Rallies to nowhere. Sell rallies not breaks until this plays out.
The patient Day trader will be able to make money from both sides of the market.
We’ll look around the board this A.M. to see if there are any single stocks to play.
The Midcap and the Russell look like better shorting candidates and the Canadian Dollar is another instrument we’ll focus on.
GBP/USD….158.30 is the 200 day and the bottom of the cloud.
General Comments…
Three times yesterday I had a NASD sell order teed up and ready to ship off. 3 times I deleted the order and walked away from the screen. All three times it was not on the highs but on the lows!
Thinking you’re going to miss something is a very hard emotion to control. It goes with the territory of being a human not a robot.
One of the cardinal rules of trading is “trading on your own terms”. For me this isn’t selling weakness on an oversold market when the currencies and Platinum were not confirming follow through. Best to wait it out.
I’d rather miss the trade than violate rules molded from years in the Pits. “There is always another trade”. One of my clients called yesterday and I told him I was walking away before I did something stupid.
That’s exactly what I did, I went for a long walk.
Our goal is to look for bigger turns. I don’t want to start trading every 20 point wiggle, even though many of you would like that.
Model Trading Portfolio…Current Holdings
……………… Stop Close Profit Points
Long TBT
Short Term View
We have a Risk Off bias
Risk assets in general are trading short term oversold…Again this simply DO NOT SELL weakness…Sell Rallies. Risk Assets traded overbought in the first qtr…now they are trading just the opposite,Oversold.
Location ,Location,Location….if you have a good trad able pattern “Good Risk reward!” You just have to seize the opportunity and see what develops!
Take what the market gives you , will be the order of the day.
Trade to Make Money!
Medium Term View…This will be updated next week for the 2nd Qtr.
30 yr. Bonds … 138.00 ish now becomes our macro pivot. Closing above this level would be short term positive the Bonds and negative the Equities. We will look to buy a multi-point break in the 30 for a rally into the fall in keeping with a general risk averse market theme.
Equities…While, we were in strategic buy mode for the first quarter, we now believe the market is fairly priced. The equity indices deserve a break. The operative question becomes, from what level and when can a break develop. We will monitor instruments on an individual basis vs. the general Risk On/ Risk Off correlation we saw last year, when most instruments traded via the theme of the day.
Copper…We’re looking to sell rallies in the Copper against a 377 weekly close. We regard this as an ancillary short to the general Risk Odd theme going forward into late this qtr.
We’ve been doing this 35+ years…I’m hard pressed to recall a year when we haven’t gone back and attempted a re-test of the yearly close in the equity indices at least once. Yes, we are looking for a re-test over the next 5-4- months. Indices can still grind higher to the upper tgt levels over the next few weeks before profit taking ensues.
We are going to be highly flexible this qtr….we are not getting married to a central theme , nor are we getting into the long term prediction business. Having a bias is one thing, being patient and executing with a defined risk parameter another. Our business is Intelligent Risk Management.
Currencies…AUD/USD continues to be a good risk barometer. 102 is the near term macro pivot! ( This is a multi-year level) 111 is the upside pivot. Anything in between is just that, in between….no break outs! Closes above 105.30 would be deemed near term positive.
NATGAS…We’re looking to buy the Natty @ 1.70.