Forex Calls Recap for 12/13/10
You just never know when a trade is going to trigger. I had a long call in the GBPUSD and a short call in the EURUSD going into the session. They both went in the opposite directions overnight, so it looked like there would be no triggers. Then the GBPUSD triggered and worked. See GBPUSD below, and also the USDJPY and GBPJPY Value Areas.
EURUSD:
USDJPY:
Perfect Value Area move in US Session from A to B:
GBPUSD:
Triggered long at A, hit first target at B, currently holding with a stop under R1:
GBPJPY:
Perfect Value Area move in European session from A to B:
Nice day, but tomorrow is the Fed announcement.
What Lies Ahead for December...
As we head into the end of the year and the Holiday season, I wanted to give an overview of what the last three weeks of the year will look like from a trading perspective. One of our main focuses as traders is to apply ourselves the hardest when there is volume and activity. Without those, the chances of trades working diminishes. December has a lot of components, especially in the last three weeks, so let's talk about some of the broader points and then we'll paint the picture.
1) Fourth quarter triple-expiration. Next Friday, December 17, is final expiration for the year for commodity, index futures, and options. Many people underestimate or don't understand the impact of expirations in general, particularly options, but a triple-expiration (quarterly) is always a big deal. Being the end of the year, a lot of hedge fund money will be playing out their endgames leading up to expiration.
2) End of year tax considerations. The last possible trading day of the year, even if it is December 31 during the week, is a full trading day. This was originally done because the exchanges needed to make sure everyone had a full day to close their positions for the year. In today's world, it is unnecessary (if Christmas Day is a Thursday, we get Thursday off and a half day Wednesday, but not the same for New Year's). Still, regular rules apply. Stocks that are up a lot for the year tend to keep rising into the end of the year because the sellers don't want to lock in the tax gain until 2011.
3) Vacations. People tend to take them starting December 23rd. Some last through the 26th, some last through the end of the year.
This year, the last day of the month is Friday the 31st, so we have exactly three weeks left. Let's go through how they will likely play out.
Week of December 13-17. Next week should really be more interesting than the last two. Hannukah is behind us, which often slows down volume for a bit. This will be the week of triple expiration. That means a lot of position unraveling will occur between Tuesday and Thursday, with one of those days (statistically, Wednesday) seeing the biggest range of the week because of it. We also have the last Fed rate announcement of the year on Tuesday (so Tuesday could be a little light, and everything gets packed into Wednesday and Thursday); INSERT INTO `wp_posts` (`ID`, `post_author`, `post_date`, `post_date_gmt`, `post_content`, `post_title`, `post_category`, `post_excerpt`, `post_status`, `comment_status`, `ping_status`, `post_password`, `post_name`, `to_ping`, `pinged`, `post_modified`, `post_modified_gmt`, `post_content_filtered`, `post_parent`, `guid`, `menu_order`, `post_type`, `post_mime_type`, `comment_count`) VALUES plus CPI, PPI, Industrial Production, Capacity Utilization, Philly Fed, and Leading Indicators, just to name a few. I know that I will be paying a lot of attention on Wednesday and Thursday in particular. Friday will see a lot of volume, but probably not much movement, as options and everything expire near their strikes.
Week of December 20-24. This is where things start to slow down. All of the economic data for the week is coming out Wednesday and Thursday, but none of it are critical numbers. Monday will be a dud as it is the first day of a new options cycle. If there is a high point to the week, expect it to be Wednesday. People start to head out Thursday. Since Christmas Day is Saturday this year, we get the whole day off Friday (Christmas Eve). In a lot of ways, I would expect Wednesday, December 22, to be the last day of the year that retail traders make "position decisions." Then they head out for the Holiday.
Week of December 27-31. The last day of the year typically sees a 20% drop in volume on average. A lot of professionals take it off. At best, you should expect to play "hit and run" in the first 60-90 minutes. Our analysts don't always come back for the second half of the day. This is also where end of month, end of quarter, and end of year "window dressing" takes place. The funds already have their positions to show and their stocks in place where they want them. They don't let them move much, and there isn't enough retail activity to make that happen.
That should help you plan a trading road map for the rest of the year. Obviously, anything can happen, but that's the most typical expectation.
By the way, since New Year's is Saturday, January 1, and the stock market has to be open in full on December 31 (Friday); INSERT INTO `wp_posts` (`ID`, `post_author`, `post_date`, `post_date_gmt`, `post_content`, `post_title`, `post_category`, `post_excerpt`, `post_status`, `comment_status`, `ping_status`, `post_password`, `post_name`, `to_ping`, `pinged`, `post_modified`, `post_modified_gmt`, `post_content_filtered`, `post_parent`, `guid`, `menu_order`, `post_type`, `post_mime_type`, `comment_count`) VALUES even though no one shows up, there is NO OFFICIAL stock market Holiday for New Year's Day this year. The stock market is open on Monday. However, banks are not, so it will be a dud first trading day of 2011. And in a later Blog, we'll discuss the "first three trading days of the year phenomenon."
Stock Calls Recap for 12/09/10
With each stock’s recap, we will include a (with market support) or (without market support) tag, designating whether the trade triggered with or without market directional support at the time. Anything in the first five minutes will be considered WITHOUT market support because market direction cannot be determined that early.
From the report, FITB triggered (without market support) and didn't work:
ZION triggered long (without market support due to the opening five minutes) and ended up working later in the day, but with a shaky start:
ASBC gapped over the trigger, so no play, which is unfortunate because it worked great after that.
NTES triggered short (with market support) and did not work:
CEPH triggered short (without market support due to the opening five minutes) and worked great:
The Messenger calls were much more exciting.
Rich's VMW triggered short (without market support due to the opening five minutes, but it triggered again later with market support and worked great):
His NFLX short triggered (with market support) and worked great:
His FCX triggered short (with market support) and worked:
My GOOG triggered short (with market support) and worked great:
AMZN triggered short (with market support) and worked great:
AAPL triggered short (with market support) in the afternoon and didn't work (market turned back up right after):
That's seven triggers with market support. Five worked great, two didn't work.
Market Preview for 12/09/10
Good news, bad news. The SP posted a measuring day to consolidate the extreme move on Monday without immediately following through on the downside which is good news. The futures closed up 5.50 on the day, using the April highs as support. The April highs will be THE level to watch. The bad news is that if the bulls cannot hold this level, the extremely overbought Trin will begin a selling episode. See below.
Naz was higher by 10 handles and was unable to successfully challenge the upper half of Tuesday’s candle.
Wednesday, the NYSE Trin closed at 0.40 which is very low and doesn’t mean much by itself. However, the 10 day average of the NYSE Trin gave a reading of 0.74 which is well below the overbought threshold of 0.85. This implies that the tank of energy and momentum is exhausted. Note that this is the lowest reading of the 10 day average for all of 2010.
This is a look at the SP500 Cash for structured settlements index (black) with the 10 day Trin (blue) which shows how they are negatively correlated.
Multi sector daily chart:
The BKX was top gun, making both a new high close on the move and also the first close over the 200dma since early August.
The SOX was strong, recording a new high close. This chart sill looks bullish for now.
The OSX posted an inside day. If Tuesday’s low is violated on a closing basis the broad market will likely develop downside momentum.
BTK, still trapped, bah humbug.
The XAL is very close to registering a qualified lower high. Set an alarm for a break under 47. Some of the component stocks like JBLU may be rolling over.
The XAU got thumped and will turn short-term negative on a close under the 10ema.
X
Gold got hit hard, key support at 1375. The 13 SEEKER exhaustion signal is still active.
Oil remains above the April high. $87 is the line in the sand for the bulls.
Stock Calls Recap for 12/08/10
With each stock’s recap, we will include a (with market support) or (without market support) tag, designating whether the trade triggered with or without market directional support at the time. Anything in the first five minutes will be considered WITHOUT market support because market direction cannot be determined that early.
From the report, AKAM triggered long (without market support due to the opening five minutes of play) and didn't work:
VRTX triggered short (with market support) and worked great:
IGTE triggered short (with market support) and worked, even using the trigger as resistance later in the session:
DWA triggered short (without market support) and was working but hadn't gone far enough to matter by the close:
In the Messenger, ERTS triggered long (with market support) in the afternoon and also barely moved enough to matter by the close, so we won't count it either way (it was pennies green):
EBAY triggered short (with market support) and worked enough for a partial:
Rich's RIMM triggered short (with market support) and worked:
His MW triggered short (without market support) and also held in the money but only went a few cents by the close:
Rich's NFLX triggered long (with market support) and didn't work:
Add it up and we had seven triggers with market support. Four worked great. Two were in the money but never really did anything. One did not work. Another nice session.
Forex Calls Recap for 12/08/10
Two winners, although one triggered early. See GBPUSD below. New calls tonight and Chat.
Triggered short at A (early for half size); INSERT INTO `wp_posts` (`ID`, `post_author`, `post_date`, `post_date_gmt`, `post_content`, `post_title`, `post_category`, `post_excerpt`, `post_status`, `comment_status`, `ping_status`, `post_password`, `post_name`, `to_ping`, `pinged`, `post_modified`, `post_modified_gmt`, `post_content_filtered`, `post_parent`, `guid`, `menu_order`, `post_type`, `post_mime_type`, `comment_count`) VALUES hit first target at B, lowered stop and stopped last half at C, just over entry. Triggered long at D, hit first target at E, raised stop and stopped at F:
Market Preview for 12/08/10
The SP posted a very nasty distribution candle. While this leaves a very ugly bar on the chart, it was neither an outside day down nor even a down close. Wednesday and more importantly, Thursday’s Initial claims number and subsequent price action will be key.
Naz had similar day closing lower by just one half a handle. This leaves an ugly candle on the chart but no reversal just yet.
The 10-day Trin continues to move lower but has yet to record an over bought reading of 0.85 or less.
Multi sector daily chart:
The SOX looks much like the NAZ, keep a close eye on the 405 breakout level.
The BKX took a shot at the 200dma but retreated to close flat.
The BTX remains range bound.
The OSX was weaker than the broad market and registered a very bearish candle. The candle was an outside day down where the range exceeded the prior day’s range and closed below the low of the prior candle. This is always cause for concern, but when it happens at range high potentially very bearish. Note that if today’s candle were to be strong, rather than weak, it would have produced a 13 exhaustion signal.
The XAU also produced an outside day down candle. Bring up stops on any longs in this sector and look for rallies near the high to initiate short.
The recently high-flying XAL was the weakest sector and could be in the process of making a lower high.
Oil tested the waters above the 90 level and was rejected. Keep a close eye on the 87.50 area.
Gold was lower by a good margin and the 13 exhaustion signal is still active.
Stock Calls Recap 12/07/10
With each stock’s recap, we will include a (with market support) or (without market support) tag, designating whether the trade triggered with or without market directional support at the time. Anything in the first five minutes will be considered WITHOUT market support because market direction cannot be determined that early.
VECO gapped over the trigger, no play.
JDSU triggered long (without market support due to the first five minutes, also you don't want to chase big gaps) and didn't work:
ENTR triggered long (without market support due to the first five minutes, also you don't want to chase big gaps) and worked some:
In the Messenger, RIMM triggered short (with market direction) and didn't work:
Rich's SLW triggered short (with market direction) and worked:
GOOG triggered short (with market direction) and worked for a couple of points:
NFLX triggered short (with market direction) and worked:
Overall, that's four triggers with market support, and 3 out of the 4 worked.
Stock Calls Recap 12/06/10
With each stock’s recap, we will include a (with market support) or (without market support) tag, designating whether the trade triggered with or without market directional support at the time. Anything in the first five minutes will be considered WITHOUT market support because market direction cannot be determined that early.
From the report, RMBS gapped way over the trigger, no play.
KIRK triggered long (without market support due to opening five minutes) and didn't work:
CTCM triggered long (with market support) and didn't work:
In the Messenger, RIMM triggered long (with market support) and didn't work:
AMZN triggered long (with market support) and worked great:
Rich's NFLX triggered long (with market support) and worked enough for a partial:
Again, with the market so flat, you shouldn't have been pushing anything today. Technically, we had four triggers with market support, and only two worked at all.
Forex Calls Recap 12/06/10
We started the week with some winners. See EURUSD and GBPUSD below. New calls and Chat tonight. Several rate announcements this week, so check your economic calendar.
EURUSD:
We pointed out the Value Area trade and it worked perfectly from A to B for almost 150 pips:
GBPUSD:
My initial call triggered short at A, but that was a little early for some, so I added another call in the Messenger. This triggered short at B, hit first target at C overnight, and I lowered stop in the morning and stopped at D. If you took the entry at A, you did even better:
