Sir Pipsalot's Daily Market Update 12-09-2009

Sir Pipsalot

Former FPA Special Consultant
Hey folks,

We've seen an extention lower in the EUR/USD that of course makes me feel a bit dumb for nit-picking over 40-50 pips on the entry price and missing out on the last 200 pips down. However, a multi-day low is likely to form soon and send prices up back above 1.4800 for another opportunity to short at a decent price which is what I'm looking for to get in. If you took advantage of my vague advice by shorting yesterday above 1.4800, I'd work it as a position trade with ample ultimate profit targets.

Stocks proved to be pretty weak today gapping down at the open and never recovering. Anyone who took my advice and got short stocks along with me at some point earlier in the week should be up 10+ points by now. You should always try to take some early profits based on your money management, but decent areas nearby to the downside for TP's are around 1084 and 1065. Below that, we can probably stretch it down to the 1020's. Longer term (many months down the road) we're looking at around 400 on the S&P, but it's likely to be a bumpy ride along the way.

In news Tuesday, UK Industrial Production came in low by 0.5% and turned out to be a big stinker. We were all over it though in yesterday's preview by identifying the potential for disappointment on this one and really widening out our triggers to only trade on a bigger surprise. It seems many people following other advice got suckered in on the diminutive 15 pip move that whipsawed back above prerelease, so I'm glad we had a good non-call on that one. CAD Interest Rates came out as expected with no surprises on the statement, so no trade opportunities there. In news Wednesday:

1500 NZ Interest Rate Statement (no change at 2.5% unanimously expected) - With Australia having raised rates 3 times now, the rumors and pressure is starting to mount on NZ to move towards raising rates with expectations they could move higher as soon as March. While the odds are low they would surprise with a hike this soon, the language of their statement will be scrutinized to figure out how soon they will be moving to tighten.
If they hike, NZD/USD should rally 80+ pips.

1930 AU Employment Change & Unemployment Rate (5K and 5.9% expected) - The Employment Change figure gets a lot of large surprises, so anything smaller will need some help from a helpful move on the unemployment rate. Either one is capable of moving the AUD/USD, so I would avoid trading a conflict.
If employment comes out at 25K or higher, or UR comes out at 5.7% or lower (with no conflicts), AUD/USD should rally 40 pips or more.
If employment comes out at -15K or lower, or UR comes out at 6.1% or higher (with no conflicts), AUD/USD should fall 40 pips or more.

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