A.M. Look 4/28/11

Red light …Green Light trading.. The Bonds aren’t breaking and the Fed seems to have the rates where they want them.

My eyes just keep taking my focus to the Aussie and the 110.30 level which is THE major Fib going back almost 40 years. I am mentioning this for a couple of reasons, first is that this currency has been a good risk barometer for global growth and strong U.S. equities. Second is the Fib level is so huge based on the time frame ( you can’t get a bigger swing) LIFE OF CONTRACT. The third reason is the general condition of so many instruments including this one. Let me elaborate. We’ve all seen many markets go parabolic in the last couple of years, they defy the RSI’s and just keep going. We’ve seen it in the Softs, stocks on and off, metals of all ilk, and the Dollar. Now having the had the experience, both good and bad, of trading the Gold implosion in 1980, S&P in 1987, riding the Bull in the Nasd into 2000 and then the sleigh ride down not to mention the innumerable currency swings, a healthy dose of caution is now on my menu. Many market analysts will tell you that the RSI is of little relevance in today’s world. I’ve lived the movie! When I see currencies like the Sing Dollar and the Aussie, which have telegraphed this entire stock rally, trading record oversold or overbought my grizzled gray hair on the back of my neck gets itchy.

I am not picking a top or bottom in anything! Just asking you all to not get complacent the ride will last forever. Pay attention to your technical levels, keep raising your stops, and enjoy the ride for as long as it lasts. The Aussie does not have to go any farther for now. Buying strength or selling weakness in instruments that have these market characteristics can be unhealthy for your bottom line.

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