The Bank Stress Tests...Do you Believe It?

I do not trust our government...

They want us to hear what they want us to know. So, if there is bad news still out there (and I think there is) we won't necessarily know about it.

Today, Adam came out with an interesting look at what we may not know about banks! Be very, very careful! Just don't get caught up in all this "it's over" hysteria just yet.

...the envelope please!

At least for now, Gold seems to have broken its mini trend. I talked about this a couple of days ago...Gold is dangerous (even if this trend break turns out to be false.)

You take less profits on the upside by owning puts...but you are significantly making money on the downside until the interest in Gold picks up (and it will.)

As I like to always say...you need Gold to protect your portfolio in case of an unforseen event...but you need Gold puts to protect your Gold until that happens. The problem is, you never know when it will.

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Took profits on the first of my EUR/USD trades I talked about earlier.

Dollar's beat up

We could actually be seeing the sell-on-the-news scenario in currencies today. Equities opened high but have leveled off. Also the Greenback looks a little beat up so I have gone long US/CAD and shorted EUR/US. These are two fresh trades based on Fibonacci and should perform well.

(OUT OF US/CAD TRADE with a nice profit...may double up on Eur/US)

Bad trade

My limit was hit and from there the Aud/Greenback went much higher. I took a loss in this thing (0.7594) because of the better then expected unemployment numbers that came out today. FX360 is still short this pair because they have a stop loss at .7722...sort of far from here. Even if the pair recovers, it is not prudent to hold it. (FX360 does longer term trades.) I mitigated the loss with a smaller profit afterwards on the US/CHF.

My mistake? I should have set the limit to short about 10 pips lower then where FX360 made their trade, and then I never would have been in it. See account update here.

How to avoid another mistake? Don't ever stay in a losing trade hoping it will get better...wait for the next one.

New trade possibility

Forex360 has some pretty good analysts (including the aforementioned Kathy Lien.) Frequently they send technical trades to your mailbox, and this one caught my eye. (They are already in the trade.) Here is the chart (clicking on it gives you a clearer view):



As you can see, I have a stop order to short the AUD/Greenback @0.7510. I think it is a good short term and good intermediate trade. I like the Bearish Gartley formation that is in progress, which is one of my favorite technical patterns to look for.

Another thing I like about the trade is that the Ozzie has basically crushed the Dollar since early March and looks seriously overbought.

Forex.com expects equities to go down, even if there is a better then expected unemployment report (<600,000.)...Sort of a sell on the news type thing, I guess, and they would look to short Gold. That confirms our trade a little because the AUD/Greenback is a commodity currency (Australia is a big Gold producer.)

Revisiting disparities

I wrote about the conflicting signals I was seeing in Forex and equities the other day.

Kathy Lien (Forex360) is my favorite Forex analyst. She just came out with this today and basically wrote what I wrote, just much better. I think it's important and here it is in pdf format.

Gold trendline

I decided to be a little schizophrenic and debate myself. In the post I did about Gold earlier, I felt, along with Adam, that Gold was going up from here...but what if my other self was right?!

Drew this hourly chart of Gold and I am pretty sure that this trendline will help determine if this new uptrend is for real or not. Fundamentally, other then the continual printing of money that we see (we had a crummy bond auction today,) I don't see anything that is inflationary.



First of all, the amounts of "printing" that countries are doing with their currencies are already established. Yes, New Zealand did surprise people the other day, but, for the most part, I thought quantitative easing was already built into the currency markets. Old news. Secondly, Bernanke came out today and reiterated what the Fed has been saying for a while now, they do not see inflation.

This is how you can incorporate fundamental with technical. What happens with this trendline (or any trendline, really) is a sort of poll of traders...what everybody else thinks.

P.S. This is why I have no problem keeping my puts until they expire...Gold's volatility is dangerous and if you are going to protect your portfolio with Gold, you better protect your Gold with puts.

Thanks, Jim!

Don't you love when Jim Cramer comes on and says how much he loves a company?

About 30 minutes ago he was on CNBC saying how much he loved Capital One, and how they were a 'great' bank. Last time I remember him assuring us about a financial company was Bear Stearns. Within a few weeks, they were out of business!

Canadian Dollar/Yen update

Remember the longer term (intermediate) trade I told you to recommend to a relative (who wouldn't watch the whipsawing every day?) Technical analysis works!

This is what the chart looked like at the beginning of April. Recognizing simple shapes like this can lead to a lot of profits if you are willing to deal with stop losses that are further out...so that you can allow for 'greed and fear' (clicking on the charts give you clearer views):

This is what the pair looks like today:

If you followed advice, you might want to consider cashing out half of your position. I will update where I think this is going soon, even though it looks like we could go higher. Every pair retraces...the markets still remain overbought...this pair usually moves with the markets...so you can decide.

Gold trade update

Yesterday, I bought and sold 1/2 a Lot of Gold for a profit and, of course, still hold the big part of it. In this case, Adam's short video talked about breaking 920 as bullish. So, what I did was sell the small position that I bought yesterday (using 920 as resistance,) and will re-enter if we close with strength above 920. New balance...

See Gold Fly???

Interesting video done by Adam suggesting Gold is ripe for pickin'. As many of this blog's readers know, I have been holding Gold as a hedge in case some unforseen event occurs. But, I have no problem selling some of it for a nice profit if it does make the move he makes a great case for.

REMEMBER, this account is doing stellar, and Adam has been a huge part of that success. So watch the video, and when you next check the account statement...remember that Adam is one of the few indicators I use to trade.

Update

Traded the Sterling/Swiss Franc last night for a nice profit in my short term account. There is a good chance that this continues...but that is for my intermediate account.

See trades and new account balance here.