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.