Big Break Out in $UNH

United Health is a position that I put on back in December and it has been nice watching it break though resistance and trend higher.  Check out the chart:

As noted in the chart, it might be a good idea to buy when the price pulls back to the 20 period moving average (yes the chart says 20 day but its really a 20 week moving average).  This allows for an entry in a range where risk can be adequately controlled.  Just a trade idea..I'll probably add to my position if it pulls back to that range.

Hope everyone's having a great week so far.

TLT

Take a Ride on the Reading Railroad: RDI

Okay, it's not a railroad but it is a fantastic trade idea.  It also happens to be a play on the Australian Dollar, but I'll let you dig into the fundamentals to figure that out.  Here's the trading plan:

Entry zone, stop loss, and profit targets are laid out.  I'm already in this one and I'll ride it to the profit targets, taking 1/3 off at each target, unless there's a close below the V-Stop..in which case I'll close the position.

Happy trading!

TLT

Eur/Usd Update

The Euro has continued to rally..the only question now is how long will it last? I don't know and will look to price action to get me out of my current long position. Here's the current daily chart:

One thing that I find interesting about the Euro right now is that the correlation between the Dollar rising when the stock market declines seems to have been decoupled.  For example, this morning when stocks slid more than 1%, the Euro rallied.  What does this mean?  It could mean that the currency market has merely changed it's relationship with stocks.  It could also mean that the currency market is not worried about Europe anymore..the worry is with the US.  Not a far fetched theory.

It's too early to tell, but it will be interesting to see how this plays out.  The only thing that I can say is that according to my system, the right trade is to continue to hold the long Euro position. 

TLT

Swing High Formed In MRK Today

I've been short MRK for a few weeks now and the position was beginning to look like it might get closed out soon as MRK has shown a little bit of strength lately. Well, that strength is more likely just some consolidation after the sell off that it's suffered lately.

Today MRK formed a swing high on the daily chart, which means that it failed to make a higher and and it made a lower low from the previous day's bar. This is a bearish sign and it is a pattern that provides a good entry for shorts because it offers a good risk to reward entry.

Here's the chart:For those looking to enter a short position, this pattern is a good one for it...the first profit target will be the previous lows down around $31 and the stop is placed above the prior day's high at $34.15. I'll be looking to add to my short tomorrow.

TLT

The Dollar is Still Heading Higher..For Now at Least

Yes, posts are a little far and few between right now. I've been incredibly busy and had to abruptly move offices (my old office suffered a fire). Needless to say, things have been crazy for me lately.

One position that I've been holding on to is being long the dollar via the UUP etf. Here's an updated chart from this morning:As you can see, the position was nearly stopped out last Friday, as it approached its ATR trailing stop. There's been a lot of chatter about the dollar moving so far so fast...I don't listen to chatter, I just exit my position when my PRE-DETERMINED exit point is reached.

Hope everyone's having a good start to the week.

TLT

Book Profits in Gold...ehh, not so fast!

A couple of weeks ago, I pointed out that gold was beginning to look interesting in this post. I think it's safe to say that gold got interesting, as it has continued to go up and make all time highs. So far, so good...this is what it's all about...you notice something interesting, buy it and it goes up. Now for what I consider the tricky part of a good trade...when to sell.

I must admit, my natural instincts of seeing a profitable trade in an instrument that's making all time highs started telling me to book profits. I even considered it on Friday. Then something interesting happend. I was watching CNBC and I kept hearing the talking heads speak about traders booking profits in gold or selling gold at these new levels. That's when my thinking changed back to how it should be. I realized that a lot of traders were feeling like me...looking at these high prices...seeing how far above the moving averages it's trading...thinking about the paper profits. This is when it pays to fade your feelings. Sure, I might see some paper profits go up in smoke, but I'm trading for big profits, not smaller profits and that's just part of the game. When "everyone" is selling out of an instrument that's making all time highs, it usually pays to hold on just a little bit longer because what nobody thought would or could happen sometimes does happen.

Will gold continue to go up? I don't know, but I'm willing to let a position ride on the premise that it could and that there has not been any good signal for me to sell gold. Sounds simple enough, yet many (most) traders don't step away from a trade and think about these things. You've got to ask yourself, "Why do I want to sell right now?" Then write that answer in your trading journal. If you do that over and over, and you're like me, you'll start to see a pattern of selling winners too early. That goes against Livermore's advice of , "Cut losses and let profits run."

Ok, back to gold..here's an updated weekly chart that I'm looking at:The most important aspect of this chart, aside from the bullish trend in price, is the rising BB Width that's still at relatively low levels. I said in my earlier post on gold that I was looking for the BB Width to reach between 20 and 25...it's at 15 right now. It may not rise to the 20-25 range, but it's likely that it will. This would mean that volatility is still expanding (Bollinger Bands are increasing in width) which I know is a sign of a trend continuing to gain strength. So for now, my analysis says HOLD.

Hope everyone's having a great weekend.

TLT

Current Trade: Short MON via Puts

I've been short MON for about a week now. I purchased some Jun 10 puts with a $60.00 strike price. This position is up substantially in my swing trade account...although it hasn't broken the $60 barrier yet. Here's a chart:I'm not anticipating pulling the trigger and taking profits anytime soon with this trade (as in the next week or 2), but it is nice to see it going in the right direction. One scenario that could take place would be for the market to really sell off hard, harder than it is right now, and see MON tank down to $55. If this happens, which it could, I'll be ready to take profits quickly. This is probably the best trade that I have on right now. I still like gold but it's taking a little dip with the market...the dollar is probably the main driver affecting both of those.

Hope everyone's off to a good start this week.

TLT

New 52 Week High 2 Days in a Row: FCX

I spent almost the entire day working on a Motion for Summary Judgment for a civil lawsuit that contains nine separate causes of action and the Petition (or complaint) is so poorly written that it appears to be drafted by a moneky. If you're not familiar with a Motion for Summary Judgment (MSJs) then consider yourself lucky because they are not fun...unless you're one of those sick twisted individuals that likes that kind of stuff...I knew a few of them in law school. Needless to say I didn't trade any today, which is okay, but I did manage a position that I already had on. I've been long FCX since November 10th and this stock has been on fire the past few days. Here's an intra-day chart with some comments on today's price action: FCX sold of with the market a little this morning but then it began showing strong relative strength as it was able to get into the green before the market did. At this point, I'm just trailing stops with this trade as it's in the money and making new highs. I don't want to add to it though as this market is a little shaky to be adding on too big a posistion...something I did just before the market made its dip back in October.

It will be interesting to see how the rest of the week plays out. The first two days of trading this week look a lot like the first two days last week--a gap and rally followed by choppy consolidation. This market tends to head higher when there's not any potential bad news (i.e. anything that could cause the dollar to rise), which leads to short covering, which leads to higher prices and then the cycle repeats itself. The only problem is that it's a game of musical chairs right now because the dollar will eventually rise, (due to rising rates, risk aversion, profit taking on the carry-trade, central bank intervention the fed even hinting about the possibility of raising rates in the future, you get the idea) and being long this market is basically a game of musical chairs for now, which is why so many pros and pundits hate this rally. Gotta love it. Although it can be confusing and frustrating at times, the market is never borring.

Hope everyone is having a good week!

TLT

Long Arch Coal

Victory! Despite a very good presentation by the plaintiff's attorney, we were able to ward off the civil claims against my clients and leave the courtroom victorious yesterday by a unanimous jury verdict...although we did not win our counter-suit, but that's not surprising, especially since we really only filed a counter-suit for leverage against the plaintiff. It appears that the market continued its nose dive while I was in court yesterday and the market was pretty oversold going into the open this morning.

I opened a little position in Arch Coal (ticker ACI) this morning at the open. This is a stock that I've had on my watch list for a couple of weeks and I've been waiting for it to hit oversold levels. I told myself last night that I would go long ACI if the market opened in the positive today, which it did following this morning's GDP report. Here's the ACI chart:
We'll see how this one goes...the whole market seems a little shaky right now, which probably means it's a good time to open a new long position. I've still got a position in FCX along with a couple of energy plays...name of the game is commodities for the time being.

Have a great day.

TLT

System Caught A Good Buy Signal

Got a buy in the Eur/Usd early this morning on the hourly chart. The trade has roughly a 200 pip profit and it's still open. Check out this chart:Not too bad. The Euro is showing incredible strength right now, we'll see if it continues or if it quickly reverses like it has after the last several Euro rallies. It all seems to come down to risk appetite and the equities markets. Everyone's jumping into stocks and chasing the great returns that equities have been offering over the last couple of months. We'll see amazing strength in the Euro if the move in stocks continues. On the other hand, we'll likely see the Dollar bounce back (flight to safety) if the equities markets start tanking...which could be ugly given all the longs and their current optimism.

Have a great weekend.

TLT

On My Trading Screen Today

It's been a wild week to say the least. I have had some good, bad and just plain ulgy. The ugly would be my Gbp/Usd trade that I posted about earlier in the week. Needless to say, my positions were stopped out as the Pound went on a bullish rampage.

As of today, I only have 2 trades left open and they both involve shorting the yen. There's a great post over at the Forex Blog today that breaks down the current issues with the yen, I encourage you to take a minute and read it. I've had a long USD/JPY trade open all week, which makes up for the GBP/USD loss, and I just bought a little bit of the EUR/JPY.

I really like the prospects of the EUR/JPY trade. The only reason that I bought a little is because I'm slightly jumping the gun...the pair needs to close strongly to give a solid buy signal. There's a little resistance right where it's currently trading (see chart below) and it needs to overcome this resitance and close above it.

One reason I particularly like this trade is due to the current relative strength of the Euro and the weakness of the Yen. The Yen has been weak across the board and the Euro has been picking up steam all week. This could be a great trade if the momentom conitues. Here's a daily chart of the EUR/JPY with some notes on it:

I will follow up with this trade next week and see how it's prospects look after the weekend has passed. Have a great weekend.

TLT

Usd/Jpy: Nothing Goes Straight Up or Down

The Usd/Jpy is pulling back pretty strongly this morning...don't know why but then again I don't usually ask why, just try to trade the chart patterns. The pair has been trending up for a while within a good channel, here's an hourly chart with a linear regression trend channel that shows the current uptrend.As you can see, the pair has been steadily trending for some time now. Does this break signify the beginning of a trend change? I don't know...my gut says no but I'm biased because I'm long the pair. Nothing goes straight up or down (or at least it is a rare occurence) and a good pullback is probably long overdue. I added a little to my position this morning and am sticking with the "buy the dip" plan until I'm proven wrong. I'll know I'm wrong when my stops are hit (still a couple of hundred pips away from that) or when my system registers a sell signal on the daily chart...sell signal will probably register if the pair closes below 96.70 level. Since neither of those conditions have occured, I'm adding.

Good luck out there.

TLT