Technical vs. Fundamental...DISCREPANCY!

When it comes to the Euro:

FUNDAMENTAL...

• Trichet and friends are being criticized for not employing stronger official measures to help the struggling European Union.
• European banks aren't lending to their businesses.
• Every day we hear that China will be first out of the recession, and Europe will be last.
• The Euro is very pricy when you take into account that it is largely an export economy.

TECHNICAL...

• The Euro/USD is going to explode much higher!

Sorry to be so dramatic...but MarketClub just came out with new technical justification that shows this pair is going to 149, as a first target, and the 160's as the second. Remember my account's success has depended on a few techniques, but trade triangles have been crucial:

"
He was right about Gold making it's recent move over $900 oz.
He was right about Oil topping out (temporarily) at $73/barrel.
Their videos and analysis is usually spot on...and if you use stop losses...you will have success like this account has had (statement.)

I tried these guys free for 30 days and was hooked...

Trade Triangles Trump Humans!

The other day I wrote this post about the head and shoulders that had formed on the S+P. Then, Adam, the creator of Market Club, and one of the technical indicators behind this account's success, admitted to a mistake today...

O.K. I got it wrong … but MarketClub’s “Trade Triangles” got it right.

The last three days in equity markets have been extraordinary beyond anyone’s imagination and you have to respect the market.

One of my heroes in the stock market was a gentleman named Bernard Baruch. You basically don’t hear about him anymore, but his teachings about the market are incredibly useful. You may want to read his book, Baruch: My Own Story, which I highly recommend.

One of my favorite sayings that Baruch gets credited for goes like this: “The main purpose of the stock market is to make fools of as many men as possible.” Well that certainly happened to me this week when the head and shoulders formation reversed and the market squeezed all the shorts dry.

I got it wrong, but MarketClub’s “Trade Triangles” had it right. Our “Trade Triangle” technology was basically neutral and on the sideline’s until yesterday when the weekly “Trade Triangle” flashed a buy signal on the stock market.

All the best,

Adam Hewison
President, INO.com
Co-creator, MarketClub

If you have been following the blog, you will know that I always talk about the WEEKLY triangle being more important then the DAILY, when it comes to timing...and the other day I pointed out I was surprised that their was a weekly up triangle issued for the EUR/Dollar when I was also bearish on equities

Out of trade

Made a small $130 profit on the EUR/USD...half of my trade. As Trader Outlook (Bob Iaacino) does, when a trade hits its first profit point, half is sold (or covered,) while you move your stop to b/e.

The idea is to have a free trade while you look for the second (higher) profit point. This way you lock in a profit and then play with house money, for lack of a better expression. In this case the second half of the trade ended up at where I went long ($0). You should try these guys for $7...the daily seminars alone teach you more about Forex more then you could ever hope to learn from a book (they also share their trades with you before they occur.)

Trade Update

Obviously the US/CAD trade would have worked extremely well for me, but as I mentioned, I felt it had moved too much to get in. Bob Iaccino did get in and they made about 220 pips I think, oh well...

I just went long on the Euro/US on a scalper rotation. There was a big move up while I slept...and then, after I awoke, on profit-taking, I went long 1 lot. My first target will be 141.15. If the GBP/USD (which had a similar move) rotates to 1.6379, I will go long that.

I am also looking to short Euro/Yen on a close below 126.82, which would be very unlikely today.

P.S. Did anybody notice that Gold held it's 200 Day and has shown nice strength since then. I wrote this on July 8...

"Remember we don't care about the Gold here. I've profited plenty on the yellow metal and have been down significantly before that. However, we break the 200 EMA, we will repurchase puts."

Being conservative will lead to less trades

I decided against doing the US/CAD short because the Risk/Reward became skewed. I would have lost at least 30 pips in profit because a large part of the move that would have been profitable, made its move while we waited for its particular 4 Hour bar to close as confirmation.

Ironically, most of the (would be) profit in this trade occurred at the beginning of that bar, but after we failed to close at our pre-determined entry point...the bar before that did not close below 1.1540, but did trade through it.

Here is the trade as described on Friday...the specs were the same for today.

Fundamental pressure on equities possible

Seems that the ECB is getting impatient with their banks. Lending is very limited and, obviously, this is not good for getting out of a recession. It makes you wonder how aggressive they will be. Will they start a stronger program of quantitative easing? What will that consist of? Will shorting the Euro be part of it? If it is, I think equities will suffer, unless they decouple.

Click on the blue box to hear what Bob Iaccino (one of my trading indicators) says about how he trades.

Head and Shoulders?

I've been thinking a lot about this pretty "obvious" Head and Shoulders on the S+P daily chart. I think I heard it brought up 4 times in the last 3 days. I even went on CNBC's website to see if there was any mention of it there...and I found three stories on it. So...

Will this big drop occur or not? Whenever the masses expect something, it usually doesn't happen. I can guarantee you that there are some smart traders who are going long equities. I mean I wouldn't be surprised if there is a nightly special this week on the formation!

Take the trade that I was given by Trader Outlook in one of the last posts. If the short (@115.40) of the Greenback/Canadian Dollar does get triggered, it would mean that risk is again in favor, and the weakness we have seen in equities is just a minor thing.

But then again, the technicals are horrible for stocks. If the dollar does start showing weakness, it may just be temporary. Jack Steiman says the hourlys are oversold but the dailys have a ways to go (stochastics.)