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Audio FX listeners

Having trouble uploading the images from James’s FX pups commentary from Friday and Saturday. Working on it an will have them up asap.

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shaysworthy1.jpgUSD/JPY-PARITY open up “new chapter”, USD/CHF, closing in on Parity

*** Fed announcement, w/ Bear Stearns, opening up Earnings next week, risk aversion pushing yen higher.

EUR/USD-finding no resistance, “where is the strong dollar policy”

½ pt/ ¾

Commodity etf’s—dbs, gld, dba, dbc.

CPI #’s (Probablly lower, off 2 for 1 sales, and saving $6.57)

http://forex.investools.com/commentary/audio.fx 

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Euro Gone Wild

Not to be mistaken or associated with the all-too well know similar title with “wild” in its heading (guys, you all know what that is all about from those late night infomercials), the euro has now hit the target on an ascending triangle formation (as seen in the below chart.) It has run and mad a 700 pip move and what a move it EUR/USD Ascending triangle formationwas!!!

Now that it has made the predicted move I am starting to see a possible pull-back down to a support level. I am not sure if it will pull back to 1.4900 or 1.5000 if it does. Currently, anything trading against the dollar seems to be the best bet to trade and may be the case for a while to come. It is hard to see this because I think the Fed and the administration wants the dollar to stay down. I like to think there is a method to their madness but for now, trading against the dollar may be the best thing for the time being.

~ G

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shaysworthy1.jpg Never thought that I would say that Eliot Spitzer might be involved in a prostitution ring and you might want to sell commodity currencies at all time highs.

Risk off is more pervasive than commodity highs – Buy risk aversion today which is primarily CHF/JPY, ag. commodities, currencies – then majors.

Choppiness and radicalness in commodities make it historically significant as a potential topping price action. Combine that with the Rising risk aversion and potential credit crunching of hedge funds and we in a world of hurt.

Rush for liquidity is going to move fed to act strong

Top Currency Only CTA’s are reporting < 1% return for the year. To make the top 10 list you have to be better than 1%. Top pro reporting CTA is at 13.4 % return on over a million.

Send in responses to the Steve Jobs homework – reposting link

Tie in the Steve Jobs Stanford speech to trading.

Audio commentary: http://forex.investools.com/commentary/audio.fx

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bellagio2a.jpg You will never see anything else like this, for investors, I promise: this year’s Investools Investor Conference. In the Bellagio, mmm. I love that place. Last time we stayed there I stole the pillows because they were heavenly. Sadly, I got charged (expected) and yet they are now getting frumpy and gross. *sigh.

Anyway, this is definitely to be checked out (everyone who goes always raves about these conferences, I’ve seen it year after year! Even if it does mean you’re staying in only a ghetto version of that place we talked about last Friday…):

http://www.investools.com/lasvegas2008

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gbpchf.jpg If you watch this pair, you may notice it’s gunning for getting below support this morning. It’s still in the area (currently at a low from mid-January), so it hasn’t breached it yet. Is it a good buy to enter a short position if it does?

 

gbpchf2.jpg This is where looking at the big picture comes in handy, and I mean big! Turns out that, looking back to 2003, if it break out to the downside we’re right at another major support level. It lasted for months, and was a major turning point from down to up. If you see a beak out over the next day or two, or whenever, watch out – I personally don’t like wondering if it will have problems going down further … I like every odd and degree of confidence I can get.

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Thank you, all 64 of you, who tuned in to our webex tonight! Enjoy our blog!

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So much for the EUR/JPY

eurjpy1.jpg Highlighting the importance of entering on the bounce and not guessing it will go lower. Note that now we have an ever nigh (highlighted rectangle) – the downtrend is interrupted until lower highs/lower lows begin again.

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No time!

Sorry gang, I’ve been preparing a discussion to give our stocks/options student tonight via webex and it’s consumed me all day. All I can say is the name of the game is risk-aversion right now. It’s all about the JPY and CHF and I hope you got in on that GBP/JPY after all the yammering we’ve done on it!

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Remember that Monday is a holiday – Martin Luther King day – and that liquidity will dry up as the afernoon goes on. Also, there is basically no news from here on out for the day on the economic calendar. Options expire for stocks today, which will also produce odd moves in stocks. Summed up: not a great day to be trading, and not too representative of where we will be when next week begins.

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mixedsignals.jpgHeads up and head over to the Trading Psychology section up top, I’m finally working on that sucker.

I put a list of “top 10 trading mistakes new traders make” in there. There’s a history to this list. Eric Utley here at Investools emailed all us coaches over a year ago regarding what we see the top mistakes of new traders to be (so, I helped create this list). Honestly, you couldn’t go anywhere else in the world to get better answers. There’s a lot of us, we’ve taught traders for years, and we trade.

He promptly put it up on the stocks site. Some months ago they took it down. I asked Eric about it but the guy never saves anything. I wanted to find it to put it here … so I googled it. I knew with our gobs of students out there someone would put it on a site, blog etc. Where I didn’t expect was to find it is on a commercial site (Realmoney.com) with no credit due to us (credit went to some Jim guy). they even mislabeled it – it’s not the top 10 mistakes that traders make, but that new traders make. NEW, people!!! I don’t know any traders who have traded a while who keep making these mistakes and keep trading. Sort of pisses me off actually.

Anyway, horrendous rant/tantrum over. Most of you will recognize this stuff as what we say all the time, it definitely is our flavor or trading, some of you may even remember it if you’re a stock student too. Enjoy!

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shaysworthy3.jpg Today on InvestoolsFX Audio:

Today in the audiofx, more follow-up with the GBP weakness and follow-up on trends, credit flu and who is catching it. The Taj Mahal doesn’t want your USD anymore, so what do search terms have to do with that? Find out on today’s daily audiofx commentary…

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  I hope nobody minds but I get lots of emails from students each week – which I love, by the way, I enjoy talking to all of you – and I figure it’s a good idea to share the Q & A sometimes. Here’s a good question:

  Could you help me with a few symbols for the currency etf’s? I know that the EUR is FXE,  the jpy is FXY,  what are the symbols for the CHF and CAD?

   [Remember, an ETF (exchange traded fund) is a stock, and each share is a grouping of shares of other stocks from an index. An index is just a big fat list of common things. So the Dow index is a list of 30 big companies from different sectors representing the U.S. economy. So when you buy one share of a Dow ETF like DIA, you own all 30 of those companies (fractions of shares, like pieces of a pie). ETF’s are a great replacement of mutual funds, since you can easily outperform them (simply buy and hold DIA…) and pay much less in expenses.]

  That out of the way, here ya go and a few others!: FXF (Franc), FXC (loonie), FXB (sterling), FXA (aussie), FXM (Mexican peso), FXS (Swedish krona).

 Currency ETF’s are a nice way of de-leveraging (i.e., easier to trade) and participating in the FX market in a stock account. But beware, some are illiquid – my own rule of thumb has always been >100K in daily volume for stocks as a bare min.)

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wavesmall.jpg  This was an interesting read in Marketwatch about Harry Schultz, who is a famous trader and has a newsletter (don’t just run out and buy it, that doesn’t mean some smart guy will simply make you rich by reading his stuff.)

   Shultz’s latest letter, just in, is absolutely apocalyptical: “A financial tsunami is upon us,” he says, caused by lax credit and complications introduced by Wall Street’s derivatives craze.

Among other interesting ideas raised by Schultz in his intense, somewhat terrifying introduction: recession, possibly depression; bank failures; exchange controls; housing prices down by 50%; credit card company failures; money market fund dangers; tripling of U.S. jobless numbers; federal bail-outs for Fannie Mae.

His advice, translated out of his shorthand style: “If you have not already done so, take immediate measures to safeguard your assets against the global derivative crisis … Most urgent is close out time deposits, buy non-U.S. government bonds.”

In other words, Schultz is saying the U.S. banking system is threatened. How’s that for a Christmas greeting?

Schultz says “the second biggest danger is owning U.S. dollars in any form, (it) has crashed and going much lower … use dollar rallies to exit dollars or sell short … This is not a time to seek profits, but to protect what you have … Portfolio diversification is essential in troubled times.”

Schultz’s favored currencies: “In order of preference: Swiss Franc, Australian dollar, Euro, Canadian dollar.”

Schultz is a trader and his specific market advice is nuanced. He writes: “Direction of global stock markets uncertain. Balance stock holdings between long and shorts to counterbalance draw-down risks, and/or hedge exposure via puts, futures, or bear funds … Exposure to gold shares and bullion should be a minimum of 35-45% of your total portfolio, with at least 10% in physical gold bullion and coins, and/or very rare coins … ”

On gold, he writes: “The public is still not in the gold market. They will be in 2008 as the derivatives and credit crises bring down more financial institutions (amid recession) and eyes will be opened, via pain. While Rome burns, gold will smash through its old unadjusted-for-inflation $850 high on the way to $1,600, & who knows how far beyond …”

In case you’re wondering, Schultz is up 21.42% over the past 12 months according to the Hulbert Financial Digest, vs. 7.51% for the dividend-reinvested Dow Jones Wilshire 5000. Over the past five years, Schultz is up a remarkable 34.38% annualized vs. 12.85% annualized for the DJW.

   Now, don’t necessarily tun out and scoop up gold, dump dollars, and move to Mars because we’re dooooomed! This is one guy’s opinion. A very popular opinion, and interesting how he puts things. We trade what we see on the chart, according to our signals, right?

 

   And hey, if you’re 80 and up 35% a year over the past 5 years … well, your just a stud. And if you’re 70 and reading this, get to work learning to trade in the flower of your youth!!

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Watch this video, that I actually watched in thinkorswim’s trading platform the other night. Which is way cool, by the way, that you can watch CNBC right in your trade platform. This will take 10 minutes and is good for you psychologically! (look how eeeaasy it is to fight gross poverty now a days)

Have a great weekend currency traders!!

http://www.cnbc.com/id/15840232?video=604752752&play=1

kiva.gif

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