Big Bets Against the Euro

This Wall Street Journal article, states that Soros, Eihnhorn and several other big hedge fund managers are betting against the euro. Some claim that the Euro/Usd could see parity (1:1) by the time the euro stops falling. Another manager stated that the outcome of the EU's problem with Greece will be bearish for the euro no matter what happens. These are some big claims.
Well, as you can see from the above daily chart of the Euro/Usd, the currency pair is in a significant downtrend and the only question now is: Where does it find support?

TLT

Weekly Wisdom Quote

"If you don't get what you want, it's a sign either that you did not seriously want it, or that you tried to bargain over the price."

--Rudyard Kipling

Home Depot: Ready for lift off?

I've been following and trading HD for over a month now and I've been looking forward to it reaching this level (the plus 30 level). The $30 range has been a major resistance zone for HD for a while...go and look at the weekly chart to see this. Today it gapped up above the immediate resistance and closed above 30 by two pennies, here's the chart:If the market rallies tomorrow, which is a possibility, this thing could take off quickly. Keep in mind, I'm day trading this thing so by take off, I mean pop up .75 to a dollar in a day. This will possibly offer up a great risk to reward opportunity, as your risk is well defined..cut you loss if it retraces back below 30. Another thing to notice, is that this stock has recently had a breakout, consolidation, pullback pattern. HD could offer up some great follow up trades later on.

As always, time and price will tell.

TLT

President's Day Quote

"Things may come to those who wait, but only the things left by those who hustle."

--Abraham Lincoln

How to Recognize Intra-Day Buying Orderflow: My 1,2,3 Internals

As I'm typing this (roughly 11:00 a.m. central time) I'm watching what appears to be the end of a great short term buying opportunity. It could push higher, but the initial momentum is definitely over for now. This was one of the best upmoves I've seen in at least a week. Fortunately, I was able to recognize that I needed to be long and was able to catch a piece of the move, although I left a little on the table because booking profits lately has been very difficult due to the choppiness of the market.

How did I recognize the intra-day buying order flow? The big signal was the market internals. There are several things I monitor at all times while day trading and these are the big 3 (note that I didn't include the cumulative tick in this list...i always watch the tick as well but it's more common so I'll leave that alone for now). The big 3 are: 1) Advancers vs. Decliners, 2) Up Volume v. Down Volume, 3) the Vix vs. SPY. I plot all of these with intra-day line charts. Here's a screen shot from just little while ago:As you can see from the above pic, it was time to be long. In 1, the advance line was way above the decline and they were heading in opposite directions (bullish), in 2 the up volume was above the down volume and they were heading in opposite directions (bullish), and in 3, the Vix was maxed at the very bottom of the chart and the SPY was at the top (very bullish). When I see the 3 internals cross and start heading in opposite directions, I know to be ready to trade. On choppy days that are hard to trade, you'll see these cross back and forth several times...a sign that it's very choppy and you have to have low expectations of follow through if you trade at all.

Today I saw buying pick up and the internals got bullish and I knew it was time to stop shorting financials, which was chopping me around a little, and look at my list of potential longs. My big long of the day was NVDA. NVDA had awesome relative strength this morning as it was able to hold a gap up and then continue higher even as the market was heading lower. A stock with that kind of strength has the potential to pop if the market starts heading higher and that's what it did. All-in-all, it's been a good day and now I'm just going to sit back and watch for the rest of the day.

I hope everyone is having a profitable week/month so far and I'll be back with another post soon.

TLT

Trading Is A Game Of Confidence

I love books that apply to trading that do not directly have anything to do with trading. These types of books tend to be about achievement and quite often about achievement in some type of competitive sport. The best are usually about the psychology of playing a competitive game, The Inner Game Of Tennis is a great example. Another great book that I've been slowly working my way through is Golf Is A Game Of Confidence by Dr. Bob Rotella.

In this book, Dr. Bob walks you through 18 stories about different golfers that encountered and overcame some sort of challenge, generally a psychological challenge, in their golf game. Some of the players are professionals while others are just amateurs. To demonstrate how applicable some the principles of this book are to trading, I will show you an excerpt paragraph in its original form and then show it again but with a few words changed.

Original excerpt from the book:

The second constant is the game plan. I want professionals to make their decisions about par fives on Tuesday and Wednesday, during practice. That way, their decisions are more likely to be coolly taken than they would be in the heat of competition. Of course, a plan has to have some flexibility, taking into account such things as the presence or absence of favoring winds. But in general, a player who thinks she is executing a plan is morel likely to be decisive than a player who walks onto a tee wondering what to do. And decisive players, by and large, hit better golf shots.

Changed version adapted to trading with changes in bold:

The second constant is the game plan. I want professionals to make their decisions about trading scenarios (setups) before or after market hours. That way, their decisions are more likely to be coolly taken than they would be in the heat of the trading day. Of course, a plan has to have some flexibility, taking into account such things as the presence or absence of favoring market conditions. But in general, a trader who thinks she is executing a plan is more likely to be decisive than a trader who watches the market wondering what to do. And decisive traders, by and large, make more profitable trades.

Very interesting. Sounds like a paragraph straight out of a trading book. I've only read about half of this book but from what I've read, I would highly recommend it. Dr. Bob Rotella also has another book that I'd like to read called Golf Is Not A Game of Perfect, which I'll probably get after I finish this one.

I hope everyone's having a great week so far.

TLT