Sir Pipsalot's Friday Market Update 03-26-2010

Sir Pipsalot

Former FPA Special Consultant
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Hey folks,

Well, we had a bit of a wild ride on the EUR/USD yesterday with higher highs and higher lows abound, so whether or not you made money had more to do with how you constructed your trades than which direction you favored. With this evening's news of a European pseudo-bailout of Greece, it's hard to say how the EUR/USD will react once the European session gets rolling, so it might be best to just zoom into a 15 minute chart and follow any momentum that develops there once the Europeans start trading in a few hours.

The big opportunity I think right now is stocks. We had a very key reversal day that formed an exhaustion gap accompanied by certain price patterns that are good leading indicators that a key high may have topped out and we could be headed considerably lower from here. This is the best looking evidence for a good early short entry I've seen since my strong recommendation to short on 1-18-2010 at 1136 (went down 90 points from there before staging a comeback). The short from January fell short of my long term expectations, but this more recent signal could breathe new life into the short side on all timeframes.

Right now the S&P 500 futures (ESM0) are at about 1162, and I think a short to medium term trade with a 20 point SL is a very good play and could be used to retain more of a long term short position. This may just end up range trading down 70-100 points, but there's also a decent chance a high like this could top out the retracement rally we've seen over the last year and lead to some dramatic losses, so it's definitely worthwhile to hold on to a portion of a short in case the bigger looming selloff we're due decides to finally take hold.

In news Thursday, UK Retail sales came out much better than expected for this month, but it only lead to a quick 60 pip pop and strong retracement because last month's figures were revised down strongly at the same time. In news Friday:

US GDP Annualized [final revision for 4Q 2010] (5.9% expected) - Final revisions usually don't post spectacular moves, but the potential is there for 25-40 pips on USD/JPY, but it is old news so I recommend being a bit stingy with your entry if you trade this.
If it comes out at 6.5% or higher, USD/JPY should rally 25-40 pips.
If it comes out at 5.3% or lower, USD/JPY should fall 25-40 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. If you have any questions, you can also email me at sirpipsalot@profitmongers.com

To our success!
Sir Pipsalot
 
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