THE HATED FRIDAY

                                   Trader Lounge: Meet At 3 PM

Another day of dodging bullets. As you know from yesterday’s post, I went home short EURUSD; all it took was 12 hours of mind-numbing back and forth [with the obligatory bump up to try and shake me out] for me to basically scratch the trade when I had the chance. When the “Flying Wedge of Death” hits [see my other post], breaking even is a victory.

I have stated this before, but I want to reiterate it again now; I have never seen so many FWD’s in such a short time frame [the last few months] in my 30+ year trading career. Normally, you can expect to see this about 3-5 times per year. Lately, it’s been 2-3 times per week!

What makes these so perplexing and difficult to deal with can be summed up pretty well by the last 2 days; Thursday sees a sharp sell-off that went through all support built over the last week on the hourly charts in about 90 minutes; the market closes [we are short] and there is absolutely no follow through. It’s like we went in time to another day.

“Hey, where’s the selling? Where’d you guys go?”

Everything is link driven by some news leak or rumor; Europe is saved, Europe is doomed, rinse and repeat. Gold is going to $10,000 / oz, gold is toast; you get the idea. Unfortunately, markets rip and dip off of this and make trading very messy.

I’m not happy about making a few pennies, losing a few pennies [excusing the one-off gold debacle from last Friday that had us up 5% and then down 12% in a few seconds.], rinse and repeat. But I do know this; time periods like we are going through now will pass. No way does the FWD stick around.

So, a rather boring last 2 days where we end up losing a fraction of a percent.

Ending NAV:  0.8911

Have a good weekend everyone.

-vegas

ROLLOVER THURSDAY

                                    Not Exactly What I Meant

I’m working on some orders and positions through rollover today, so I will have a final wrap-up tomorrow on today’s action as well as what happens tomorrow.

Have a good day everyone.

-vegas

FIRST THE DIP, THEN THE RIP

                          Another Market “Chip Diller” Moment

One of my big rules for trading survival is that when apparatchiks or politicians speak they have as one of their major objectives to severely hurt speculators. Prima facie evidence on display today.

To be sure, there were a slew of algorithm signals as the Pols spoke, with EURUSD and EURJPY reacting in an epileptic fashion; gyrations of 5 – 10 pips per second as the Fed news was breaking. For good measure, and not to be outdone because they have their own agendas, the “Alice in Wonderland” Pols that infect Europe started their own scripts to reporters across the pond.

A very difficult trading environment, with first a 50 pip dip followed by a 100 pip rip, and then a move back to the middle. Stops on both sides taken out and shot. What we are left with is a market that wants, no demands, hopium in large quantities to keep its nerve.

With record short positions still in play, I have no doubt one of the main objectives of Merkel et al is to destroy those who have the nerve to try and make money off the Euro debacle.

“How dare you try and make money off of our stupidity and arrogance!”

Over the years, they have learned very well how to punish the specs; a little hint here, a little hint there, and next thing you know the freight train is running in the other direction. “Oh, so sorry you got stopped out.”

We made 2 trades today, both slightly profitable, adding some incremental return, but really this type of day is to be avoided. Now that the “big news” is out, markets should return to some sort of normalcy going forward, in which we can take good advantage.

End NAV:  0.8997

Have a good day everyone.

-vegas

THE DAY BEFORE

                                      The Holy Alter Of Cntrl-P

Today is the day before Weimar Ben unleashes the next great wave of money printing and currency debaement easing; the only question is how much?

Today’s action in EURJPY felt very much like short covering; long pauses and very quick bursts upward. Sure, Spanish bonds rallied a little, and Europe’s Pols talked smack all day long about how things were progressing towards a satisfactory resolution, and for good measure even Greece looks like a patchwork government can be formed by tomorrow. Uh huh [and now read my post on the other blog and ask yourself if Nick is going to pay anybody].

It was the 7^th day in a row locked into an inside range; my feeling is the breakout will be rather dramatic, and tomorrow provides the perfect scenario for that to happen. With record shorts all over the place, I think we might see an explosion up in EURJPY [maybe the 102 handle] if Weimar Ben delivers the easing goods.

My intent is not to raise the fund NAV a few pennies at a time, but today’s trade gave no buy signals and came within 8 pips of a sell signal. USDJPY [the bottom part of EURJPY] had only a 23 pip range today, making EURJPY price moves almost entirely dependent on EURUSD. Without some kind of impetus, other than short covering, it’s very hard to maintain long positions given the bearish sentiment in the market. Thing is, when it turns and the short covering is over, you end up with no friends in the market to help you get the prices you want getting out.

And, as I write, the latest rumor dujour of Greece-and-Spain-are-saved has been denied, thus eliciting the obligatory 20 pip immediate dump in price in 1 second.

My gut feeling tomorrow is “The Bernank” will run with some kind of shock and awe that surpasses market expectations of easing. This should prompt a vicious dollar sell-off and stock market rally. We will see around Noontime tomorrow.

We had one trade today that produced a few pennies from the long side. Not what I want, but with no signals today from the algo, it’s what we ended up with.

Ending NAV:  0.8975

Have a good day everyone.

-vegas

IT’S BE CAREFUL WEEK

                                 And We All Want To Be Happy

Since the Spanish bailout was announced 2 Sunday’s ago, EURJPY has been capped in the range of  98.70 - 100.90. Today was the 6^th day in a row of being “inside” this range. It is not at all common to be locked into this type of arrangement, especially with all the news of the last 8 days. What we have seen is gap straight up, followed by straight down turn-on-a-dime, rinse and repeat.

We have been through 2 large gap up openings on Sunday, followed in the European session of selling. Gap openings in general skew the algorithm, and make trading difficult. Add to that the large spreads usually seen at the start of the Asian session, and you have a scenario for sitting on the sidelines.

We did get a sell signal in Asia, but I’m not taking any signal where the spread is 8-10 pips versus the normal 2 ½ - 3 pips. We also got some buy signals today, but after the first one fizzled and left us with a few pennies of profit before going lower, I ignored the subsequent signals.

If I had followed every one, I probably could have added a few more pennies, but I would have to have been very nimble. Outside of Asia, there were no other sell signals for the day for us to get short.

In general, nothing has been solved in Europe; in fact considering Spain and Italy it is getting worse. Unless Germany agrees to something not in the equation at present, I can’t see the Euro sustaining any rally. With “risk” generally off, it makes it difficult for USDJPY to rally as well [Yen weakening]. So, I prefer selling the rallies with an algorithm sell signal.

It’s also “be careful week” because of the Fed meeting on Tuesday and Wednesday, with an announcement around Noontime on Wednesday with their easing plans. Of course, news out of Greece, Spain, and Italy will influence prices as we move through the week.

While I would have preferred some better trade opportunities today, what we got today was sure better than Friday. I still haven’t quite gotten over the gold debacle, and the absolute insanity that rules that market now.

The only other time in my entire 35 year trading career that things got that stupid, in such a short period of time, was in the crash of ’87. Let it be another 25 years before the next one shows up.

So, whoop-de-whoop, we made a few pennies today.

Ending NAV:  0.8968

Have a good day everyone.

-vegas