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Archive for the ‘U.S. stocks’ Category

Friday 04/18/08

  • Asia – Look at the inverted head n shoulders on FXI
  • Europe – Great Britain giving out pounds – look for institutional traders to step in
  • US – James look into the Financial futures crystal ball and tell me what you see?
  • James how do I trade the financials and the JPY?
  • $ up and commodities down.why??? – Interest rates may not fall as much as the market had been pricing in?
  • $CRX.X what does that tell us, POT,MON, EOG, PCU, IWM -UYM
  • Look at commodities/ w JPY
  • FX Pup Lesson on Stochastics
  • Have a great weekend

Audio commentary Link

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Tuesday 04/15/08

  • To quote from Andrew Busch, currency strategist for BMO Capital Markets: Happy Tax Day! Most likely, this will be the lowest tax rate you will be paying for the rest of your life…….
  • AUD rally then retracement overnight on rumors and then spends the rest of the nigh selling off
  • $CRX.X, GLD, SLV, OIL make the commodity picture increasingly more bullish based off of demand – $ gets whacked
  • UK housing meets up with Browns Approval ratings and gets sold
  • EUR rallies on Poor German News?
  • SKF – Up but CHF and JPY still not selling off??
  • US PPI and what that means for CPI tomorrow? Want to see commodities follow through to get long Commodity equities and currencies
  • FX pups postponed, James Boyd is MIA

Audio Commentary Link

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The Federal Reserve moved today to add liquidity to the markets by announcing a series of actions with other central banks to help improve liquidity and lending for the markets. The Fed are taking this coordinated action without cutting interest rates due in part of rising inflation. US markets showed instant gratification in pre-market trading. and the Dollar rose in strength. The EUR/USD reversed an earlier move 150 pip run up right after the announcement. The USD/JPY ran up 120 pips after the announcements. With all this good news, the bulls may be back for the dollar.

This coordinated effort with the other central banks is being excepted very well with the ECB because it falls in line with what they are trying to achieve. Time will tell if it is a good move for the US markets and other markets around the world.

~G

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dow.jpg Stocks got a HUGE “denied” today as they failed to overcome former support/now resistance (was the old head and shoulders neckline) and came down forcibly from it. See the green oval on the lefthand chart.

 

 

eurusd-triangle.jpg This is a classic “retest”, having broken out from a technical level. What does it mean for the pairs? In my book it’s a big signal to get frisky again with the yen and franc, and back to be careful/be bearish with the more aggressive currencies such as the euro. Look at how the EUR/USD has come down hard from the resistance we’ve been watching.

This is also a good example of how intermarket analysis can help in currency trading. Disclaimer: if you are starting out, don’t think you have to know all this and do it! You can do fine without. But I’ve found it helpful to me as I’ve adavnced over the years.

dowvolume.jpg Stocks have the bonus of having volume attached to their prices. Rising volume supports price movement, falling volume weakens it. We can put volume on DIA (mirrors the dow, and has volume on it) and see a picture of the bears being strong and the bulls being weak (see chart on left). As we see this unfolding, it helps us feel more bearish and bullish of certain pairs because stocks continue to lead currencies in a lot of ways.

Bottom line: as stocks continue downward, so will most pairs, and the yen and franc will strengthen!

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eurusdtnx.jpg So the EUR/USD super trend has stalled. Will it regain its pace?

It’s in murky waters. The dollar is, without a doubt, weak. Evidence is seen on $TNX – as it falls, 10 years yields (rates) are falling, which hurts the buck. And the buck is already hurting.

In the chart, notice how as EUR/USD rises (USD is falling) $TNX falls. Falling rates/rate prospects coincide with dollar weakness. In the green bars, the two prices diverge and we expect EUR/USD to correct bullishly according to the still dropping $TNX. In the red bar we’d expect EUR/USD to correct bearishly because $TNX was rising – alas, though, it was counter trend and the $TNX up-blip didn’t stick. Beside, at that point euro bullishness dominated.

With $TNX still heading firmly lower, the dollar still has an anchor tied around its ankle. The question is whether the euro can oblige, or if this stock stuff spooks it too much and economic worries make the pair choppy. It wouldn’t be surprising.

If US stock weakness continues (it could continue for a long while), and if EUR/USD stays in a funk, you could participate in USD weakness via USD/CHF. Again, it goes back to following your rules vis a vis the charts, and this economic/fundamentals thinking helps point you in the right direction so you know which charts to focus on, and to see the chart changes coming.

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stocks.jpg Shocking and unsurprisingly stocks went down in a heavy bone-crunching thud today! Bam! We’ve seen this coming for months, talked about it here, fundamentals have been getting nasty in the US (hi, financials, thanks mortgage/real estate) and it showed up as a long term double top on the US indexes (see S&P500 chart beside this) and now a gigantic break below support today.

Wasn’t this what we were looking out for on Monday? 🙂

istock_000003880585xsmall.jpg This has all sorts of implications for currencies, the least of which are “unwinds” in carry trades involving the yen and franc. So the strategy is real, real simple here: if you haven’t already look for trades involving these as they continue to strengthen. And enjoy raking in the pips.

Once again, stocks lead most currencies (the counterparts of the yen and franc in the carry trades) most of the time except at important turning points like the last couple of days.

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gbpjpy8.jpg After the carnage in stocks today (more later), the GBP/JPY is eyeing the downside again. If you traded the pair on the hourly chart, you were stopped out in the last few days. But oh, what a run! And if you gave back too much in gains, time to devise an exit strategy that captures more of the move.

And so I present … the GBP/JPY hourly triple top! Ta-da! Notice where I drew support (“neckline”) to breakout from, and the green oval target below, which by the way, happens to be at another support level: the turning point bottom.

Most other crosses have remained in the dumps, it’s the pound that’s shown some strength. But the fundamentals of the pound remain week, and some short term strength is nothing to be excited about. It’s born out technically in the trend on the daily chart. As we get into the Asian session tonight, I’d like to see the break of this triple top as Asian investors jaws’ drop from seeing the damage in US stocks and their own follow suit.

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