Monday, February 14, 2005
Issue Contents:
| 09:28 | The Day Ahead Economic releases and news. |
| 10:07 | Swing Trade Setups |
| 10:50 | Quick Take: Gold, Currencies |
| 16:15 | TrendVue Trader Talk Today's transcript. |
Good morning – its Valentines day, and the 45th day of 2005. With no US economic news releases on the calendar today, traders will be looking at Friday’s price action and other markets for some guidance.
Futures markets are trading a little soft ahead of the open, however given the strong move up on Friday this is not a big surprise in the early going. Crude and Gold are both higher, the former perhaps bolstered by talk coming out of Venezuela and Brazil which appear to be forming an oil-based economic alliance, supported also by China which is interested in their underground resources.
US Economic Releases
- None scheduled
Canadian Economic Releases
- 8:30 am: Manufacturing Shipments & Orders – Dec.
- 8:30 am: New Motor Vehicle Sales – Dec.
After being stopped in on a number of long trades last week, and a large move pushing positions to profit, today is likely to be either a pause or continuation of the move up. In either case, relative safety lies in managing existing positions. We will continue to look this morning for stocks which are still in a position to provide a trade trigger meeting our requirements that price prove itself by pushing higher from a down bar on the daily – but its clear that after Friday, many of those which were down then may not be viable stocks for long side trades in the first place.
Consequently, immediately after a big up day we never expect to see much in the way of selection on the long side. We’ll look just the same, and no doubt we will also find some weak stocks worth stalking on the short side. Please join us in TrendVue Trader Talk or click on the link to review the ‘almost-live’ transcript.
After our well-timed entry last week in the sector, currency moves are continuing to support the price of gold, up another 0.7% early this morning.
GC Gold continuous futures contract – hit the first target (decending trendline) on Friday, and pushed through it. Frequently following such an obvious trendline break price will stall, sometimes even retreat a little. If this should happen I will lay out a number of scenarios and trading actions which can be utilized. Target two is approximately 431 – 432, which also happens to be roughly where the 50 day moving average will be lurking by that time.
TSX S&P Gold Sector index, which provided the reason to get long in the first place, plows through target 1 (20 ema) and recent swing high.
HUI Gold Bugs Index reaching up to where we would expect some resistance, the breakdown in price from early January.
My trading plan: Taking some profit on any weakness is probably not a bad idea, although my personal plan is to hold most or all of my position with a break-even on the off chance that we’ve nabbed an important and lasting bottom. After buying a test of bottom (TSX S&P Gold Index) I never take profit on the entire position on the first bounce, at most I’ll take profits on 1/3 to 1/2 of the trade.
My goal for a test of bottom is to get in on the ground floor of a trade that may last weeks, as opposed to our typical 2–4 days for most swing trades. I find that even if we are proven wrong about such things more often than not, the winners which follow a good entry more than make up for this.
Currencies
USDCAD breaks down after tailing to hold the break out and up from the rising wedge (marked in purple). The ultimate target for a rising wedge is the base, although as is clear from this chart (and the even larger rising wedge or channel) is price is stuck in a range and can be considered directionless in the big picture.
EUR against USD continues to act like it wants to stop the decline and is at least a currency we don’t want to be shorting.
GBP against USD coming in to a touchdown at target 2, the top of the recent range. IF price starts to trade above that range high and turn it into new support then price will have initiated a new up trend on the daily.
Today's transcript.
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