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Sir Pipsalot's Daily Market Update 12-21-2009

Discussion in 'Commercial Trade Journals' started by Sir Pipsalot, Dec 21, 2009.

  1. Sir Pipsalot

    Sir Pipsalot Former FPA Special Consultant

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    Hey folks,

    Well, the EUR/USD tried, but failed to break above 1.4420 topping out at 1.4411, so our area of resistance did not break and we got another push to new lows. This just makes the 1.4410-1.4425 area an even more important level to watch this week. A break through that resistance should see enough follow-through to bring fibs into the picture, the first of which (38%) is now at 1.4595. I'll actually buy the Euro if it breaks through that resistance and gives us a bit of a pullback down. Long term however, the best idea is to wait for this countertrend rally to mature and short it when it starts to turn lower. If you're in on a medium to long term short that you'd like to give room, but also keep a tight rein on, I'd suggest a 1.4430 SL.

    The short term pattern on stocks has become pretty undefined, so for now we're watching important levels. On the S&P futures (ESH10), we're watching the lows from 12-9 at 1080.50. If we break through 1080, we're likely to have a multi-week decline targeting first the 1060's, then likely the 1030's. I still believe a rally up to new highs into the low 1120's could be a great spot for a short, but we'll have to see what it looks like when it gets there.

    There was no particularly key news on Friday 12-18. Keep in mind this is a holiday week and there may be thin market conditions at many points in this week's trading. That's not necessarily a bad thing. There are two types of thin market conditions: thin volume, and thin liquidity. Thin volume means no one's really putting much into the market and everything is very muted. A bit more rare but more lucrative, "Thin liquidity" means there aren't enough bids and offers available, so the decent volume traded creates exaggerated trends and moves. Obviously near holidays, you want to keep an eye out for signs of those thin liquidity situations and try to capitalize on them with trend following strategies. In news Monday:

    0830 CAD Retail Sales m/m headline (0.8% expected) - I think it's best to play this one a bit safe. CAD news around holidays tends to underreact rather than overreact, so I'd only trade it with a bit larger than usual deviation of 0.8% even though usually 0.5% should do the trick.
    If it comes out at 1.6% or higher, USD/CAD should fall 30-40 pips.
    If it comes out at 0.0% or lower, USD/CAD should rally 30-40 pips.

    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
     

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