When The Going Gets Tough
For the past quarter equities in particular have entered a market phase eerily reminiscent of the mind numbing churn we had to endure for most of 2016. Meaning a lack of direction, high intra-day volatility, and sudden directional spurts which are either news driven or the result of FOMC or ECB deliberations. Obviously the supposed phasing out of quantitive easing already has and will increasingly affect the effervescence of what we all most likely will remember as a one-in-a-generation bull run.
Almost to make my point, just when I finished typing this intro the following popped up on my twitter feed:
Producing of course the expected response over in the EUR/USD:
Since that sudden drop dip buyers have already swarmed in, so I suppose Draghi is now contradicting his prior contradictions just to make sure everyone gets a chance to have his/her stop run. I for one would be fine without the likes of him running their mouth just to cash in on speaking fees.
Of course the damage in bonds has already been done, and this is not a market that easily turns on a dime. Technically speaking this is an entry opportunity but since we’re approaching the long 4th of July weekend I’m going to not push my luck.
Which I may already have done yesterday when added my second lottery for the week. However to my credit I had anticipated a surge in volatility and thus had only deployed 0.25% combined on two positions (ES and YM).
The squares I drew on the daily panel should help bring our current trading reality in better focus. Since the end of winter we basically have been jumping from one trading range to the next. The only trending action was in mid may until early June. If you remember my seasonal update then you know that June and July are not bullish months, so at best we should probably expect more of the same until late summer.
Silver is on a roll and barely budged during the Euro wipe out just now. I’m now moving my stop to below 16.6 which marks a recent spike low. This should still give it enough space to run however.
Gold is limping behind a bit and I’m leaving my stop at break/even until further notice. Glad I spread my exposure between both contracts of course.
The USD/JPY campaign apparently also in good shape and I just moved my trail just a few pips higher to below 111.434, again giving it sufficient space to weather out some long weekend thin participation volatility.
Finally USD/CAD triggered short yesterday, exactly according to our cunning plan (i.e. a breach followed by a retest of the daily NLSL). Nothing to do here just yet as it’s a bit early to advance our stops lower.
Words To The Wise
I hope some of you were paying attention over the past few days for this post shows that it’s almost always possible to eek out an edge even during difficult market conditions. If you’re not a sub yet then I strongly suggest you go here right now to remedy this embarrassing faux pas