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This is a discussion on Mr Spread Better's blog within the Trading Journals forums, part of the Reception category; www.paddypowertrader.com Sterling has been sniffing around the $1.50 mark as Barclays gave shares another boost. But why on earth is ...

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Old Feb 9, 2009, 6:48pm   #46
 
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Risk Appetite Drives Shares And Sterling Higher

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Sterling has been sniffing around the $1.50 mark as Barclays gave shares another boost. But why on earth is the Euro doing so well?

The best thing I did this morning was to switch my screens off and go to the gym. My take on the weekend press was that UK banks and property companies would drag the market lower. On the currency front I reckoned that expectations of a mega-gloomy inflation report from the MPC on Wednesday, and rising estimates for the cost of a bad bankers bonus protection scheme might take the gloss off Sterlingís rally.

And in early trade both of these looked reasonable bets; the pre-open in FTSE was lower, and both EURUSD and GBPUSD pushed below their daily pivot points. But to me this seemed like an early Monday morning fake, and after watching the screens for 90 minutes I decided on some exercise. Of course when I returned around mid-morning GBPUSD had resumed its recent trend, consolidating above $1.48; Sterling had also broken below £0.87 against the Euro, allowing me to close Fridayís short bet for +30 pips. Iíve just re-opened a token £1 short at £0.8732; the reason for the small size is because Iím not sure why the Euroís doing so well today, so Iíve restricted myself to a small bet for the time being.

The two main themes have continued along last weekís merry path, with my short FTSE bet not looking good, but my long bet on GBPUSD notching up further profits. And on a smaller scale my bank shorts continue to work against me.

Click the image to open in full size.

I closed another £1 of my GBPUSD long bet this morning. I was a bit too keen, accepting a bid of $1.4872, but Iím not sure if weíre entering the end-game for now. Sure, thereís no reason why the move should stop at $1.50, but Iíve stayed in this trade quite a while for me; my last sale was over 200-pips lower so what the hell. Iíve now got £1 remaining, protected by a stop at $1.4680 (again, just below todayís lows).

I need to try and keep an open mind on equities as, once again, Iím now running a fundamental view, rather than a trade based on technical analysis. Charts on the major equity markets are started to kick-up buy signals and even if I donít trust the market I donít want to be another 200 points offside and still singing the same song.

Hey, wasnít the rugby great over the weekend. Wales look hot, but the best game was the Ireland, France humdinger. And what a try; a determined burst through the middle, a neat little sidestep and crashing over the try line-just like any good number 8, nice one Jamie Heaslip.

Happy Trading
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Old Feb 10, 2009, 7:22pm   #47
 
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The Yo-Yo Euro

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Whilst the world waits on superhero Geithner, the Euro has been the main mover-in both directions. Meanwhile, some of the gloss has come off Sterlingís rising star.

As Alanis Morissette once said, ďIsnít it ironic?Ē My first trade of the day was a canny purchase of EURGBP at £0.8679, on the grounds that the Euroís overnight collapse had gone too far, too fast. But when the price didnít seem interested in the up-travelator and started to tail off I cut my position for a £10 loss. At the time it was a discipline; after all, I was trying to call the turn in a nasty sell-off.

Once the loose buyers had been shaken out however, the EURGBP rate showed a very steady uptrend all morning. This uptrend continued after I sold at £0.8751 and £0.8760. Iím not sure whatís behind the move other than short covering of early Euro sales on fears that Russia might default on some overseas corporate debt. But a break above £0.88 will see me cut my bet and watch from the touchline for a while.

Click the image to open in full size.

Yep, the eagle-eyed will have spotted that I sold without confirmation from my indicators; I chose levels that had produced trading profits over the past few days, but should have waited for a moving average crossover to rubber-stamp the trade. Iím happy to run the trades at the moment, and I put the Euro in the same category as equities and West Brom; theyíre all due to go down.

Click the image to open in full size.

But whatís starting to worry me is that on the daily charts the Euro is showing some signs of flattening out. Against the Dollar itís broken free of the powerful downtrend line and is threatening to break above a flattening 21-day moving average. The other momentum indicators donít confirm a Ďbuyí signal, but neither do they help the down move. Of course, out in the real world any substance to stories of Russian debt problems will likely rip the chart pattern to shreds, but just something to be aware of.

So, how will equities fare today? Thereís a real debate out there on whether markets are turning the corner and the right noises today will light the blue touch-paper, or whether all the good news is in the price. The third, slightly nasty, option is whether we see a strong rally tonight that forces the shorts to capitulate and limit their losses, whilst the longs and neutrals rub their hands at the prospects of a better selling level.

Click the image to open in full size.

The charts arenít much help either; true, the S&P failed at the 50-day MAV, but itís still well above the 14 and 21-day MAVs. The FTSE and Dax are above all three averages.

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Old Feb 12, 2009, 12:09pm   #48
 
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Sterling Falls On Warning Of Deep Recession

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Sterlingís collapse continued as Bank of England governor, Swervyn Mervyn King warned that the UK was in ďdeep recessionĒ. . This speech will be adapted by Monsieur Trichet some time in the future.

This morning I decided to blow some of my winnings to show newbies the difference between a strategic and an impulse trade (yep, I have done this before).

Trade 1-Impulse
To be fair, there was a bit more thought involved than just running after some Kylie lookalike with a bunch of flowers. Iím already a small short in Lloyds and thought it would be likely to suffer if the bears kicked off again. After the recent relief rally a small downturn looked to be coming into play and the shorter moving averages had crossed below the 50-MAV on the hourly chart.

Click the image to open in full size.

So far, so good, but hereís the crazy bit; I made my decision and acted straight away, selling £5 at 87.6p. Now thatís fine if Iím running a large portfolio and making a decision for the long term. But as a trader it was daft; I sold just after the shares were marked down and spent the morning with an irritating red blot on my trading book. Iím relaxed about the trade, but could, and should, have got better terms by using the charts.

Trade 2-Strategic
Yesterday I was running a short bet on EURGBP, but it was starting to look like the tide was turning. I set a disciplined stop at £0.8805, which was taken out whilst I was being treated to lunch. A nuisance, but thatís part of trading, and I was damned glad of that stop as the price pushed onwards towards £0.89.

Click the image to open in full size.

I donít like the Euro, and Iím not sure why itís doing so well, but the charts favoured it so today I looked to trade EURGBP on the long side. The overnight move had added 100 pips so I really wanted a pullback before jumping onboard. Early trade refused to give an inch so I used the break above the dayís high as a trigger.

Trading the breakout without a pullback is a riskier trade, but often thereís money to be made if youíre awake. Iím also far quicker in shutting the trade down if I donít think the momentumís there. I paid £0.8973 for a fiver, selling £3 at £0.8983 and a further £1 at £0.8998. Then, after reaching £0.9029 the price tailed off, hitting my stop at £0.8983.

A decent pullback gave me the chance to re-enter the trade, although I sacrificed a larger gain by opting to wait for confirmation from my signals. I paid £0.8963 for a fiver, taking profits at £0.8975 and finally £0.9003 when, again, support above the big figure diminished. The profits were steady rather, rather than exciting, but the trade had a plan and it worked.

Regulars will know that Iím usually bearish on equities (sometimes too bearish), but Iím not getting too carried away after yesterdayís move. Sure, it was good to see a sell-off, but really it wasnít up to much. Prices are no-where near testing the uptrend line from Novemberís low, and todayís seen a bounce off the 21-day moving average. I added to my short bet last night, but closed out for a small gain ahead of the US close.

Click the image to open in full size.

Finally, for those of you still confused by what the US stimulus package is all about:

This year, US taxpayers will receive an Economic Stimulus Payment. This is a very exciting new program that I will explain using the Q and A format:

Q. What is an Economic Stimulus Payment?
A. It is money that the federal government will send to taxpayers.

Q. Where will the government get this money?
A. From taxpayers.

Q. So the government is giving me back my own money?
A. Only a smidgen.

Q. What is the purpose of this payment?
A. The plan is that you will use the money to purchase a high-definition TV set, thus stimulating the economy.

Q. But isnít that stimulating the economy of China?
A. Shut up.

Below is some helpful advice on how to best help the U.S. economy by spending your stimulus check wisely:

If you spend that money at Wal-Mart, all the money will go to China.
If you spend it on gasoline it will go to the Arabs.
If you purchase a computer it will go to India.
If you purchase fruit and vegetables it will go to Mexico, Honduras, and Guatemala (unless you buy organic).
If you buy a car it will go to Japan.
If you purchase useless crap it will go to Taiwan.

And none of it will help the American economy.

We need to keep that money here in America. You can keep the money in America by spending it at yard sales, going to a baseball game, or spend it on prostitutes, beer and wine (domestic ONLY), funerals, weddings, or tattoos, since those are the only businesses still in the US.

Happy Trading
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Old Feb 17, 2009, 3:55pm   #49
 
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No Further Panic In Lloyds Shares

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European trading can react to US holidays in one of two ways. The lack of liquidity can lead to exaggerated price moves, or yawwwnnnÖ.But it gives a welcome chance to prepare for the week ahead.

The trade diary has a few spare lines on todayís page; Late on Friday I sold £5 of Lloyds at 58.5p, but they were a punt on the weekend press and I closed the trade this morning at 56p in the absence of any follow through. The shares are now steady at 61p, around 10p off the early lows.

Click the image to open in full size.

An early short bet on GBPUSD backfired. I sold a token £1 on what looked like a failed attempt to re-take the $1.42 figure. But the trade was ill-timed and I closed out on a move above the moving average for a £50 bloody nose.

At Mid-day the range on GBPUSD was a derisory 123 pips. The average daily range over 20 days is around 260 pips. With no US trade today Iím going out with my in-house IT expert to get a new computer.

The quiet trading day provides an excellent chance to catch up on a bit of reading and Galloping Zebu has just come out with a great piece on how to identify trending markets (Finding Trends in Markets Part I). Although I rely heavily on the 21-day moving average as my trend indicator, my daily charts also show the ADX indicator mentioned in Zebuís article as numerical back-up.

The trouble is, the current readings on major equity markets support the cries in many of the recent posts that the markets are soooo dull. Thereíre no discernible trends in the major European indexes and only a weak trend in the US.

None of the major currencies are demonstrating a strong trend at the moment, again, borne out by the regular swings in price. Perhaps this serves as a useful warning to newbies that, unless youíre an ace range trader, to be careful with entering trades where the market will chew you up and spit out the left-overs- a bit like it did to me this morning!

This is the week leading up to expiry of February options on Friday, but before that thereís a host of key economic announcements, including the minutes of central bank meetings in the UK and US, inflation numbers from the UK, Europe and the US and the German ZEW survey. Check out the full list in the Weekly Wrap.

Finally, the Atlantic Ocean covers 41 million square miles, give or take the odd wave. So how on earth did two state of the art, nuclear-armed submarines with radar equipment happen to collide? Was this an expensive game of chicken, or a ploy to get Gordon Brown off the front pages?

Happy Trading
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Old Feb 17, 2009, 4:00pm   #50
Joined Feb 2009
bear on tsb, the hbos toxic assets are far from revealed.
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Old Feb 18, 2009, 11:52am   #51
 
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Gold Higher As Equities Plunge

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Thatís more like it. The equity bears are having a picnic; the S&P 500 is currently below 800 and gold has plugged $1000 into its Sat Nav.

My only trades today have been in GBPUSD; the first trade was poor quality and cost me a few quid, the second was better and left me with an overall profit.

Iíd been hoping to get to the gym before the release of the UKís inflation data, but for some daft reason decided to open a trade first. I fancied that the overnight news on European banks, and the consequent weakness in equity markets, would benefit the Dollar. The GBPUSD rate was way below its pivot point and falling. I would have preferred to sell on a pullback, but early-morning fever took over and I dipped my toe in with a £1 sale at $1.4136.

Click the image to open in full size.

The only thing that happened for the next hour and a half was that I missed the gym. The price gyrated close to my opening level, not inclined to return to the lower levels ahead of the inflation announcement. In fact the steady improvement ahead of the number looked suspiciously like a few people knew what was coming. I opted to hold the bet over the announcement (only because it was a tiddly £1 bet) and closed out at $1.4178 on the higher than expected inflation figure. The loss of £42 was irritating but bearable.

My second trade was of far better quality, and had the added bonus of providing a link to Galloping Zebuís excellent Finding Trends In Markets Part II.

Zebu talks about using a moving average crossover to enter the trade; this usually means that you donít get the full 3-course meal, but that youíre more likely to enjoy a good main course, rather than get chucked out during your starter. I tend to trade when the price crosses a moving average, rather than wait for a moving average crossover, but only if the move is confirmed by either a MACD or RSI momentum indicator.

Donít get me wrong; Iím not saying my wayís better (itís certainly more risky). Iím simply using it as another example of the many variations on a theme. If you check out the chart above you can see the two entry points; the first where I entered after a closing candle on the price crossover, the second after a closing candle on the moving average crossover. But thatís a selective (though topical) chart. Many other charts would show my early entry stopped out as the momentum dies. I guess the real message is, ďhave a play, make use of the demo account, and see what floats your boatĒ.

So, back to my trade, I bought £2 at $1.4222 and, after trailing my stop at a safe distance, closed the trade at $1.4295 after the second assault on $1.43 failed. The trade netted me £146; enough to offset my earlier loss and pay for some tuna sandwiches.

But forex trading was a sideshow today. My real winner was an extremely patient short bet on FTSE, and I must admit to closing out part of the short at 3998. Previously there was good support around here and I reckon Iíll get the chance to re-open at a higher level in the next few days. The real fun will begin if the S&P 500 ends the week below 800. With option expiry on Friday Iím hearing there will be a lot of support around this level-hmm weíll see.

Click the image to open in full size.

A final observation; gold looks to be the safe haven of choice, rather than the Dollar or Yen.

Happy Trading
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Old Feb 18, 2009, 11:57am   #52
Joined Feb 2009
the market is running sidewards. The pensions investments and fund manager investments are buffering this position. its not like the old days where pension provisions were not as heavily invested into stocks. these funds are not as concerned about the individual stock price as long as they get dividends, if your looking for more bear behaviour look into where pensions are pulling, because thats where new bottoms will appear, but to be a bear now is as smart as being a bull.
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