Friday, December 18, 2009

Just a quick thought

I was reviewing LOTs of charts last night and I have to admit, we have quite a few stocks stuck at resistance but what really surprised me is that the majority of stocks that have broken down are either at key support or have formed a bullish descending wedge over the last 2+ weeks.

The dollar is strong but its also stuck at resistance (with EURUSD trying to build a base). So what that means to be honest is that we either start a BIG correction with key support failing on many stocks (and therefore negating the bullish lower wedge on many) and stocks stuck at resistance failing to break through


the more likely scenario to be honest is a breakout above resistance, rally from support and dollar yet again dropping with EURUSD going higher.

In terms of odds, I have to admit, being carefully bullish still seems the way to play this especially when looking at seasonality. On the bearish side, we can find just as many justifications for the market to stop here, break support to get to next support level and fail at resistance - however the only thing that is the wild card in this entire thing is the dollar. Weaker dollar will yet again give an excuse to continue risk through the carry trade.

I am still on the fence and quite honestly, do not know where this may turn we have strong signs for either side here, and it truly is one of those times where the market is at a brink of setting up for a larger 2-3 week move here.


  1. I have entered some small positions since yesterday. All equity based, all kind of small in size.

    Its based on what I was describing in my post. If SPX moves higher, shorts will be stopped out and longs at support start gaining, same the other way around. Bias is a tiny bit more on the short side but overall fairly balanced.

    I did not update those in my positions sheet, I have been working on trying to find a better position management tool that I am starting the new year with. Any ideas or links let me know. It seems none support all the things I am looking for, especially the requirement to log futures and fx trades as well. Will have to keep on searching ...

  2. I admire those who have the gut for forex trading, since forex is mainly a short term intra day trading method.
    I will read through the blog to understand more about it, even though I prefer to stick to equity.

  3. scheng1, yeah forex is not for the weak hearted and requires proper risk and money management strategies as well as strong background on technicals.

    Believe it or not, with forex, I have made more then half my monthly profits and its my smallest account (less then 10% of capital) yet its making me the most money.

    Over the holidays I have quite a bit of time so I am getting ready to make a big 2010 post that will also include quite a bit forex.

  4. and in regards to short term trading. Most of my trades in FX have been swing trades (most less then a day) only some more then a day but always less then 3 days.

    I had attempted a few longer term trades that would have netted amazing gains BUT my trade style stopped me out on all of them. So there is a bit of a lesson for me there, but with proper sizing (which was my main problem) this can be fixed.

    To be honest, I think 2010 will have a much large focus on FX for me then it had in the past. I "love" equities and thats what I had been trading exclusively but in forex, you can make a lot of money without much risk exposure. Its a bit if a different animal of course, but once you get the hang of it ... its amazing since you have so many independent markets.

    SPX = 1
    FX = you pick how many markets that all follow their own trend (in a way) you want