No updates for a few days.......European Motorcycle Tour

I will not be updating my blog for the next 10 days as I am going off on my motorcycle for a tour taking in Belgium, Germany, Austria, Italy, Switzerland and France.   Approximately 2500 miles.......and I'm hoping for sunshine all the way!......

It normally rains when we are away...but the roads are great for biking and the scenery is fantastic, so getting wet is a price well worth paying.

If you're a trader..I wish you good trading!

ABF: Update

My ABF:LSE short trade has made some downward progress and I am going away tomorrow for a week.  The price appears to be "bear flagging" and the indicators are all heading south.  I have therefore decided to leave this trade running as I can't see any reason to take my profit now.

I will be alerted if the price hits my first target and I will then sell half of my holding, move the stop to break even and run the remainder in the hope that my second target will be reached.

In the meantime, my protective stop is in place.

USD/SEK closed for a profit

I've closed my long trade on USD/SEK for a profit....the price hadn't quite reached my target but I am going away tomorrow for a week and I wanted to tidy up my book.   The trade achieved a  R:RR 2:1 in 24 hours....very acceptable!

FTSE Short Trade closed for a profit

I have closed my FTSE short trade for a profit.  It was a little frustrating as it made two attempts to break down big time...and failed.   I had trailed my stop and was stopped out as you can see o the chart.  However a R:RR o 1:1 in 24 hours is very acceptable!

Facebook : My final thoughts

Since there is more interesting things to concern myself with as a Trader,  I'd just like to add the following: 

Facebook’s stock is down 29% since it opened at $42.05 per share on May 18. This grim result is causing a lot of howling about the IPO process and those “damn Wall Street banks.

Of course, you could take the view that investors who fool around with hyped IPOs get what they deserve. My sympathies lean in that direction. If you play with fire, you might get burned. 

Regardless, I agree with this comment in yesterday’s Wall Street Journal:

What could have been a model example of the market’s strengths — an eight-year-old company with 900 million users raising billions of dollars from a cross-section of the investing public — ended up as a case study of the power wielded by insiders over outsiders.

In short, Facebook is another black eye for a market that already has a lot of black eyes. In the last dozen years, we've suffered through two 50% drops from peak to trough, plus a long list of scandals and shenanigans. Facebook just added to the feelings of disgust and revulsion people already felt toward the stock market. 

New Long Trade USD/SEK

I've just taken a second chance entry on USD/SEK.

The price broke from a Fibonacci Funnel and (as is often the case) re-entered the funnel on a re-test.  I've entered long on the second break.   Stop is at red line and target is at the solid green line.

ABF:LSE Brief update

Whilst I do not expect this trade to make rapid progress, it has already made a little progress to the down side.   The price action appears to be forming a "bear flag" pattern which I'd like to see breaking to the down side.

New short term trade - FTSE 100 short

I've taken a new short trade today on the hourly chart of the FTSE100 CFD.

The price has been trending down since 1st May and has formed a pattern within a pattern.

The first pattern is an inverted version of "Fibonacci Funnel" which is highlighted by the green lines.   This is a bearish pattern.   The second pattern is an ascending triangle (blue lines) which is normally a bullish pattern.   However, it has just broken to the downside and I take that as being bearish too.

Furthermore, there is a bearish divergence (purple lines) which adds to my edge.

The price may retreat into the funnel or up to the lower trend line of the triangle for a re-test (which is a common occurrence) before continuing it's downward trend...........but then again it may not!

In any event, my protective stop and profit take orders are in place.

New Short Trade - ABF:LSE

I have entered a new short trade today on Associated British Foods (ABF:LSE).   The monthly chart shows prices making all time highs last month and dropping off slightly this month.   However, the indicators all show bearish divergence to the price and the price does not appear to be sustainable at current levels.

The daily chart shows a bearish rising wedge formation and I've entered short just as the price re-tests the lower trend line.   The price has just made it's first lower low after what can be described as a substantial uptrend spanning from August 2011 through to April 2012.   I'm looking for a pull back.

My stop is just above the rising wedge upper trend line and for this to be hit, the price needs to make a new all time high.   My first profit target will be at the 1:1 risk to reward ratio and I will monitor the price action as time progresses.

Valspar trade stopped out VAL:NYSE

My trailing stop has closed my Valspar trade before reaching my second target.  Only time will tell if my stop was placed at the correct level, but, I place a lot of trust in the Fibonacci ratio's and have made this part of my trading plan so I try to enforce it rigidly.   This was a nicely profitable trade after all is said and done.

Facebook.....my prediction of 17th May proves to be spot on

My post dated 17th May suggesting that "Buyer beware" should be the position to take with regard to the Facebook IPO seems to have been spot on!

Look at the news today.....Mark Zuckerberg, Facebook, Morgan Stanley all being the subjected to lawsuits by disgruntled shareholders.

Morgan Stanley are already reported to be reviewing orders placed by its retail brokerage clients for shares of Facebook on a trade-by-trade basis and will make price adjustments if those clients paid too much for the stock, according to people familiar with the situation.

Talk about a farce????.........the retail investor gets a caning once again!

Where do we go from here?

So...where do we go from here?

That's the question which is always perplexing a Trader's mind.   The Dow Jones Industrial Average has been in free-fall for the past 14 trading days.....and given that the price is still above the 200 day simple moving average, this type of decline has only happened two other times in the last 100 years.........

That means that most of us have NEVER experienced such market conditions in our lifetime.

In my opinion, the fact that the Dow can experience such a historical decline and still be above the 200 day SMA, simply proves how over bought the market was.

VAL:NYSE Update

Valspar continues to move down toward my 2nd profit target and my stop is trailing in accordance with my plan.

AUD/JPY hits profit target

My AUD/JPY  short trade has hit my profit target and is now closed.   Whilst I am happy to have made an overall profit from this trade,  I have mixed emotions about how I handled the trade.

My first entry was very poor judgement on my behalf and that hurts.   However, I am pleased with my actions in having the confidence to re-enter into the trade as the pattern was still valid.   That proved to be a good decision and enabled me to turn a loss into a profit, without chasing the trade unnecessarily.

Of course, I am also aware that my earlier error means that my final profit was only half the size it would have been if I had acted according to my trading plan in the first place.

As I said earlier......LEARN and move on and be thankful that I had the confidence to re-enter the trade.

New Trade- AUD/JPY

I am in a new short trade on the AUD/JPY currency pair, which has formed a volatility funnel.

I saw the pattern soon after it completed and took a late entry.   HOWEVER, instead of placing my stop at the level dictated by the pattern (the red bar across the top of the chart,) I decided to place it at the bottom of the pattern (the short light red bar)........WRONG DECISION!
Why was it the wrong decision:-
1).  The pattern dictates where my stop should go
2).   My trading plan calls for me to place my stop where the pattern dictates.
3).   If I wasn't happy to place my stop where the pattern dictates, I should not have taken the trade.
4).   I entered the trade using a market order.   I should have used a sell limit order to enter me at what was the second chance level.

I was stopped out for a loss.   However, as the original pattern was still valid and the price level at which I was stopped out would have been the original entry price, I took a "second chance entry", which is circled red on the chart.   Needless to say my stop on this trade is where it should be....at the top red bar!

Learn and move on!

The subsequent price action has been frustrating and the price has hit the blue support line four times in the past three days, without breaking through it.   I may., therefore take my profit if the price touches that line again, depending on the price action and indicators, as it approaches.

VAL:NYSE Update

Valspar is making progress towards my next profit target and my trailing stop is in place.   It made a strong move down two days ago and then made a weak attempt at a bounce which, from my point of view is encouraging.

Facebook - Buyer Beware?

This charts shows what has happened in the market since the much anticipated Blackstone IPO in 2008 and runs up to the upcoming Facebook IPO.

Those who invested in Blackstone way back then and held on are still losing money today!

BUYER BEWARE is my opinion!

The above is a cartoon which appeared in The Economist, that neatly sums up the implications of the Socialist win in the French presidential elections. German chancellor, Angela Merkel, is meeting French president, François Hollande, for dinner at Das Austerity Euro-Café. Austerity preaching Merkel is having a miniscule single sausage for dinner, while Hollande is enjoying a sumptuous repast and obviously ordering the most expensive wine from the list.

The cartoon would be funnier if it weren’t so true. Austerity is now suffering a retreat on the order of Napoleon’s retreat from Russia in the winter of 1815. Her Christian Democratic Union party suffered its worst post WWII defeat in last weekend’s North Rhine-Westphalia elections. It is now looking like Germany will have to accept a higher inflation rate as the price for bailing out Europe, something it is loath to do. Needless to say, this is terrible news for the Euro

Charts Are Breaking Down All Over

Charts Are Breaking Down All Over. 

They say a picture is worth a 1,000 words, so here are 4,000 words worth. The good people at www.stockcharts.com put together this series of charts establishing beyond any reasonable doubt that the “RISK ON” trade is breaking down across all asset classes.

Everything is breaking down, simultaneously and in unison, including the S&P 500 (SPX), Gold (GLD), Silver (SLV), Oil (USO), Copper (CU), the Euro (FXE), the Australian dollar (FXA), and the Canadian dollar (FXC). In the meantime, Treasury bonds (TLT), (TBT) are moving from strength to strength. 

The news from Europe can only get worse. An American recession, considered impossible by strategists only a month ago, is now looming large as their economic data continues to deteriorate. The flight to safety has exploded into a stampede, driving the US dollar index up 12 consecutive days, a new record.

If these charts continue to break down, as the news flow dictates they should, here are some downside targets which could be met pretty rapidly:

(SPX)  1,280

($INDU)  12,200

(IWM) $70

(FXE)  $126

(FXA) $95

(GLD) $150

(SLV)  $25

(USO)  $32

(CU)  $22

VAL:NYSE Update

Valspar has made a sharp move down today which is very favourable for my trade.   My stop is being trailed and my remaining profit take orders are in place so the trade will now run its course while I continue to monitor the price action.

VAL:NYSE - Update

Valspar (VAL:NYSE) has sold off this morning along with the market in general.   The price has hit my first target at the break of the lower trend line and I have taken some profit there and moved my stop to break even with a trailing stop. I will continue to manage the trade and act in accordance with my trading plan strategy.

My goal of trading well......

Traders who routinely make enormous amounts of money trading don’t mentally count the pounds or dollars while they’re trading. They don’t keep a mental calculator continuously running in their head to constantly keep track of how much money they’ve put into their account.  “Let’s see, I bought 1000 shares of Vodafone and it’s up one point, times one Pound or dollar a share, equals 1000 pounds or dollars!” Nothing and I mean nothing, will blow your concentration and cloud your judgment faster than keeping that calculator running in your head, calculating the pounds or dollars you’ve made or lost each minute that goes by during the trading day. Another booby trap is to announce to the world, your husband, wife or even your dog that you’re going to make a specific amount of money trading today.  You’re setting yourself up for failure.  Setting as specific dollar amount you must bring home each day, especially if you’re a beginning trader, assures that it probably won’t happen.  This need to make a specific amount of money colours your view of the market and pressures you to open positions that are marginal trades because you have promised yourself or worse yet, someone else - that you’re going to bring home the cash!  Your pledge echoes in your mind, so you force trades.  Odds are, you lose money.  Now you’re embarrassed with yourself and you start questioning your self-esteem, which automatically leads to more losses. The cure for this illness: From this point forward, your goal is not to make money.  Your goal is to trade to trade well!  Money is a by-product of trading well.  A very interesting thing starts to happen when you focus on trading well.  Your profits will start to add up a lot faster than they did when making money was your primary goal.  This is simply because traders who focus on trading well cut their losses and let their winners run.  They protect their capital and leave unnecessary risks to others.  They recognize a choppy market and sit on their hands and don’t trade.  They make promises to no one, including themselves, about the money they want to take home. Traders who trade well let the market come to them.  They are extremely patient and disciplined.  They wait for the perfect setup and entry point.   If that perfect point doesn’t come along, oh well, they wait for the next one knowing that another chance is just around the corner.  Once in the trade, they mechanically and methodically manage their position, taking profits at specific points, and moving their stop loss to protect their principal. Traders who trade well don’t trade simply for the excitement of the trade because they have become addicted to the thrill.  They don’t trade out of boredom or when they are sick or tired.  They don’t trade especially if they have stress in their life that disallows their full focus on the market.  Successful traders always abide by their trading rules and never stray from them. Traders who trade well are perfectionists and can make themselves very wealthy as a result of their unwavering discipline. That is my goal!

New Short Trade - VAL:NYSE

In line with my bearish stance on the whole market/economy, I've entered a new short trade on Valspar (VAL:NYSE).   The stock has been in a strong uptrend since September 2011.   However, the price action appears to be weakening within a tightening rising wedge.   I've gone short this morning at the top of the rising wedge.   There is strong divergence between the price  (making higher highs) and the MACD indicator making lower lows.   Stochastics are oversold and the market has made a small bounce this morning.   By entering at the top of the wedge with a tight protective stop loss order, my first target (at R:RR of 1:1) lies just at the bottom trend line of the wedge, which means that could be achieved even if the pattern continues to hold and doesn't fail.   Should this be achieved, I will be looking for the second target to be just above the .382 Fibonacci level at $43 and the third target to be just above the .618 Fibonacci level at $37.

ICP:LSE Closed

My ICP:LSE long trade was stopped out at break even for a scratch trade on Tuesday....I'm happy to be out as my stop was at break-even which was at the same place as where the pattern failed.

ICP:LSE - Update

This trade has moved slightly in my favour but the market is very hesitant. Given the passage of time, I've moved my stop to break even and will continue to monitor the price action