX: trying to stay out of the Cloud:

EURX: the 4 hr chart shows how the EURX is going nowhere fast!

A/U: is trying to hold up above key support of the monthly ascending trend line and the 1.02 level. It has a big day today. I read that Mr Soros has shorted this ahead of the RBA meeting today. I don't have any new signal here yet:

S&P500: stocks have crept up and this gave another SPY trade opportunity:

AAPL: this would have to be the best trade of the night though.

Apple stock: rose from $449.98 to $461.50. An increase of $11.52 or 2.5%

Apple Call Option: The October $450 Call was up from $29.10 to $34.65. An increase of $5.55. This is an increase of 19% though. The power of Options!

Monday 6th (7.30 pm)
A/U: looking bearish for sure BUT no TS sell signal off the 4hr charts:

EUR/AUD: aiming for the key 1.28 level BUT no TS buy signal here:

S&P500: playing poker and giving nothing away in pre-markets!

Monday 6th (5 pm)
The USD is picking up steam a bit as the European markets come on-line.

There are no new signals yet. just the two from late last week;A/J and U/J. I'd be wary of trading any Aussie based pair ahead of interest rates tomorrow though.
A/J: down a bit
U/J: up a bit

AAPL: I have noted some bullish movement with Apple stock. Check this out at my Stocks:May page

BTW: I have also updated my Stocks:Triangle page. This simple technical analysis tool is most powerful.

Monday 6th (2.30 pm)
Not too much happening. There is a UK holiday today but ECB 'Super Mario' talks later so this might shift things a bit.

EURX: I guess you've heard of 'paint by numbers' for art? Well, I'm suggesting a 'trade by colours' approach to FX. I don't think it's wise for longer term trend trading (4hr +) until the EURX is out of the pink!

AAPL: I have noted some bullish movement with Apple stock. Check this out at my Stocks:May page

BTW: I have also updated my Stocks:Triangle page. This simple technical analysis tool is most powerful.

Monday 6th (11.20 am)
A little 'risk on' shift with the indices at this early stage:

AAPL: I have noted some bullish movement with Apple stock. Check this out at my Stocks:May page

BTW: I have also updated my Stocks:Triangle page. This simple technical analysis tool is most powerful.

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