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Sir Pipsalot's Daily Market Update 11-24-2009

Discussion in 'Commercial Trade Journals' started by Sir Pipsalot, Nov 24, 2009.

  1. Sir Pipsalot

    Sir Pipsalot Former FPA Special Consultant

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    Hey folks,

    I said yesterday short Euro and stocks was a good way to position, but unfortunately, it looks like the very solid housing numbers were trickled out and leaked to the markets well in advance which rallied both up overnight. The gains were unsustained though, so it's very likely if you shorted EUR/USD with the recommended SL that you're still in and in profit on the trade now that it's come back down. I'd recommend continuing to bias short by holding previous shorts or looking for new ones in both stocks and the EUR/USD for at least another day or so. If the EUR/USD busts higher decisively through 1.5000 or if the S&P 500 breaks it's Nov 16th high of about 1114, then it's probably time to bail and give in to the thin holiday market euphoria.

    Sentiment continues to hold up at unsustainable extremes though and the fall from here will be quite hard when it does come. As someone pointed out in yesterday's signal thread, Silver looks quite good short right now as it is unable to keep pace with Gold's extention higher. I think our best bet is to whether whatever remaining storm may come here during the thin Thanksgiving holiday week and hopefully come out the other side ready to build some downside momentum. A break of 1.4810 on the EUR/USD, $17.80 on Silver, or a break of 1045 on the S&P 500 would be strong signs that the downside momentum has indeed developed and a longer term short opportunity is starting to confirm itself.

    In news Monday, US Existing Home Sales came out VERY high at 6.1M vs. 5.7M expected which was big positive news, and the price drop wasn't that bad since Oct 2008 at 7.1%, so all was good news. Despite this, the move up on USD/JPY was quite muted due to an obvious leak of the numbers. Oftentimes leaks like this will cause a big move leading into the report that severely limits or reverses the move after the release as those who got in before look to take their profits which puts reversal pressure. Fortunately, we identified this in the trading room and stayed out of that one. In news Tuesday:

    0400 Mainland Norway GDP q/q (0.8% expected) - Make sure you look to focus on the mainland Norway number, not the headline number as the mainland number is what moves the NOK, especially on a conflict.
    If it comes out at 1.1% or higher, EUR/NOK should fall 400+ pips.
    If it comes out at 0.5% or lower, EUR/NOK should rally 400+ pips.

    0400 German IFO - This report has underperformed and I don't believe is as tradable as it once was. I'm going to skip it and use any potential volatility to fine tune any potential Norway GDP trade on EUR/NOK.

    0445 BoE Inflation Hearing Testimony - Expect some potential volatility surrounding the GBP/USD for an hour or two after this Q&A gets going. It's possible a tape bomb could come out of this, but it could also end up being a dull waste of time.

    0830 US GDP Prelim 3Q Annualized (2.8% expected) - They expect the number to reign in a bit from the 3.5% advance number to now 2.8%. I think a 0.4% trigger is appropriate since this is an annualized number. It's hard to say whether EUR/USD, USD/JPY, or both (meaning EUR/JPY) will trade optimally on this one. I'd prefer to play it safe and look to USD/JPY first and consider moving over to another pair as needed.
    If it comes out at 3.2% or higher, USD/JPY should rally 30+ pips.
    If it comes out at 2.4% or lower, USD/JPY should fall 30+ pips.

    1000 US Consumer Confidence (47.5 expected) - It's a similar story on US Consumer confidence in that it's hard to say which pair will work best. I'm going to mix things up a bit and look for EUR/USD to take the lead on this one as it did last month.
    If it comes out at 52 or higher, EUR/USD should rally 30-40+ pips.
    If it comes out at 43 or lower, EUR/USD should fall 30-40+ pips.

    On a side note, there will be no signal released for Thursday or Friday as I will be taking those days off to celebrate Thanksgiving with my family. If Norway GDP ends up being a good trade, I'll include in tomorrow's signal a highlighting of Swedish GDP on Friday even though I won't be trading it.

    That's all for today's update. If you'd like to learn more about trading or trade along with myself and my collegues, come join us at Profit Mongers. Our subscription is very reasonable at $179 per month, and right now you can sign up for a 2 week trial to get started for only $29. This offer is for new customers only.

    To our success!
    Sir Pipsalot
     
    #1 Sir Pipsalot, Nov 24, 2009
    Last edited: Nov 24, 2009
  2. Vladon

    Vladon Private, 1st Class

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    Thank you for the signal. I have managed to earn some money on Norway GDP data release.
     

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