The case against the Euro continues

Went long the Euro/Yen, and got stopped out. Finally I start to see the bulls point of view...take a risk trade...and equities are creamed. That was my punishment for being seduced by all the optimistic shills on CNBC!

More and more, fundamental evidence against Europe coming out of this recession anytime soon is becoming a fairy tale. Sure, I could always play a contrarian position and buy the Euro, but why...because it's opposite of what the herd will do? I don't think so. The charts show that the Euro pairs are precarious at best and, if you use Bob Iaccino's strategy of closes below trendlines on a four hour chart, the DOW has already cracked.

The DOW chart below seems to have broken a trendline back to the beginning of March AND the neckline of a significant head and shoulders formation (8300.)(Clicking on the charts give you clearer views):

Now, since being stopped out in the trade above, I became short the Canadian Dollar/Yen in a couple of accounts...because of the significant break of a trendline we discussed days ago. This pair, along with the Euro/Yen or Euro/Dollar and equities, is a risk trade (when you are long,) so there are definitely signs of cracks. (At the bottom of this post, you will see the link to Adam's new bearish video on the S+P.)

The chart below shows the Euro right at critical support going back months. Look how the last bar closed...closed off its low...but weak nonetheless.

We basically have the same thing going on in the Eur/Yen.

A new and very significant Weekly Trade Triangle issued yesterday

I haven't worked out a new profit percentage for my combined accounts in the past few days, but I've got to be up close to 90% since Jan 1.

One of my favorite indicators I use are my Trade Triangles...because they work very well. Daily issuances of a triangles are OK for short term trades, I guess...but weekly issuances are more seldom, and more powerful. Adam and Market Club just issued a new weekly on the EUR/USD. This flies straight in the face of my theory that equities will correct any time soon. This account also holds Gold, in case the Dollar spot continues its weakness. (Clicking on the chart gives you a clearer view):

Of course, the last time Market Club issued a Trade Triangle for this pair, it went the opposite way. This is rare.

I also use Traders Outlook to confirm my trades...and we were shown the following at the start of this morning's seminar (please click on the image):

So, in my intermediate account I went long 1 lot...ahead of Trichet's speech tomorrow. The performance of the CAD/YEN is another thing that is showing me that 'risk' is still the in thing. Of course I will use a stop loss, but it will be generous.

New Trade...that we may not hit

Looking to go long Euro/Yen, on a pullback to 136.14, but only a half position, in case of a further pullback. This is a classic swing trade that Bob Iaccino's Traders Outlook trading firm has set up. Great part about trading like this is there are no impulsive moves and the trades are well researched. So, this gives me a chance to see if I get confirmation from other indicators, without committing immediately.

I am watching a couple other less likely trades too.

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New Trade Triangle short video on the S+P here. The fact that there is a long rec from Bob on Euro/Yen, means that, at least in the short term, their traders could be equity bullish.

Lookout below......!

Most all of my regular readers know that I have been calling for a correction in equities for a while now. Market Club made two videos about it already, and both times the S+P was where it still is...after all the hype about how the markets are healed and the world is saved...Adam's videos still may play out like he said.

Jamie Saettele called for it a while ago in this post. (End of April.) He uses Elliot Wave theory which is discussed in a question I found on the Elliot Wave site below. Read the post above and then read below...you might find it hard to dispute this:

How can stocks fall again if the economy is getting stronger?
-- In the major global stock market indices, from the U.S. to Europe to emerging markets, you contend that we are in a Primary Wave 2 up, and that the really nasty selling panic will ensue in the next downdraft of Wave 3. Yet, hard global economic data point to recovery globally by the end of this year. How does your Wave Principle square with the hard data, which indicate that even a retest of March 09 index lows is highly unlikely, let alone a collapse beyond them?

Answer (6/4/2009): That's exactly the kind of thinking that gets most investors buying at tops and selling at bottoms. The reality is that "fundamentals" -- such as the strong economy -- lag the stock market, not lead them. How else do you explain the fact that the DJIA topped in July-October 2007, in the midst of "goldilocks fundamentals"? Or that it bottomed in early March 2009, when the "fundamentals" were horrible? The list of examples goes on and on. That's why our April 2009 Elliott Wave Financial Forecast warned: "Primary wave 2 up is now unfolding, as the March 25 Interim Report communicated. Be prepared: In its final weeks, the advance will re-ignite some of the zaniness of 1999 and 2007... By the end of wave 2, many market followers and economists will proclaim that the bear market is dead and the boom is back. For those who felt trapped in stocks during Primary wave 1, wave 2 will offer a respectable place to exit. But we know from past experience (and the chart on page 2 of the March 2008 issue) that many will hold out for even higher prices, hoping to 'break even.'"

Larry Levin

I'm always quoting Larry Levin in this blog because he is the ultimate cynic, as am I.

Here he is on CNBC...in a great debate with Wilbur Ross, Steve Liesman and Rick Santelli. You get to see the face behind the words...it's 6 minutes of great material covering everything from equities to government intervention.

Battle Of The Tech Titans

A little over six weeks ago I showed you a video Adam did on the relationship between Apple and RIMM.

I called it the “Battle Of The Tech Titans,” and in this short video he explained that he felt the relationship was changing between Apple, Inc. and Research In Motion. He detailed a strategy on May 15 of approaching this market using a trading strategy that he calls “pair trading” or “trading pairs” which I do every day with Forex. That's why this was perfect.

What trading pairs means is that you buy one market while going short the other market in the same sector. Now Apple and RIMM are battling it out right now in the smart phone sector. It remains to be seen who is going to be triumphant in this battle but it would appear as though Apple may have the upper hand based on its very successful “APP” store. (This is the update...neat.)

Trading pairs is what many EQUITY professionals do when they are unsure as to the direction of the general market but feel pretty comfortable in their analysis of the relationship between two stocks. So the first short video discusses the cool strategy and the second is the update that just came out today.

Oil

Interesting discussion on oil that just finished on CNBC. Today it's down almost $4 and it got me thinking to the oil video Adam did quite a while ago. I mentioned how great he has been predicting Gold...well, take another look at my post where he discusses oil. Notice where he said the short term top would be...

The Comeback

Sort of a silly title, given that Bob Iaccino has been trading Forex for much longer then I have (and he certainly doesn't need a comeback.) But actually, it refers to my Trader Outlook account, which I just opened. His skills and 100% trading mindset sold me from the outset.

I pointed out in an earlier post that certain trades can only be made in the middle of the night, like the one I just closed...so I guess it helps to, either live in the U.K or Europe, or be a night owl (New Jersey, baby!)

The beginning of the 'comeback' just began with this morning's (Monday) trade setup; I was informed that Bob's firm was going to go long the Sterling/USD on a close above 1.6620 on the 4 hour chart.

That happened at 1:00 this morning and I just closed out positions at 2 different target points 1.66924 and 1.67308 for about a $1600 profit. When you click, notice the chart at the bottom.

(p.s. Numbers came out of Britain about an hour ago. Here are the details. Interesting how the technical analysis for this trade didn't give the long signal until about an hour before the actual news came out, even though we knew the entry point almost 24 hours ago. Actually, if you want to be cynical, you might ask how this move started an hour before anybody was supposed to know the news in the first place...hmmm.)

Gold, baby, G-O-L-D!

Search in the box above for "Gold" and you will find, among the trades, a few videos where Adam talks about Gold. ON EVERY SINGLE VIDEO he's done on Gold since I started this blog he has been 100% correct. (See if I'm right.)

The point is, he just did another one...and I highly recommend watching it. I post this accounts profits all the time and a large part of that success is due to my Market Club software and its creator, Adam, in this short video. Below is the inverse head and shoulders formation that he talks about:

Again, I gotta point out that this account is doing spectacular...A long time ago, I decided to try out Market Club for free for 3o days and the rest, as they say, is history.

China's banks are an accident waiting to happen to every one of us

If you've been following since the beginning of the blog, you'll see I have not gone more then three days without owning Gold. I have made profits on it after being down significantly and I have made profits after it had been up significantly...

I own it because I consider it to be a hedge against some event that we have yet to see. With everything from Bernie Madoff to mortgage-backed securities...I became more of a cynic then I already was. So, check it this scary story from the Daily Telegraph of the UK.

(...Read this and see if you find it ironic that the Chinese government complains about the U.S.'s lack of fiscal responsibility and the need for a more stable currency.)

Cad/Yen

In the last post, I talked about equities, its relationship to the CAD/JPY, and the six month trendline that it broke. The following could be a fundamental confirmation from today's Action Forex...

...And some economists viewed that considering the sharp appreciation of Canadian from March to late May, it's logical to see some realignment. No matter what, Canadian dollar is noticeably weak against Yen and Euro. In particular, CAD/JPY is the only yen crosses that's sustaining below medium term trend line.