Lessons

1. If VIX is under 26, buy the dip. If VIX is over 26, sell the rip.

2. Always trade in the direction of the larger trend. Find the strongest trend in your time period.

3. Nothing as bearish as a failed breakout. Nothing as bullish as a failed break down.

4. Don't worry about the last dollar. Take your money and go to the beach!

5. No more than four positions at a time. Preferably 2-4. Scope out others. Pick the strongest.

6. Buy the strongest; sell (short) the weakest.

7. Nothing is guaranteed. Nothing.

Tuesday, March 30, 2010

Wednesday

Observations:

EurUSD daily looks like it has turned over. We may have begun a move down to 1.298 or so.

11:16 a.m. EST update: EURUSD bounced on a strong German employment and European inflation. Target 1.3640. 1.3640-1.3300? We may be entering a trading range in this pair.

I may try to:

Buy SLV May 16 calls on Tuesday or Wednesday.

Load up on GDXJ?

Buy AAPL Puts on Friday around 143 or so. This would be strictly a ST trade, in anticipation of a sell the news reaction. I may switch and buy calls on Monday.

EURUSD May go to 1.31 or lower, but I will get out at 1.33 or so and focus on other opportunities. Sold at 1.349 for a 135 pip loss. Bad risk management. Will stop trading currency futures for the time being and enjoy the weather.

Buy C June 4 calls for around 0.35.

Sold AGQ for 57.98.

Monday, March 29, 2010

Tuesday

I may try to:

Buy SLV May calls on Tuesday or Wednesday.

Buy AGQ at around 54.6. Bought at 56.55.

Load up on GDX also?

EURUSD May go to 1.31 or lower, but I will get out at 1.33 or so and focus on other opportunities.

Buy C June 4 calls for around 0.35.

Sold ZSL at 4.15 (.8% profit - mostly eaten up by commissions).

Monday Plan

I will try to:

Buy SLV calls on next move down.

Huge move in interest rates coming. Gold is going up. Buy AGQ.

Load up on GDX also?

EURUSD May go to 1.31 or lower, but I will get out at 1.33 or so and focus on other opportunities.

Buy C June calls. Bought C $ 4 calls for 0.40. May buy more tomorrow.

Update: Sold C calls for $0.43. May buy on further weakness.

Saturday, March 27, 2010

USD Post - Post in Progress

I see the following alternatives for the immediate direction of the USD:

1. a. The first is that the dollar does not, in fact, make a big move next week; in this case, one alternative would be that the Euro bottoms around 1.3200. 1.3550 - 350 = 1.3200. I give this a 40% probability.

1 b. Another alternative is that the EURUSD has bottomed at 1.3267, and that the dollar breakout is a false breakout. In this case, EURUSD should still descend to 1.338 or so at least, and probably to 1.3335 or so. I give this a 30% probability.

2. The other alternative is that the dollar will rebound big right away. In this case, EURUSD should descend to a minimum of 1.3050 before a correction and probably to 1.2980. 20% probability.

3. The third option is that the Euro will rise up to 1.650 before any correction. I give this a 10% probability.

As you can see, I slightly favor the first course (1 a.) for the immediate future.

This does not mean that I think the dollar has topped. The Euro will have problems in the future, with all the PIGS, problems it has no means for solving (as far as I can tell). But in the near future (1-2 weeks) I think there is a floor underneath - at least until we see what will happen to Greek efforts to sell debt and how equity markets perform in the U.S. However, I do think that equity markets will outperform in April and that risk levels will stay low. Hence, I do think that the dollar will make it's last move for the next few days.

This should mean strength in equities and PMs, for the next few days.

Evidence:

Silver Candlesticks Friday and Monday 3/28. Awesome big green bar on Friday. (Could be ascribed to dollar retrace.)

EURUSD candlestick Friday. Same as above.

Daily RSI 14 divergence on EURUSD bottom. (May not be bottom. Trends don't turn so easy.)

U.S. Debt. Look at the goddamn 2 year TNX chart. A thing of beauty.

Gold weekly trend line, solid move up from touching it.

Gold miners bounced up from TL.

EURUSD overbought on 2 hour RSI - at least a small correction coming soon.

Gold overbought on 2 hour RSI. SLV overbought.

Too cozy. One more touch or fall for Gold.

EUR 1.32 terminal move? Not much strength left in dollar?

Dollar 2 closes above breakout level.

Critical levels on EURUSD - 1.3450, 1.3360, 1.3330, ...,



Friday, March 26, 2010

Bull Market Update - U.S. Indices

Look at this chart:
http://tinyurl.com/yc2bguj

This is the SP500 (in dotted green) with the 5 and 20 MA of CPC super-imposed from January 2007 to February 2008. Notice that between mid April and late July 2007 the SP500 kept rising, as the 20 day moving averages of CPC kept indicating a correction. This is typical of Wave 5s, when bullishness is rampant. I expect a smaller version of that to end this cyclical bull. I expect that we are in Wave 5 of this bull right now.

This overbought phase in the chart above lasted from April 15 to July 15 or so, a period of about 3 months. For three months, the market was choppy but climbing. I believe that we are in a similar bullish phase right now, that will last 1.5 months or so. I also believe that we are already at least half a month into this phase; hence, according to this estimate, we will end this bull move in late April.

There is no point shorting this move now, but because there is limited upside in the overall index, one should only go long on pullbacks.



Pat on the Back

For the last two weeks, I have seen the market as perfectly as anyone I know ever has. By market, I mean Silver, Gold, EURUSD, and the SP500.

This post is just a little pat on my back for that. Keep it up, weirdo. Above all, keep up the risk management.

Thursday, March 25, 2010

FraidAY

EUR/USD range held true yesterday - to 5-6 pips. Pretty good, huh?

The whole picture seems much clearer now. The dollar is retracing the breakout on the back of the Greek "plan." In the bigger picture, the dollar has retraced 50% of it's last, multi-month fall (50% retrace at 82.2 or so), and gone a little above. After this retrace, the dollar will surge -- on the back of risk returning to the markets. Look at the CRB; look at PC ratios, ... The first half of next week will not be kind to U.S. indices.

Remember, though, that fundamentally the dollar's ascent is still restricted by the awful debt condition of the United States. Fundamentally, the dollar can rise on the back of risk appetite, interest rates, or worse alternatives for the other currencies. For the first part of next week, the first of these three will take over.

The ES will top off today around 1167 or so, the EUR USD around 1.342 or so. Then the ES should fall to 1145-1150 on Monday or Tuesday, the EURUSD will have a terminal fall (for this move), and the Win will buy SLV and Citibank calls on Monday or Tuesday. In April, we will see the final move higher of this cyclical bull in the US indices (Wave 5 of 5). 1145 - 1220 or so. This will mirror Wave 1 of 5.

If anything changes, I will stop out of EURUSD at 1.3400. I doubt that I will have to do so.

Today's best guesses:

EUR/USD: 1.3360 -- 1.3210. changed at 7 a.m. EST to 1.3270 - 1.3420 -- 1.3330.

/ES 1160 - 1167 - 1158. (partial retrace then fall)

ES will fall through next Monday or Tuesday.


Will try to:

Sell AGQ at 54.3 -- this is stuff bought today at 52. 79. (Will buy next Monday for around $51._)
Sold at 53.85.

Sell GBPUSD? Sold at 1.4915.

Still holding EURUSD short from 1.3356. Will try to cover at 1.3050 and go long around 1.300.

Wednesday, March 24, 2010

Thursday Outlook and Plan

Best Guesses:

1. EURUSD will fall under 1.31 by Monday or Tuesday. 1.3290 - 1.339--1.3030. (terminal move may go below 1.3030 to 1.2980 or so.)

2. Silver will fall to $16.2 and Gold to $1060 or so.

3. SPX will fall to 1135-1140 by Monday-Tuesday.

4. C will fall to $4.02 or so.

I will try to:

1. Sell EURUSD around 1.339. Sold at 1.3356. (Couldn't sell at 1.339 - didn't get that high.)
2. Buy Silver around 16.2. Bought at 16.6. Will sell Friday and try to buy again around 16.40.
3. Buy C around $4. C is nowhere near $4. Will try to buy next Tuesday.
4. Buy EURUSD around 1.300. Next Tuesday-Wednesday.

Treasury auction today had a very low bid-ask. That's why the surge in TNX today. This is another reason why the market will fall, because if the market keeps going up, the government won't be able to sell its debt. Of course this fall is a more long-term development. Another auction tomorrow, which is another factor that's got me bullish on PMs in the near-term.

Wednesday

Sorry about no update yesterday.

Tuesday update:
1. Sold EURUSD at 1.356.

2. Bought ZSL at 4.29

3. Bought SLV April Puts at Silver around $17.05.

Wednesday Update

1. Covered EURUSD at 1.3351.

2. Will try to sell ZSL at 4.54 - 4.60. Sold at 4.49.

3. Will try to sell SLV Puts around Silver $16.5. (SLV around 16.2). Sold at Silver 16.61, SLV 16.3.

Have a good day!

Thursday, Friday, Monday - Will try to buy C June calls, maybe a couple of small Gold miners, AGQ around Silver 16.2 or 16.3. 200 DMA is 16.225 or so; strong support at that area as well.

Sunday, March 21, 2010

Monday Plan

ES range 1146- 1156

I will try to:

1. Sell C April $4 calls for a few bucks (around C 4.0). Sold at break even.

2.Sell AGQ around 55.4. PMs will also have a hard time. Will try to sell around 54.9 Tuesday. SOLD for 54.8 on Tuesday.

3. Sell EUR/USD around 1.3630 - 1.3660. Sold at 1.3554.

Buy C June calls coming Thursday or Friday, around March 28, when we bottom. EURUSD around 1.3100 or so? Buy AGQ Wednesday or Thursday. Buy EURUSD 1.31?

Week Ahead 3/21

Weekly Outlook

In the U.S. Indices, we will consolidate for the first couple days of this week, then we will fall. We should bottom next Monday or Tuesday (3/30 or so), around SPX 1130-1140.

I am very bullish for April.

On Monday, the EURUSD should rise up to 1.3580 - 1.3650 based on reassuring news from Europe or just consolidations. This move should be shorted. Sell RSI 14 sell signals tops on the 15 or 30 minute chart (Prophet).

This move up in the EURUSD (consolidation in the USD) will also mean a short wave up in the ES, perhaps to ES 1157-58.

Tuesday or Wednesday the USD will break out. This is a confirmed signal. Based on this equities should have a hard time in the next week or so. By Thursday or Friday ES should descend to the lower TL of the channel, around 1144 or so. Gold should descend to 1087 or maybe more. 1087 should be bought.

Friday, March 19, 2010

Friday

Mistakes

1. Bought EUR/USD too soon - was going against the trend. Didn't wait for the trade to come my way. I thought I would get out with 20 pips or so; I was tired of waiting for the trade to come my way so I gambled for 20 pips or so from 1.3600 to 1.3630 on an expected retrace. Well, the retrace didn't go all the way to 1.636 because Angela Merkel remained obdurate and I am now 130 pips underwater (as of Monday 3/22). Lesson: WAIT for the optimal trade. 99% of trading is waiting.

2. Sold SLV Puts too soon -- what I had planned came to fruition, but I was nervous because of the earlier fiasco with EUR/USD.

3. Bought C April calls instead of Junes. Sold too soon, because I was afraid of a pullback. With Junes, I would have held strong.

Trades today:

1. Sold SLV Puts for a small profit. Went long AGQ at 55.3.

2. Bought C April calls. Target 4.5. Will add to this trade with June calls if it goes my way.

3. Holding EURUSD long. Will sell and go short, probably around 1.3600.



Thursday, March 18, 2010

Thursday

Thoughts:

SPX is in Wave 3 of 5. Pullbacks will be brief. Buy 1152 on the ES.

EURUSD may be rolling over but SPX health may support. No free fall yet?

Silver and Gold bearish ST. Silver toppy at 17.5. Target 16.8. CPI data out at 8:30, which should be bearish for PMs, so prices will have fallen by market open.


Economic Releases:

8:30 a.m. CPI
10 a.m. Philly Fed Manufacturing


I will try to:

1. Sell BGZ (at a loss) at 14.3. Bought at 14.48.
Sold at 14.14.

2. Buy SLV Puts at open. Target 16.8 on YI; 16.5 on SLV. Buy ZSL around 4.1.
Bought at Silver 17.47.

3. Scalp EURUSD - Sell 1.37; buy 1.3650
Too choppy.

4. Buy C April and June calls on weakness. Around 3.95 then around 3.76. Target is 4.50.


Yesterday:

Made a few bucks on SLV Puts, lost a bit on EURUSD. Still underwater on BGZ, will exit today.

Tuesday, March 16, 2010

Wednesday

There's a small H & S on the Dollar, which projects lower prices - around $79, but because of my preferred Elliot Wave count (bullish dollar) I don't think that the H&S can complete.

Also, my short-term (2 hour and 4 hour) charts suggest that EURUSD and GBPUSD are topping off here. Wave 5 down may be about to begin, and if not, we will still see lower prices before we go higher.

Will try to:

- Sell EUR/USD around 1.3840

- Buy C Puts around $4.15?

- Eventual goal is to buy C calls around $3.75.

- Sell GBPUSD around 1.538

Friday, March 12, 2010

Monday- Thursday Plan

Monday night update: Commodities are looking bearish. OIH looks like it has rolled over. Gold miners (especially the juniors) are looking terrible. Financials are looking good. Classic bullish breakout. Sector rotation is key. TRIN on the NAS is recovering, may mean further highs ahead. TRIN on the SPX is still quite overbought, but could be even more overbought (was earlier in the bull market). After a pullback, the SPX could soar. 5 DMA of CPC indicates big pullback imminent, but 10 and 13 DMA suggests further strength ahead. Negative divergence on New highs. Plan is to short EUR-USD, but buy C calls on a pull back.


Will try to:

- Sell C Puts at around C 3.82. Sold at 3.88. Missed 3.82 (overslept!)

- Sell BGZ around 1140 on the /ES. Sold at 1141 or so. Will try to buy around ES 1156.
- Bought BGZ at $14.48, 3/16 at 11:25 a.m.

- Buy AGQ around SLV 16.2; YI 16.5. Target is Jan highs on SLV and YI.
AGQ will be around 53.2.

- Buy SLW calls around the same price.

- Buy C June 4 Calls around $0.25.

- Sell EURUSD around 1.373. Sold at 1.3728. Underwater but okay. Will close at 1.37 and wait and see.

To investigate: $PLATINUM

3/16 11 a.m.: Bought SLV Puts at 17.41 or so on the continuous contract (/YI). Target $17.10. May go much lower, but I'm being conservative because ultimately I'm looking for a long. This is risky and I'm a bit nervous about this trade. Very ST overbought and at my initial target for a pullback, but has held channel and may have finished correction.

Today

Bought Q puts yesterday at around 47.35, sold today around 47.22, for a few cents profit.

Bought C puts today at C around 4.08. Target is 3.72 but I may sell around 3.82.

Will try to buy BGZ at around 14.70. Bought BGZ at 14.75.

Thursday, March 11, 2010

The Biggest Bearish Blogs are (gasp) almost Bullish!!!

evilspeculator.com

slopeofhope.com

I very much respect both these guys, but look at them now... this is an awesome contrary indicator. On top of everything else! Wow.

FRAiDAY

Not one single blogger is bearish. Every thingle blogger -- including TIM KNIGHT -- is bullish! This is not good for the bulls. I am short QQQQs for at least a pullback.

I see it as a low risk-reward trade. This is just a ST trade while I wait for a pullback to get long. If we pull-back, I'll take some profits and run. If we don't we have to pull back some time soon -- 5 MA of TRIN and PC ratio haven't been giving this bearish a reading in a looong time.


Wednesday, March 10, 2010

Thursday

Will try to:

Buy SPY Puts around 1155 on the Cash.

or Buy SLV Puts again at $ 17.3 or so on the continuous contract (YI).
Target is $16.5 on YI (about 16.2 on SLV). Will try to go long at that point.
I sold puts bought 3/10 at YI 17.63 at around YI 16.95.)

or Buy GBPUSD around 1.498.
GBPUSD map --> 1.5050 -- 1.4980 -- 1.5250 --> fall to 1.4500. Buy 1.4980. Sell 1.5210

ES Range today - 1135 to 1155.

Wednesday

Will try to:

sell GBP/USD around 1.508. Hopefully it will make it there.

buy BGZ at 15.02 or so. --> bought at 14.94

buy SLV Puts at around 17.45 on the spot. --> bought at 17.63 on the spot.

Sunday, March 7, 2010

Monday Plan

Dollar -
EURUSD - 1.3550 to 1.373
SPX - close to a ST top. 1141 (ST Top?)
Gold (YG) 1128 - 1140 (ST Top?)

Trades:

Buy GBPUSD 1.5075 (taking out short position). Buy EURUSD 1.357.
Sell long position in Silver (AGQ at 47.5 or so).

Friday, March 5, 2010

Weekend Update

Next week (between 3/8 and 3/15), gold will pause (at 1150-1160), and the dollar will pause its fall (between 79.6 and 80.1). The subsequent reaction will tell us if Gold is to triumph or the dollar. The Euro is batting for the dollar's triumph -- by continuing to fall apart as a monetary currency. If the dollar triumphs, then Gold will have a hard time going over 1160. However, I think that in the short-run, the dollar will decline.

I think the dollar will be weak in the short-term (1-2 weeks) and strong in the medium-term (1-3 months). In the short-term, the Euro may be stronger until 1.384. I personally don't see the Euro going beyond that level. It could, but I don't see it.

The Australian dollar will be strong in the long-term, and in the short-term. I think its bull market will continue for another 4-5 years, as a Commodity bull market started in October 2009. (Now is a really good long-term entry.) The AUD/USD is making a nice bull flag on the weekly chart.

In the short-term, the AUS/USD is a buy (until at least .9241 (175 pips or so)) where it meets a falling trend line that may cause a bit of resistance (the bull flag line). I believe that this high will come within the next week, and should coincide with a high in Gold, the EURO and the SPX. This will be a ST high.

To conclude:
In the long-term, I am bullish AUD/USD.
In the medium-term, I am bearish EUR/USD.
In the short-term, for the next week or two, I am bearish the USD and so I can be bullish the Euro, AUD and PMs. I will sell PMs around Gold 1155 to wait and see.

I think that after 1160, Gold will come down to 1130-1140, after which it will go straight up to 1300. This will be accompanied by the SPX going up to 1200-1240, which should all happen by May 1.

Basically, for the next four years or so, whenever the Euro and SPX are bullish, the AUD will be VERY bullish. The AUD/USD will probably predict moves in and roughly match the trends of the Hong Kong, Australia, Brazil and Indian stock indices.

Monday: Dollar rises EUR bottom at 1.357 or so, ES range 1025-1140. Gold 1135 -?
Trade: Buy GBPUSD 1.5075 (taking out short position). Buy EURUSD 1.357.

Tues Dollar falls; ES rises to 1140

Wed: Dollar falls; bottoms? SPX tops 1150-1160?

Thurs: Dollar falls; bottoms? SPX tops?

Fri: Dollar falls/rises. bottoms? SPX tops?


Thursday, March 4, 2010

Gold, Euro, $, SPX

Medium-term:
Fundamentals on the EURO are more bearish than those on the dollar, so the EURO will fall to 1.31. I think that this may happen in the short-term, after a terminal move up.

The rising channel on the dollar is immediately below us right now. This is bearish EURO.

A falling EURO will create headwinds for US Equities. It is more difficult for equities to rise with a rising dollar. However, it has happened often.

I believe that US Equities are headed up to 1200 at least; it's just a matter of how long it takes. I believe we should be there by end April, which gives us about 7 weeks. Average gain implied is 12 points per week, but in bullish weeks it could be 20-25. Buy the dips in equities. There is a ST floor around 1113.

This implies that equities will disconnect from the Euro.

In the medium-term (2 months), I also believe that Gold is going to new highs around 1250-1300.

Short-term
Gold will go up to 1155 or so before any correction, and perhaps to 1160. Equities (ES) will go to 1123-30, I believe.

The dollar is at the bottom of its up trend channel - 0.37 away (about .74 on the EURUSD). That implies a target of 1.372 or so on the EURUSD, if the dollar hits the bottom of its channel. That means an upside target of 1145 on Gold. It is also a possible bearish indicator for equities.

However, I am quite sure about the Gold target, especially because my target for Silver is quite far away (3% or so). Gold could certainly rise with the dollar, but there would be headwinds if the dollar bounced sharply. This implies that the dollar will not bounce sharply (or not bounce sharply uncorrected) until my PM targets are reached. This is bullish for the EURO.

Sentiment on the Euro is massively bearish, which implies that there may be an downside breakout, out of the dollar channel. The EURUSD channel is quite far away on the upside so there is considerable room on the upside. A downside breakout of the dollar channel is possible; it would be difficult to accomplish, and it will likely be retraced quickly, but given the humongous bearish sentiment against the Euro, it is possible.

Humongous bearish sentiment is common in Wave 4s up. Also, Wave 4s can be choppy and last for a while. This means that we may have a marginal break of the dollar channel. Use breaks to go long the dollar, short the Euro.

Short the Euro aggressively when Gold gets to 1155.

Tuesday, March 2, 2010

The SPX will hold the EURO up

The ES (SPX E-mini futures) is going up to 1130 and then to 1145-1155 before a pause for breath.

The EURO will be held up by the ES, until at least 1130. I will short 1130 on the ES by going short the EURUSD.