SP-500

I'm looking for weakness in Cable to get long, just like I'm looking for weakness in the SP-500 index to get long. Daily indicators are still on buy, but when I look at the hourly chart it shows that this move up has either finished or is near completion before a move down.

The chart is showing a completed 5 wave move off the 1160 lows, which means a retrace should be followed by at least one more 5 wave move up, if not more. Just counting 5 waves up doesn't make me bearish, I need to see some confirmations. I'll start with the ADX on the hourly chart.

The circle is showing the hourly ADX has rolled over, indicating the rally is exhausted or near exhaustion. The +DI has also put in a negative divergence to price. Risk takers can short right when the ADX prints a lower high than the previous hours and place a stop at the price high of the high ADX tick. A less risky entry is to wait until the ADX closes below the 40 line. Let's see if there's more confirmations.

The Elliott Wave Oscillator was also showing bearish divergence during the new price highs. So when we put these thoughts together with the Cable charts they seem to be saying near term equity weakness followed by a strong move upward.

AUD/USD is also showing bearish action:

I Hear The Bears Growling, But They Lack The Killer Instinct

I'm actually becoming more bullish by the day. I've seen this play before. P3 Crowd, "It's just another 1-2, the third wave down is coming..wait for it...61 retrace...78 retrace...double top...  It's played out a couple times since the 09 bottom. Maybe it takes a couple falsies before the real happens, but I'm not waiting for that. When volatility gets extreme, as it has of late, it's time to shorten your trading timeframe. I don't know what's coming next, but I have some ideas.

Until the yearly close I won't know what the future years will bring with what a trader can claim as certainty. Certainty for me is conviction of over 51%, and a year end closing level will give me that. Until then, I trade short term until something catches my fancy. For now, I am bullish, save a short term pullback in which I'll buy call options and short the whore known as TVIX.

As of the charts:

Daily Swing: On buy since Monday
Hourly w/ Indicators: Hourly indicators rolled over to sell today = Bearish
EW Count: Wave 3, i or C topped today. Looking for pullback to 1225/30 area for 4, or 1220-1190 area for B or ii. (i,ii) very bullish count, which I'm kinda leaning toward now.
Subjective Personal Thought: If the market is going to put in an elusive P3 it will be to the upside.

Cable - Time to Face My Fear

Cable has a tendency to kick my ass for some reason. I recently went long and was stopped out for a $4K loss only to see it rally a couple hundred pips after I was stopped out. That couple hundred pips would've yielded over $10K. Grrrrr. I've known for awhile not to gamble too much on Cable because it's in a long-term correction. Corrections are probably the hardest patterns to trade because the patterns are always morphing, especially when you're talking about a correction the dates back to 2009. I have been tracking this corrective pattern since early in 2010, and the long term count is still valid. I'll start with the weekly chart so you can see what I've been tracking.

As you can see from the chart, 2009 marked a wave 3 low in Cable and we've been experiencing a corrective wave 4 since. The EW Osc is displaying lower highs and higher lows validating the triangle count. The C wave of the triangle is a double zigzag corrective pattern, a more complex pattern which usually develops in the C or D wave of a corrective triangle. The major ABCD waves thus far break down into 3-3-3-3 structures. If it looks like a triangle, and acts like a triangle....well if it was anything other than Cable I'd say it's a triangle. Damn Cable.

Next we'll zoom in to the daily chart:

This chart shows the D wave low in October followed by the a of E rally. I have the b of E low in place with a 1 of c of E up and finishing off 2 of c of E. From here we could go long with a stop under the D wave low, but that leaves us with a 320 pip stop-loss. Most people don't want to take a 320 pip drawdown before a move up, and nothing is guaranteed. I'll zoom in again and try to get us a better entry.

Finally we'll zoom in to the hourly chart:

Oh Cable, why do you hate me so?? Was this an Expanding Diagonal Triangle for wave 1 of c of E off the b of E wave low. Maybe, and I'm going to play it like it was. The Fibonacci Support Zone lies at 1.55600 where c of 2 of c of E resides. So I have now dropped my stop-loss to 290 pips rather than 320 pips. Not much I know, but it's something. Next support comes in around 1.55300 where prior 4th wave meets with C=1.618*A. Both are good setups. The latter setup will reduce your exposure to -290 pips. These stop-losses are all based off the D wave low, not the b of E wave low. You can further reduce your losses by setting stops at that low and risking 100 pips. There is still a great risk of being wrong, but the fib support zone should at least provide a bounce so we can get out of the trade if it doesn't look like it's going to play nicely.

So, if this trade doesn't work I WILL NEVER PLAY CABLE AGAIN!

To be a successful trader I believe you have to start in the forest and finish at the limb. Starting with a weekly chart and zooming in multiple levels will let you see aspects you may be missing while focusing on minute levels. Always remember there is something bigger.

I hope this helps.

Peace,

Jim Genosky

The Fate of the US Dollar Index

Geithner finally found a way to officially tank the US dollar with help of the major central banks around the world. Will this be the fate of the US Dollar??? I think it may be.

SP-500

No changes to the chart from yesterday. Support resides at 1230 area for a pullback. The bearish option is the C wave high was today, but full corrective patterns rarely channel as well as the move up has. Therefore, I believe this is either the A wave of an ABC pattern higher, the bullish count pictured in the chart calling it a 123 up thus far, or there also exists a VERY bullish case with the 12 up as pictured, but the 3 or C wave being counted as just wave i of 3. Again, because of the channel I don't believe the third case to be true either. So, by elimination, I believe this is a 5 count A wave for now targeting 1265/70 before a reversal back down to test 1220/30 level again and then higher in the C wave.

First Trade

Long Cable (GBP/USD) @ 1.57500  - 800,000
Money at risk 25K
SL - 1.57000
TP - 1.62
Risk/Reward .005/.048 = .0800

Most Lost = 4000
Most Gained = 38,400

The 100K Trading Challenge

I know I haven't updated my real trade log since last year, but I'm sure those results still speak to my trading record. Now I am going to test a new venture seeing how long it takes me to DOUBLE a 100K trading account. First, I have a little bit of an advantage since forex markets give 50:1 margin, lower than the 100 before the Dodd-Frank Act, dirty buggers, but still an advantage to the 2:1 margin for equities. Second, I urge you to post your own trades based on any monetary value account and beat me to increasing your funds by 100%. Game on!

This account will obviously take on more risk than I usually assume! DO NOT trade on these recommendations. Falling knives are generally harmful to ones health. My general risk is between 7-10% of my overall account value. These trades will risk 30-45% of my total account value. Risking this much of ones account is not acceptable under any conditions, so I must repeat, please do not follow these trades unless you're willing to risk your account.


Peace,

Jim

Short EUR/USD

I'm short EUR/USD from 1.38067 with 1.382000 stop-loss. Got the gap up open I was expecting.

Not Entirely Bearish

I've been watching some setups on the EUR and AUD and they are telling me there's more left in this bull run. Both are highly correlated to equity prices. Behold THE CHARTS!

AUD/JPY looks like it's putting in a consolidation before the last push higher in what would be a 5 wave C wave up. Targets for e of B and C are on the chart.

Similarly, under this count, EUR/USD has room to test 1.39300 with possibility of reaching over 1.40. I will be keeping an eye on these charts Sunday night to see what they are saying.

I am not talking my book here since I'm short 500K EUR from 1.38800 and have IWM puts.

Peace,

Jim

Best Interpretation of THE CHARTS

Researching charts a little tonight showed me the SP-500 will most likely gap up on Monday morning and reach the 1263 level by Monday or Tuesday followed by a shallow, delayed selloff and then resuming the trend upward for WED/THURS. My preffered count follows:

The line labeled VERY IMPORTANT is because it satisfies 2 different EW counts. If my green 4 was labeled A and the low at 1074 labeled B, C=1.618A near that trendline. That trendline is also where C=.618A for the count on the chart. That line is VERY IMPORTANT TO ME! Good luck to everyone.

I also have a very BULLISH count going but the technicals behind it remain to be seen at this point so I'm not going to post it. IF 1280-90 gets taken out I would assume we are in a new bull trend to new all-time highs for SP-500 and DJIA...Nasdaq and Rut have different counts.

Reiteration of my free posts and outcomes

POST:  Thursday, July 21st - Said dollar should bottom on July 29th
Outcome: Dollar bottomed at 73.59 on July 27th

POST: Tuesday, August 30th - said 1230ish was key, bullish above, bearish below
OUTCOME: August 31th traded to 1230 and change and sold off = bearish, traded down to 1135 within 2 weeks.

POST: Wednesday, Sept. 14th Scaling into EUR/USD shorts at 1.37600 and 1.39000
OUTCOME: Traded down to 1.31700 on October 4th

POST: Saturday, Sept. 15th oil trading down to 75 with additional 65 target.
I said I wouldn't be surprised with double bottom at 75.
OUTCOME: Traded down to 74.95 on October 4th.

POST: Friday, Sept. 30th Bet money in Michigan -21  to MN Gophers
OUTCOME: MN lost by 58, 90% in 3 hours satisfied.

POST: Friday, Sept. 30th - Oil should hit 75ish before a bounce and SP-500 should
hit 1070-1080 before a sizeable bounce
OUTCOME: Oil hit 74.95 is was up over 15% since, SP-500 hit 1074 and is up 14%.

POST: October 6th SP-500 is shortable at 1170 with 1120 min. target.
OUTCOME: SP-500 sold off to 1150 - I count this as a loss even though I made money.

Monetize

Monetize is a button you can hit here on blogger and I'm sure it puts ads all over your site. Or maybe it causes people to make their site private to paid subscriptions. I used to check a certain blog and I usually disagreed with the commentary, not because his/her thoughts weren't correct, but because he/she never took a stance and had an arrow going up and one going down. Does this help? That site is now a paid subscription! I will reiterate my stance on this once again...I WILL NEVER CHARGE NOR ASK ANYTHING OF YOU! And I'm sure my track record exceeds that of 95% of paid sites. Good luck.

Jim

Squiggles and a hedged approach

Both Bullish and bearish action is calling for a short term reversal of the price trend

Short positions near 1170 should be lucrative

A setup like this has worked about 88% of the time. They are very rare to find.

Oil Update

Oil looks to be completing the final wave down of wave Y

The 90% Return Bet Paid Off!!

That was easy. Now for the market. I have the SP-500 finishing up the first corrective series of waves before we get the big bounce up. Follow the chart

90% Return in 3 hours

Don't believe me? Just bet on Michigan to cover a 20 point spread on the MN Gophers! Easier than trying to predict the stock market huh?!?

Anywho, I've been playing the ups and downs of this market, and while making decent money, it has been trying on me. Yes, I too get worried sometimes. It's frustrating with all the gaps up and down, and although I've made money on nearly every turn, it's time for me to take a break from trading.

Oil should still hit 75ish before a bounce
The SP500 should still make a low around 1070-80 before a sizeable bounce

So I'm putting in limit orders for LONG!!! Positions on SPY, IWM, GBP/USD and AUD/USD. These orders should be filled either late next week, or early the following. I'm not going to watch the markets next week. I'm just going to see how my "future analysis" does and either suffer the consequences or reap the rewards!

Peace

OIL Targeting 75, then 65

Oil is on the verge of breaking down with it's ongoing double zigzag correction. 1st Target is 75 area followed by 65 area. I wouldn't be surprised by the 75 area holding for a doublr bottom.

Here's the chart:

A Post for My Friend Pogeen

Sir Winston Churchill once said, "If you're going through hell, keep going."

This has to be a traders motto. Trading is a learning process. Did you see my profile for my website? I'm a student of everything, always learning. Any trader worth his salt has taken some licks, but we learn, adapt strategies and continue. Don't give up, set a plan, follow your rules and the money will flow.

On a secondary note, the phrase "worth one's salt" began with the ancient Romans. One reference suggested that the origin of the phrase "worth one's salt" could date back to before 900 B.C. During that time, Roman soldiers were paid for work in salarium, which was an allowance for the purchase of salt. Salt was considered good for human health and was a hard to find commodity. The word soldier, in that era, literally meant 'one who is paid in salt. The 'sal' in the word salarium is Latin for pay. Over the years, the word salarium was shortened and came into the English language as salary. To say that someone is worth his or her salt, you are saying that he or she is worth the wages that he or she earns.

I hope that one day you become worth the wages you earn, although I already suspect that you're worth far more.


Peace,

Jim

Scaling Into EUR/USD Shorts

I initiated my first EUR/USD short position today at 1.37600. I will add to that position at the 38% and 50% Fibs to establish a full short position @ 1.40200. The downside objective currectly stands at 1.3000.

1230ish the key to the S&P

Under 1230 = Bearish
Over 1230 = Bullish

Simple as that.

USD Index

Posting from iphone so forgive some things and keeping it short....here's the chart

If Copper Doesn't Lie

Here's a weekly chart of copper with SPY overlay. Copper tends to lead the market by a week or so and most know that I've been bullish copper recently. Based on this count the SP-500 should reach new highs or a double top near 1370. Keep watching!

Changing My Longer Term Count

My previous recommendations asserted that we were entering a long term bull market until Oct.-Dec. 2015. I maintain that position, however I'm changing my current count from a third wave up to a 5th of 1 wave up. This basically means that a new high over 1370 should be shortable for 3-6 months, then the super bull market to all-time highs on the SP-500 should resume. Turning points will be Late July (28-29) then late December. I'm not 100% sure on this call, but something fishy in the markets and debt crises seems to be taking place.

PLEASE MAKE A COMMENT TO THIS TEST POST

I'm trying out some code to have a reply to comments made so I can more efficiently answer to comments or questions. Thank you in advance!

Special thanks to Sean at www.beforeitsnews.com for the tip (if it works).

I DON'T KNOW HOW TO RESPOND TO COMMENTS!!!!

I feel terrible that I haven't responded to comments from the blog. Please email me @ geno369@yahoo.com with your specific question and I'll either respond back or create a blog post addressing your question. Once again, I apologize!!!

Jim Genosky

The $4 Trillion Campaign

I trade US Equities as well as Forex, so I feel I can see where  there is manipulation in the system. To be honest, there is absolutely ZERO manipulation in US securities, although the FEAR BLOGS will have you believe so. However, there is manipulation in the FX forum that can carry over to US Equities.

I will dive into the post in more detail in the future, but for the time being, just realize that Japan enters into the FX market quite often trying to boost their holdings. This can be seen by swift 50-200 pip gains/losses per currency. This weighs on the RISK ON/RISK OFF environment that effects all market participants.

I recently heard Jim Cramer talk about how useless the risk environment is, and I TOTALLY disagree. I can trade US Equities by watching the AUD/USD...PERIOD!!! Actually, one of my proprietary indicators measures all risk currencies and I play US Equities based on that! To trade a risk indicator in US Equities!!!! And Cramer says it's useless???

Who Could've Called It?

Apparently the markets have reversed course, once again when the bears were waiting for the elusive 3 of 3 of 3 of 3, etc. down. Who could've called it? I believe I did once again, although a tad early. I bought SSO at 49.25 and I bought UCO at 37.80, almost where it was announced that we were releasing reserves. I told my brother that releasing those reserves would mark a short term botttom within two days, and I seem correct in that rhetoric.

I'm already lightening my load on long positions because we need to listen to the bears, and sometimes the market panders, hahaaa (pandas, panda bear?), to the bears, to keep them in the market. Remember, someone has the other side of your trade!!!

I sold UCO for 13% (in three days) and I sold all of my SSO. I have now entered short term SPY puts. Why? I locked in good profits since oil dropped below 91, which was my target, and the SSO was an okay trade, meaning I didn't lose money.

There is still a chance we get a low under 1258, although I posted before I only give it 15% odds. The Wilshire already reached wave 1 zone, but until the majors DJIA and S&P do, I'm not getting bullish complacent. We all know that the market drops much faster than it inclines.

Anyway, I'm going on vacation tonight with 10 contracts of SPY 130 puts under my belt. I'll be back Tuesday, perhaps, after a nice long weekend of fishing. Remember, it's not only about making money, you still have to live life!!

The VIX - Mystery Solved

The VIX is meant to measure fear in the market. When the VIX reaches extreme levels the bears are in control, when it drops to lower levels it measures complacency which generally is a bullish market. Looking at a weekly chart of the VIX gives me many answers. First of all, the bulls are not yet in control of this rally. This leads me to believe that A. There is MUCH more upside yet to come, or B. this is a bear market rally with lower lows yet to come.

My analysis on other aspects has told me the 2009 lows are in place, therefore I have to resort to option A. The following chart has it's own annotations, so I fail to see the need to repeat them here. I expect the VIX to make a new "Green Zone".

Does Elliott Wave Theory Give You Something to Trade?

The short answer, which I'm sure you weren't expecting from me, is HELL TO THE NO! There is no 3-5-3-5-3-5- whatever count imaginable that could make me trade off of it. BUT EWT is based on market participants and "thinking", which I can get behind. EWT theory is NOT a useless tool, and I hope I've shown that by using it PROPERLY! It's when people try to count waves without using other information available to make a rational choice that it becomes USELESS. I know people who use EW and I know of people who use EW PROPERLY! The latter are usually the ones bucking the trend and mostly correct. If you would like to know how to use EW PROPERLY!!!! Let me know. But don't bash EW because some people disregard rules and suck at it!

Trend: Update

So did we get the confirmations I was looking for this morning? We sure did.

First chart:

Both trendlines breached. I'm disappointed it didn't make it over the white horizontal line though.

Second Chart:

Yellow crossed above white, a bull trend signal.

Third Chart:

SP-500 Hourly and current count.

I would place the odds at 85% that a bottom is in.

Best of luck!

Jim Genosky

Trend

I have been watching my favorite two charts for confirmation that the bear trend is over, and neither have confirmed this yet. If the bulls can hold onto the gap up this morning we may get confirmation.

Here's the first chart:

In this chart we want the red line to break above both white downtrend lines. Then a sustained move above the top horizontal white line would be a sustained bull market.

In this chart we need the yellow line to cross above the white line. Right now both lines are at a zero value, meaning bearish. A cross is the first buy signal where I'll unload a 50% lonf position. Once the yellow line goes above the horizontal green line I'll unload my final 25% long position.

Best of luck to ya'll!

Gold: Waiting on a Correction

I am long term bullish on gold. Gold has broken out of it's base channel and I believe it will soon drop down to retest that channel before going to new all-time highs. This channel is drawn off the 1980 top.

I would love for Gold to fall back to the 1230 area before going fully invested into it. Right now we wait patiently for the pullback to occur. Until then I am not buying gold.

Is Copper Trying to Tell Me Something? ALSO BULL/BEAR ALT. COUNT

Looks to me that Copper may have already bottomed, or maybe just put in another X wave before the final Z wave down. Either way, this is telling me to be cautious about getting heavily into bear mentality. Copper so far made it's bottom on May 11th, over a month ago. In my opinion copper better start selling off and break the previous low or we're going to see one hell of a short squeeze on the bears in the near future.

Additionally, I was looking for a count that would throw off both the bulls and bears, and came up with a beautiful idea that would scorch the bears one last time, then kill the bulls. Check the green count in this daily chart.

From my research I've learned that wave 3 is less than wave 1 in under 5% of the cases, so I'm not giving this too much credence, but I'll sure be watching it!!!

Drop Into June Is A Long Term Bullish Signal

Since December 2010 I've been saying we should see an incline followed by a drop into mid-June 2011. It seems we are getting that drop currently. Targets for this drop were 1273, 1250 and 1220. On Friday I bought my first batch of SSO which is a 2x SP-500 ETF. The bears will say we're in wave 1 of P3 down, I say when will they give up?? Listening to Prechter would've lost you nearly 30%. Listening to the P3 crowd is NOT working. The support level for the SP-500 in 2011 is 920. THERE WILL NOT BE A NEW LOW MADE UNDER 666.

A yearly closing over 1220 in 2010 was a bullish signal. This bull market should last until late 2014 or early 2015. This should be the greatest appreciation of your wealth since the 2009 low. If you choose to try and short the market and not receive this gift that's up to you. I'm scaling into long term long positions for my IRA and my trading account.

On a side note, the Australian Dollar should also aprreciate during this timeframe. I have a bank account holding AUD. I sold half of my AUD when it reached 1.10 v. the US Dollar. I'm now rolling that half position into gold and holding the other half in AUD. I will sell that position when AUD/USD is at 1.76.

Here's my long term chart with annotations

NOTE ANNOTATION IN LOWER LEFT CORNER!


And here's my weekly cycle chart

It's Time To Buy

I apologize for my absence as of late, I've been dealing with some family issues. People are becoming extremely bearish as of late and that has me in the buying mood. Looking over a few charts tonight made me turn even more bullish near term. At least we can catch a sizable correction to the upside if not an entire bull move. The first chart getting me in the buying mood is that of the McClellan Summation Index. It recently broke below my bull support line, but is in an area where it has reversed some more.

You will also notice that the SI is coming to another bull support zone of the downtrending white line. This has me near term bullish.

Another reason I'm getting bullish is because of the inverse correlation of the USD and the equity markets. I believe the US Dollar put in a 4th wave up and is now in a 5th wave down.

The chart shows the dollar breaking back down under the 1-3 channel line drawn off the 2. If the inverse correlation holds the equity markets should soon reverse course.

Finally, my current wave count has either 5 waves down ending C of Y in an ending diagonal yesterday, or 1 more low coming to end wave C down. If we get a new low around 1280 it would be the latter of the counts. My bearish count is also looking for a wave 2 retracement upward. When a bull and bear count align in such fashion (both looking for upside) it's a good risk/reward situation in my book.

Today also gave me an hourly buy signal according to my ADX, which means a low is either at hand or within reach. I went long on the wedge break today and will add to my long position on new lows.

Thanks for reading.

geno0010

The

Trader

May 28th, What Really Matters

This past weekend the love of my fiance and my life passed away at 16 months of age. Within that time I have learned more from a dog than I could've in a lifetime listening to teachers, preachers, bloggers, etc. Sometimes in life I was more focused on the market than either my fiance or my puppins, so I would like to take this time you remind you of what is really important in life. I love playing the market, but personal relationships are WAY more important than money gained or lost. My pupppins actually stepped on my keyboard one time and entered a trade. She lost $300. She never did pay me back.  On this Memorial Weekend I think it's important for everyone to reflect on their lives and the people and animals who influenced it. I know my puppy made me a better man than I ever was, and that's important for me to remember.

As of the market I really don't care right now. I was looking for a correction to 1308/10 and the 1311 low should've satisfied that. I'm still looking for 1390 or higher.

Take care everyone and remember that making money is probably the least important aspect of life. People or animals don't love for money, they love for you, in your entirety!

Termination of Wave 2 before Wave 3 up

I had to slightly alter my count based on the price action recently. The move up to 1370 seems to only have completed wave 1 up of the ending diagonal, with wave 3 up to 1390 to follow. After the I'll be looking for completion above 1400. Here's is my updated daily chart of the SP-500:

This move down has been impulsive: An impulse A wave consisting of 5 waves, a 3 wave B wave back to test 1360, and now we're in the final impulse wave down, the C wave which will finish red wave ii down on the daily chart. Now let's zoom in to a 10m chart to view how this wave ii down has unfolded and how I plan on trading it.

So far I'm counting this as an impulse A wave and we're in the final impulse C wave. This can also count as a completed WXY down where Y=X today to complete wave ii. That is why I bought June  IWM and SPY calls today. Going with the impulse count looks to me like we put in 4 of iii with a 5 of iii down to the 1308/10 area to complete iii of C. After that we'll probably get another bounce up to the 1325/28 area before the completion of the C wave. I will be adding to my call collection at 1310 and finally around 1295.

Until next time,

geno0010

The

Trader

Whipsaw Nation & Trendline Support

This will be the first post of many which lead into you my swing trading intellect. I have been watching the hourly and shorter term charts whipsaw for a few days now. My previous call at 1350 was for a top to 1370 then a pullback. That happened nearly perfectly with the market topping at 1370 and change. The pullback I expected was to 1240/42, so I established long positions at that level. When the market dropped further I didn't fret, I added more long positions after I looked at my original anlaysis and deemed it correct. I sold out out of this position on Tuesday and have been in cash. (Tuesday 1358).

Some would say I missed this drop. I disagree. Per the stock market all gains made on the short side should be considered a bonus in my opinion. Also, I knew the drop was coming since I sold my long position. YOU DON'T HAVE TO PLAY EVERY SWING TO MAKE MONEY!!! You want to be on the longer term side of the swing!!

I believe these tops & drops are part of a consolidation pattern and I don't think we'll see new lows under 1329.

My next projection target comes around 1389.60 as long as 1329 holds. I am flat position wise and really don't plan on playing anything until my upside projection targets are met, or something on the short side triggers my interest. If anything happens you'll be the first to know!

POSITIONS: FLAT...NO LONGS EVER, maybe short under 1329.

Until next time,

geno0010

The

Trader

PS WATCH HORIZONTAL WHITE AND UPTREND YELLOW



Turn Your Stock Market Gains Into A More Valuable Dollar

Alberta Rocks recently had a great post on the value of stock market gains, which he concluded an 19.4% gain on the TOTAL gain of your holdings. Now it's my turn to teach you how keep more than 19.4% of those gains, and even amplify the gains by 10-25%. Basically what we'll be doing is a carry trade, but there's no need to worry about interest rates.

What I've been doing since September of 2010 is turning my market gains into Australian Dollars. You don't need a Forex account to do this since the inception of ETf's and Trusts. A quick search turned up ticker symbol FXA which is a Rydex Currency Shares AUD. Another CiLian, Herz, recommended the Canadian Dollar, but I don't believe CAD has as much upside potential as AUD.

Since September of 2010 the AUD/USD has risen 18%. The US Dollar index has dropped 7%. This would give you a total gain of 25% on top of the market gains you locked in! Why hold dollars when you can hold foreign currency for the cost of one transaction through your brokerage? In the near term I believe the AUD is due for a correction. Anything down near the parity level would be a great entry, but I believe 1.02 or thereabouts will limit the downside. If you want to lock in your market gains in real rather than relative terms, why not test out this "carry trade".

Here is my current daily chart of the Australian Dollar:

It looks like the 110 area should cap the short term advance, but after that it's off to even more all-time highs. I also believe capital is flowing into Australia at high rates. This capital flow IS a global phenomenon. Somehow money finds the best investment and rides it into a bubble. The trick is knowing when to get out before the bubble bursts. I think the Australian Dollar has a chance to hit 1.76-2.00 before that bubble bursts, and plan on putting my USD into AUD the whole way. Until next time,

geno0010

The

Trader

Short Term SP-500 Forecast

With the SP-500 hanging around the 1310 level it's hard to get an exact read on market direction. Most indicators are still whipsawing making me believe we're still in a correction rather then an impulsive 5th wave up. On the following chart I noted a couple dates we should see a low put in if it's not in already. These dates are based on the triangle count proposed by Col1 and others. Each wave should take less time and travel a shorter distance then the previous wave. The reason I'm not totally buying into the 4th wave triangle is because some indices made a higher high on the proposed B wave, therefore, after the next low I believe is coming, I will be holding long.

I still believe we will see a major LOW in June which will be just as good of a buying opportunity as was March 6th, 2009 (at 666). This count of completing the 4th wave and rising up into the 5th wave during the beginning and mid-May still fit with that June low scenario. The June low would be my proposed wave 2 down before the surge of surges King 3. Until next post....

geno0010

The

Trader



Using the ADX

You can go to stockcharts right now and read about how to use the ADX, but I'm going to tell you how I use the ADX. I believe the adx can be used as a semi-predictive tool rather than the lagging, momo indicator it's intended to be. Of course, you should always use other indicators in conjunction to ensure proper market readings. The adx was specifically developed for use on daily charts for commodity and currency trading (NOT stocks), but I believe in it's value for all trades.

This first chart is the hourly chart:

As you can see, I have a red horizontal line at the 40 mark and a yellow line at the 35 mark. A lot of time the adx will give you a pop over these 2 marks that's tradeable. The first white circle in the chart shows how the ADX and the -DI (red indicator line) both sliced right through the 35 line and above the 40 line. This is showing a very strong trend. Most people wait until the ADX drops back below the 40 line before making a trade, but I don't. When the ADX reaches the 40 line there is usually a correction looming. When this happens, I wait for the ADX line to turn back down to hedge or cut my trade. This trade is represented by the second white circle. On this trade, after the ADX turned down it turned back up and made a higher high while the SP-500 made a new low. I wasn't overly worried because I had counted 5-waves down and there were positive divergences on the -DI indicator as well as other indicators I use. I simply added more long positions at the new bottom.

The triangle that followed didn't give me many clues using the ADX and DMI's so I had to rely on other information to get out of my new long positions. With the DMI's whipsawing I knew it was a correction within a correction so I was prepared to get short again. The ADX this time showed the trend wasn't nearly as strong as it kept turning down at the yellow 35 line. In my experience, if it gets turned down at the 35 line once it usually won't get up to the 40 line. In this case you hedge or cut your position on the first test of the 35 line. Every pop back up to that line is an opportunity to add to your new position or take more profit from your old position. Again, the -DI showed negative divergence on the new low was was a good place to get long.

Now we are long from 1250 and this is where I got into trouble for the first time. The ADX popped up over the 40 line again representing a stronger trend. It started to turn down around 1310 so I sold my longs and added some short positions. This was a mistake since I knew that if the ADX pops over 40 is usually represents a new trend and I got a little ahead of myself. In these cases you want to wait until the ADX pops again and fade that move. I did this at 1328 when the ADX popped back over the 35 line. Now I was holding short positions from 1310 and 1328 and the market started to whipsaw, as did the DMI's. This time I was a little worried because it could've been a consolidation at that level, but I stuck to my guns. The short ended up paying off, but not nearly as well as if I would've waited until the second ADX pop to the 35 line.

On this latest move down I covered those short positions in the 1303-05 area and added longs. You can see the ADX didn't even make it to the 35 line before turning down. This is a weak trend so I knew I needed to get out before the market rose back up. Also noted in the chart is yet another negative divergence on the -DI. It makes it easy to move in and out of positions with the help of these indicators.

What the ADX and DMI's are telling me about this move down from 1340:

On the move down the ADX failed to achieve the 35 mark telling me the downtrend was weak. Sometimes the first portion of a corrective move fails to achieve these numbers.

The move up from 1300 is not raising the ADX at all. The ADX is showing "no trend". Also, the DMI's look ready to whipsaw again. The +DI just crossed over the -DI, and they are about to cross again. This makes the move up look more corrective than impulsive. I would like to wait until the +DI shows me a negative divergence or pushes to new heights before taking a new position. I sold my calls at 1320 and am flat now.

In the next ADX Tutorial I will use a daily chart for longer term trades. I hope you can add the ADX and DMI's to your trading arsenal and make some extra money along the way!

***TRADE UPDATE*** EUR/USD

Took all profits at 1.37900 and went long for s short term scalp with target of 1.38400-600. I DON"T ADVISE THIS LONG TRADE

***Trade Update*** Taking half profits in EUR/USD trade

***NEW TRADE UPDATE*** TIME TO SHORT EUR/USD

2 Counts, both bearish. Cancel the trade if it goes above 1.4100
Short 2 @ 1.39900 Short 3 @ 1.40100, and add to short every 10 pips thereafter.

Closing AUD/USD Long trade

I'm bearish on equities so it's wrong to be bullish AUD/USD at the same time. Taking some profits. There are some key levels to watch and maybe I'll put longs back on, but I doubt it. Out at 1.01050

AUD/USD - Buying on Weakness

Here's a daily chart of AUD/USD. I believe it's finishing a 4th wave triangle and I will be buying for longer-term on short-term weakness. I have buy orders in at 1.00100 and .99950 which are the 50 and 61.8% retraces of the last move up on a 15m chart. Good luck!