I’m currently in that mind set that I fall into from time to time when there’s not much that’s inspiring me to trade. Aside from a bit of intraday punting between levels there’s no real big juicy trends to get on board. I love a big event like the re-emergence of Japan (work in progress) and jumping on the UK recovery last year. If you can spot these events early they fill the bank up but at the moment we’re in one of those flux moments where it becomes a case of clock watching.
Let’s take Japan first
The sales tax is the next big event and one that could keep Japan on track or derail the train altogether. The BOJ’s willingness to stand ready to chuck more money into the system if the tax causes economic problems kind of negates the purpose of it in the first place. It’s almost taking from the right hand to give to the left. We’re not yet seeing any front running of the tax, due to come in in April, but there’s time for that to happen. If we do then USD/JPY could be in for a little boost. If the tax doesn’t cause material problems then we could be off to the races once more and looking towards 110 in the currency. Again though, it’s all wait and see stuff. Im still a buyer down towards 100 and may reverse on a break through. I’ll then be loading up anywhere from 95.00 to 90 depending on what’s going on at the time.
The recovery Seesaw
We have the UK at one end and the US and Europe at the other. At the moment we’re heavier and those two have been left up in the air with their feet dangling. Like it or not at some point that is going to change and some rebalancing will come in. Last weeks EZ GDP numbers haven’t really garnered much interest but against my short EUR/GBP strat it’s something I’m watching very carefully. Irrespective of how much the UK can gain from a European recovery a real sustained one will tip the overall balance into the Euro’s favour against the current backdrop. I still favour shorts in the cross but I’ll be ready to look to switch to a long view should the data in Europe continue to improve. Either way I’ll be picking my short entry points with greater care from now on and will maybe look to play more intraday longs of the low levels.
Cable will have me looking to short around 1.70 and the data this week will tell me whether to start now or wait for an attempt at the level.
My Aussie and Swiss strategies are well known and I’m happy to sit on them until I’m old and grey if need be, though hope I don’t have to wait that long.
Stocks, oil, gold and all else
I would have loved a further blowout in stocks when we had the falls as we were just getting to mouthwatering territory. I was looking at the Dax at 9000 the Italian Mib around 17000-16500 and the S&P at 1700. It’s a shame we didn’t get there but that’s old news and so I’m looking at the “do or die” situation we have in the S&P. We’re getting some trepidation again at the highs, such as which I noted just before we got the fall back. The quick return from the lows is telling enough and I think we see the 1850 highs blown up soon. I’m going to go with a break of 1860 and will look for 1850 to hold if retested.
Oil is still middle of the road for me. I like longs in Brent down towards 105 and shorts starting small from 112 to the Feb 2012 resistance line at 113.85. Get the seasonals out of the way and we get a clearer picture.
Brent crude weekly chart
Gold is a difficult one as a lot of the QE specs are out (unlike in stocks) and we’re now trading more on fundamentals. China is going gold potty it seems and when they get an appetite it’s only going one way. The double bottom at 1180 was a great trade and unless something major happens I doubt we’ll be seeing it again very soon. There’s still a fib level from August at 1337, the Sep 2012 resistance line and Oct 2013 high at 1359/61 and the 55 wma at 1364 to contend with and I may look at a small short from there.
Gold weekly chart
Other bits and bobs I’m looking at are NZD/USD down around 0.81 and lower for a long. And AUD/NZD if we see those historical lows around 1.0650-1.0500.
AUD/NZD monthly chart
So what do you fellow traders have on the cards? There’s plenty of you who are happy to trade the short term but I like a good long trend to get on to. Any “out there” trades you are looking at? I saw one reader looking at Nat gas shorts, which is something that could be interesting at these levels up to $6
Nat gas monthly chart
So what is inspiring you?