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" You can't pick cherries with your back to the tree " J P Morgan
analysis for 12th coming soon: quick update at 08:08am. I got stopped out on Cable, at 1.3805. I am however reentering immediately 1 unit. I got filled at 1.3799. We are trading 1.3792 now...
update at 01:11am 12th March 08
Larry Pesavento just sent me the greatest piece of information, which I will pass on to you. It is a little late here, so my analysis may be a little later tomorrow morning....
Here we go:
Today I received an e-mail from Tom Demark"s website. Tom is an experienced technician and highly regarded in our industry. He also worked with Paul Tudor Jones during the 1980s. The following information was posted on his website and was quite interesting.
"If the S&P 500 can end the day above 712.87 (last Wednesday's close), then it would be the first time in 27 years (1982) that the index closed at a new low one day, then rallied enough the following day to close above its five prior closes. The 1982 instance marked the end of that bear market."
The above was accomplished yesterday...
After reading this paragraph I immediately contacted my good friend Jim Twentyman and asked him to send me the charts for the S&P in 1982. The bottom in 1982 was a very significant event. There were five major planetary conjunctions or oppositions occurring on August 9 of that year, the day of the bottom. Currently we have a similar pattern occurring but without all of the astrological information that we would like to have four major bottom. However we must keep in mind that bear market rallies can be quite vicious and last longer than anyone can expect.
There is one thing that is very important to understand and that is I do not know what is going to happen next nor do I know the extent of the rally if it does continue. What I will do is to update the charts every day for the stock market. The option strategies that we selected for March 5 have at least started in the right direction.
Should the market go below the lows of March 5 then I am confident that this cycle has failed and I would exit any long positions in the stock market.
Trade sheet currently stands at 2124 points since 2nd March.
update 19:31pm
I will cancel the limit order at 1.3890, and close it now at 1.3881. There is an old floor trader saying, which an old LIFFE trader taught me: don't be a d##k for a tick. Thank Chris Lodge. I remembered that one. We are out at 1.3881 on one unit, taking 199 points profits, and the other unit will have a stop loss at 1.3805. AND that is me done for the day. We will go into the night session with one unit LONG in Cable. Good night......
update 18:48pm
evening update on Cable: Trading at 1.3828. I got a reverse divergence on the 60-min chart, and I got the currency hitting the top of the channel. If we break, there could be a sea of stops being hit. I am putting a limit order to sell one unit at 1.3890, and I am putting a stop-loss in at 1.3805, on both units to lock in gains made so far.
update: 17:25pm
Cable hit top of the channel. Profit taking at 1.3810 is an option. I will grind it out and hold it....
update 17:17pm
the Sterling Dollar position is 100 points to the plus side on two units (200 points), but it is struggling to break the channel. I am in two mind to take profits here and bag 220 points or leave it. I will leave it for the time being and place stop at 1.3730
11th March 09 - update 13:19pm
The trade sheet on this page has been updated. Stops have been moves on two unit to breakeven on Cable(sterling Dollar). The $CHF has been closed. Sterling will probably pull back. We had a target of 1.3825 for this move up, but we are still holding long two units.
Thats all for now
11th March 09 - UPDATE 13:10pm
I am closing my $CHF trade at 1.1555, taking 100 points profit. This trade was announced at the bottom of the page this morning. It was a beautiful reverse divergence..
$CHF chart 15 min... closing trade
11th March 2009 - 07:15am
Good morning,
First a little household meeting, to explain a concept or two. I have received numerous emails, asking me what a unit is and what "cable" is?
Unit = A unit is the trade size that I use, based on my money management. So for example if I have decided that my trade size in the FTSE 100 is £100 per point, then 1 unit is equal to me betting £100.
The reason I use "unit" is because everyone's trading account is different. This way you can understand the risk I deploy on the position. So when I "add" another unit to a position, you know that I have bought or sold short one more of whatever my trade size is.
Cable = Cable is slang for the US Dollar vs. the Pound Sterling. I won't bore you with the story why it is called Cable. Google it if you must :).
Now to the markets:
Yesterday afternoon I wrote I wanted to buy "Cable" at about 1.37. Last night we got filled in those positions. The entry price was 1.3695. I have bought one more unit now at the real price I wanted, which is 1.3668. However, I did not get this price. I was a little sleepy and not fast enough at 06.30am this morning. My entry price was 1.3683. You should all (who have signed up for the newsletter) have received the alert that we bought at 1.3695. It was sent out last night.
Going forward I will rely less on the email alert, and simply post it in my live trading room. I will send details of this over the coming weekend.
If you look at the chart on the link below, you can see that the chart shows 1.3668 as the 88.6% retracement.
Here is the message from yesterday:
We want to buy Cable at about 1.37. Chart explains the set-up. At this level we have an 0.886 retracement, as well as a 1.618 extension of the last flag on the 15-min chart.
Chart 1: shows the overall count on a 240 minchart
Chart 2: shows the extension and retracement target on the 240-minchart
A lot of the work is done used Fibonacci, E-wave and time counts. If you are really interested in this, then read the paragraph below about the Matrix book.
MATRIX COURSE OFFER
I use the Matrix book for the swing trades. It is a self-published book, and it is printed in a very limited number of 1618 (yes, it is very heavily into Fibonacci). Anyway, supply is running out, and the author has raised the price to £999. I asked him if I could offer it to the TraderTom readers for a discount.
So here goes, for 24 hours the price is £599. This is not a sales joke by the way. If you go to the Matrix site, you can verify for yourself the price of £999. You can read about the book on TraderTom here. It is an investment, on par with attending a course. It is a great book, but it is not a "read in an afternoon" book, and then forget about it. Here is the purchase link: Buy Matrix Course. The offer is valid until Wednesday night. It includes an extra book on how to trade commodities by Mr King, access to the Matrix Forum and postage in the UK.
Positions open and recently closed
Trade Sheet
The trade setup in EUR GBP is still on track. Yesterday we wrote:
We want to buy EUR/GBP - betting on a move towards parity. Right now we feel that the market can pull back to the trendline, although it may have to tag touch the 1.618 extension at 0.9286 or even the 78.6% at 0.9330. Either way we are looking for a pullback to buy, betting on a move up towards parity in Euro Sterling.
Chart 1: shows the overall structure on the daily chartchart
Chart 2: shows the extension and target on 30-minchart
Finally the equity market began to move in the favour of the bulls. I wrote last week that I am long plenty of call options. This strategy is what Larry Pesavento recommended. Right now though we still have to monitor the situation carefully. This could very well be a 5-6 days bounce to correct an extremely oversold condition, before move downside resumes. It is simply too early to say if the turn is in. I am of course going to enjoy any rally from here, and will monitor the situation around the clock.
As I type this, there is a SELL set-up in the $-CHF for a scalp trade. I am selling at 1.1655 with a 30 point stop. The time is now 07:35.
I am flying to a meeting today, so there will be no comment until later this afternoon.
ANALYSIS
