Just as the charts predicted last night, the EUR/USD headed higher from a gap down, the Yen kept falling and the Futures markets for ES, NQ and TF all went higher, more on that.
However Japan is not coming off as a 1 day knee jerk event, the bond market there- as mentioned last night, the most debt of any developed country- was halted again today. Worried Japanese investors made a major show of their flight to safety sendingFrench and Belgian bonds to record lows, the Spanish 2 Year to sub 2%, the German 6 month bill to negative territory and the US 10/30 year are seeing a bid as well. ANYTHING BUT JGB'S! Wouldn't it be something if this QE, Mother of all QE's, not the Bazooka, but the tank that Kuroda built to halt 2 decades of deflation actually was the thing that did in the Japanese economy once and for all, at least until a new reset emerges which is probably a far better idea than papering over the problem with Yens. Portugal is the flavor of the week in Europe and probably the next at the bailout trough as last week their constitutional court said all is fair if the government wants to pay its workers in bonds rather than cash-WHAT? Serious? YEAH, SERIOUS! Finally (well not even close, but as close as I need to go), the earnings season is kicked off tonight as usual by Alcoa (AA). The charts... Currencies
EUR/USD rises overnight after a gap opening lower
USD/JPY is a little scary in how flat it is... Single Currency Futures...
USDX 1 min has a positive divergence, maybe this helps the USD/JPY head higher, it's not going to help the EUR/USD though, however this is a short intraday chart so it will change as the day goes on and I'll update you.
USDX since the pullback on the 5 min chart shows the same small positive divergence this a.m., but it is still well within the pullback.
Yen 1 min is still leading negative so again this is good for the USD/JPY
However the larger problem of the longer term Yen charts still exists and is quite scary as it looks like the BOJ really has lost control and it's only matter of time, we'll see what that 60 min chart looks like later today to know a little more.
The Euro 1 min went positive since last night's post and in to the European open and headed higher, it has a slight negative divergence, taken with the USD's positive, the EUR/USD should see a pullback early on today.
The Euro 5 min however remains in line so I think it's just a pullback.
ES was showing up as positive in the post last night even though it had gapped down, the divergence sent ES (SPX futures ) higher, they are just about in line, but with EUR/USD trouble early on they may see some draw-down.
NQ (NASDAQ) intraday futures look VERY much like they'll see early draw-down, either pre-market or in to the open, however again these are intraday and will change.
TF (Russell 2000 Futures) also saw higher prices from last night's positive divergence, but look set to see early weakness, the thing you have to remember is this...
This is the last couple trading weeks in the SPX, note that how the market opens is exactly the opposite of how it closes, so early downside should be met with closing upside, we'll see if there are any divergences in the early going that are worth fading. Besides that, CONTEXT for ES is already on the case working toward a green close as the ES model is 8 points above ES currently.
Many of the charts you see here at WOWS are my proprietary indicator 3C which reveals underlying institutional money movements and often contradicts price. To understand the annotations made on charts, you must first understand that 3C has no numerical value, it is a pure divergence indicator. Positive divergences represent accumulation by smart money, negative divergences represent distribution by smart money and when 3C trades with price, that is trend confirmation.
The chart annotation system is simple; white arrows represent relative positive divergences, red arrows represent relative negative divergences and green arrows represent trend confirmation. When 3C is in a white or red box, that represents a leading positive or negative divergence, leading divergences are the most powerful.
We analyse 3C in multiple timeframes, the longer the timeframe the stronger the accumulation. 1-2 min timeframes represent intraday moves, a 5 min timeframe can represent a day or two and 15 min timeframes average trends of a swing trade nature. 30 and 60 min charts can move the market for a month or more and daily charts can be over a year.
You'll get use to seeing the charts and understanding how the multiple timeframe analysis works and works well.
Welcome to Wolf on Wall Street.
The trades featured here are meant to maximize returns with the least risk and highest probabilities. Unless otherwise mentioned, all trades are meant to be executed at market. I prefer long-term trending trades which perform well in rising markets, but really stand out in declining markets. However, we get occasional one day gifts 30,40,60% 1-day gains. I'd urge you to consider taking some or all off the table in such cases, the markets don't give gifts like that often or for very long. Most of the returns that make the system outperform so well come in short-entry trades. If you are opposed to short trades, this is not the system for you, unless you are ok with buying an inverse ETF. If you would like more information about the truth about shorting stocks, just email me.
Risk management. I recommend a specific and consistent risk management approach to all positions. In most cases we try for 2% risk money (2% of portfolio) unless such a position size exceeds 15-20% of overall portfolio in actual position size. Each trader is different and each has a different allowance of open trades. I like to keep the overall money in the trade around 10-15% of portfolio per position in case of gaps against you. Stops are generally executed at the end of day and I personally never place a stop order, all my stops are mental; remember, the middle man gets to see everyone's cards. When you are not in tune with the market or opportunities just aren't that spectacular, I take my risk per position down to 1% or even half a percent of portfolio value.
Each trader is different and must determine their own level of comfort with risk. I do have a channel stop which I provide to TeleChart/StockFinder users for automated stops, I appreciate you using my links to sign up if you do. The Trend Channel catches trends and works well as it automatically adjusts for each stock's volatility. Arbitrary exits based on nervousness about the markets WILL decrease the portfolio performance dramatically. This system will not ever get you in at market bottoms or tops. The recent 1 year performance against the Russell 2k buy and hold had the system beating it by 3:1. Ultimately it is up to you as to how you proceed, but I'm always available to help you determine what might work best for you.
I do use other scans and systems when market conditions warrant their use and may change strategy with market conditions.
The MOST IMPORTANT tool you have to bring you long term success is RISK MANAGEMENT. There are plenty of articles linked at Trade-Guild.net on Risk Management. We can be wrong 75% of the time and still outperform the market with solid, consistent risk management.
Position Sizing
The position sizes noted in the positions @ 2% risk of portfolio are based on a $20,000 portfolio-adjust as needed. Due to tight stops, there is the possibility, even probability that one position could take up the entire portfolio. You need to decide how many positions you want to trade and reduce the position size according to that. For instance, if you want to trade 5 positions in a $20,000 portfolio, no one position should be valued at more than $4,000-not risk money or 2% rule, but share price entry x shares.
Futures Update BR-EXIT Edition
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So the conventional wisdom couldn't have been more wrong. Those chasing
risk and closing hedges couldn't be in a worse place right now. I would
still remin...
This website may include stock and market analysis. Any opinions, ideas, views and statements expressed here are opinion only, subject to change without notice and for informational purposes only. Trading stocks carries a high degree of risk. It is possible that an investor may lose part or all of their investment. Accuracy and timeliness of any information is not guaranteed and should only be used as a starting point for doing independent additional research allowing the investors to come to his or her own opinion. Nothing on this blog is to be considered a buy, hold or sell recommendation. *Wolf on Wall Street portfolios are PAPER TRADED, no real money is used. Any investments, trades and/or speculations made in light of the opinions, ideas, and/or forecasts expressed or implied herein are committed solely at your own risk, financial or otherwise. Results are dependent on market conditions, timing and trading style. Comments posted on Disqus Threads are not moderated and are not representative of opinions of authors of this site.
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