What the hell is that? I’m still short on GBPUSD. Is it going to affect GBPUSD too???
Not sure, but I suspect it is this:
“The Trump administration on Tuesday delayed imposing a 10% import tariff on laptops, cell phones, video game consoles and some other products made in China that had been scheduled to start next month, in an abrupt pull-back from a hardline stance on Chinese trade.”
Just shows how jumpy markets are these days when one never knows what is going to be said next by perhaps the most unpredictable leader we have known in many generations.
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Well, there we go - a spanner in the works!
We had a very promising downside set-up, and then a statement that killed that instantly. But there is no follow-through on the upside, nor should there be as little has actually changed, the globe is still in a state of economic uncertainty - and the glass is getting very dark!
But, it seems, the markets are stunned into a numbness, not knowing what to make of this. They are static and sitting in a neutral position. The spike was halted by the high from last week and we are now sandwiched in the upper half of last week’s total range and between the 1-hour and 4-hour 200SMA levels.
It is "sit-on-hands" time again, unfortunately, but that is the way it goes sometimes. No point in forcing a trade just to be in the market.
Of course, that also depends on what kind of trading one is doing. I guess a scalper will find trades whatever is going on, and a long term trade will just keep on watching the daily/weekly closes and not be stressed out by such intraday jigglings - but a swing trader or day trader? well that’s an adrenalin question! 
- if you like the thrills and the challenge, that is!
The last four days also now change the outlook to flat after today’s turnabout reversing the anticipated continuation of last week’s down move:
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So the spike in US indices was indeed, according to Reuters, due to the Trump administration announcing a delay on select Chinese import tariffs.
The immediate reaction was a shade of fresh optimism over the ongoing U.S.-China trade war and recent signs of an evolving global recession.
But a pertinent warning against too much expectation was given by Robert Pavlik, chief investment strategist, senior portfolio manager at SlateStone Wealth LLC in New York, who is quoted by Reuters as saying:
“You really don’t know where any of this is headed,”
and who then followed with this rather graphic comparison:
“It’s very reminiscent of when we were in Vietnam and the U.S. was in talks about ending the war and you’d get periods of high hopes followed by crushing blows.”
Not a very encouraging description of the tradeability of the US market right now!
Actually, I was looking at this monthly chart earlier today and I was really surprised at the volatility over the last 18 months (in the red box) when compared with the market from 2000 to this period…
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On another note - can you believe this:
Saudi Aramco held its first earnings call with investors on Monday, and also reported profits of $46.9 BILLION for the first six months of 2019. That was down 12 percent from the same period a year earlier the result of lower oil prices.
Imagine, profits fell by 12% and were only 46.9 billion - I hope heads will roll for that! 
But all is, thankfully, not lost:
However, that figure still makes Aramco the world’s most profitable company.
Unsurprisingly, there was little change in SP500 overnight in the Far East. Charts show prices, well, should we say “neutered” rather than “neutral”.
The postponement of additional tariffs is, of course, positive news, but does not actually change anything longer term. It only hints at possible further good news in the pipeline. But the current actual, tangible, reportable, statistical weakness in global economic performance is a result of the present trade war status - further tariffs would have just made things worse.
So there is limited room for optimism in the present situation until some concrete changes are made - as evidenced by this morning’s release on China’s industrial output growth for July:
“China reported a raft of unexpectedly weak July data on Wednesday, including a surprise drop in industrial output growth to a more than 17-year low, underlining widening economic cracks. Industrial output grew 4.8% in July from a year earlier, data from the National Bureau of Statistics showed on Wednesday, lower than the most bearish forecast in a Reuters poll.”
So our markets flipped up a notch in response to the postponed tariffs - but are now sitting and waiting and asking, “ok, fine - but what next?”
Overall, the global situation still looks weak and it is hard to conceive of a US market striding forward in total isolation from the rest of the world. Multinational companies and their markets and their materials and their suppliers are not “nationals” they cross multitudes of borders and when one country is feeling unwell then it easily infects the others.
And so, here we are. Still within the upper half of last week’s range and no trades in sight this morning - yet!
These are times when it is worth reflecting on why we enter trades. The only reason is because we expect that price is going to be somewhere other than where it is right now. But we also accept that nothing is 100% true and therefore we also accept that we are trading probabilities.
And if we are trading probabilities, then our analysis, whatever form it takes, should include a positive expectancy, a bias that the “odds” are in our favour, that the chances that our analysis is right is more than 50/50. This is the first part of why trading is not just gambling.
This leads to the second stage. If we accept that some trades will fail, then we need some risk exposure/money management parameters to ensure that the losses deriving from these loss trades are less than the gains when we are right. This is the second part of why trading is not just gambling.
A combination of these two aspects can sometimes produce an effective trading approach even if winning trades are less than 50% of the total. But our analysis should always be based on an identifiable, tangible, and explanatory study of why our proposed trade is more likely to win than lose.
SP500 1-Hour
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Got a signal at 14.00 for a short B&B trade - an hour later it is filled:
Probably going lower from here, but my Bread&Butter trades are intended as fixed-pip value trades that occur regularly, usually at least once per day, regardless of any continuation. They provide a nice steady income alongside which one can trade around on a more speculative basis or look for more long term trades in line with the daily chart. At present I do not have a long term trend as my daily chart is flat, so I am sticking with my B&Bs for now 
So that is a quick 150+ pips (times position size) for the day and now time to do something else…
Reuters: "U.S. President Donald Trump’s administration delayed imposing a 10% tariff on certain Chinese products, including laptops and cell phones, beyond September on Tuesday, providing battered equity markets world-wide some relief.
However, weak industrial data from China and a contraction for export-reliant German economy - Europe’s largest - in the second-quarter was a reminder that the impact of the drawn out trade war between the United States and China is far from over."
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Happened to notice that the US2000 is looking even weaker than SP500 and is trading into the lower half of last week’s range, so took another 68 pips follow-through here, too.
But now is time to go out, things to do…
Nice call!!
I can picture the big “T” and his kids sitting around the oval eating happy meals, and I can hear it now…
“Ok it’s dropped on tariffs, too bad so sad. Kids… does everyone have their “longs and TPs” on? I’m going to tweet the China tariff delay. We should have price spike in 3… 2… 1!”
KC
… can’t tell be there aren’t any “insiders” profiting from these tweets.
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Hmmm, things didn’t go quite according to plan!
Went short on SP500 again towards the close yesterday, and when it finished on the lows I decided to leave half the position overnight as it was almost definite that the Far East would continue the decline - afterall, why would they buy it!!
But logic seldom prevails in these markets and we moved higher during this morning’s London session and the balance got stopped out almost on the high of the move.
But, anyway, once the decline continued, I sold a double size position as a good risk trade. Fortunately, I took the profit on both these after 100 pips and thus recovered the stoploss from the half position and a nice chunk in addition from the other 1,5 positions. But it was a sweat 
- and I’m getting too old for sweats!!!
But it gets scary when one sees how things can reverse so fast and if I had left these positions they would also now be in the red…whether a situation ends up with good win or an upsetting loss is dependent on so little, it seems! 
I don’t know about anyone else but it seems survival in these markets nowadays is becoming more an issue of lucky timing than skillful level-setting. The markets jump on random speeches, tweets, statements and so on.
I haven’t been trading currencies like EU and GU for some time, but even looking at the charts for these is enough to put me off.
It’s making me nervous!
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Its Friday and little change in SP500 overnight. The current hourly system cycle closed out this morning and so now waiting for the next signal that a new cycle is starting.
Technically, the system changes simultaneously from one direction to the other but only if certain other filters are in confluence. In this case the RSI is still negative and negates a buy at this stage.
Max pips on this cycle was 886 with a max drawdown of -16 pips.
One can see from the price movements yesterday (in the red rectangle) the unusually excessive volatility on the hourly chart yesterday compared with the Mon to Weds range. This seems to me to reflect the current divergent pressures of a seemingly strong and healthy US economy v. suspicions of a global recession on the horizon.
The news was full of the conversion of the US interest rate yield curve into a negative form, where longer term money is cheaper than the shorter term. This has historically often occured prior to recessions.
So the downside remains the vulnerable direction and is still dominant on the 4-hour =>Daily charts, whereas the 1-hour, as mentioned above has turned neutral-positive. This situation suggests the possibility of some upside potential into the close today, but the trade risk assessment associated with this is not good whilst the RSI is still negative.
So there may be a later trade in US time, but otherwise I am done for this week and thankful for a positive end result in what have been some choppy stormy seas this week!
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And there indeed was a later trade in US time.
As anticipated, there was very little upside following the first signal (blue ring) whilst the RSI was still negative, but then came another signal (the red ring), at almost the same price as the first signal a few hours earlier. This new signal came with a strong bounce off the low of the same candle - and this time with a neutral RSI. And that made a probability worth buying into.
And, as usual with the B&B set-up the target was 150 pips, but I was in a little prematurely and so, using the same theoretical level from the candle close, I hit target in the next candle with 122 pips instead of the full 150 - and with only a -12 pip pullback from entry.
I had fine-tuned the TP here as it coincided with the 1-hour 200 SMA. I was conscious of it being Friday and generally a bit slow and that the longer TFs are still technically negative - even though price looked firm enough to go higher than this (which it has) - but the B&B is a fixed-pip basic earner, not a trend follower (I have to keep reminding myself of this!).
Well, I doubt there will be another turn this evening and I don’t enter trades into the weekend, so this is now it for the day and week. A good end to a positive, but mentally-challenging, week - strategically, the week has been very much like a chess match (especially the patience today) and I’ve enjoyed it and the brain cell is now in need of rest! Happy weekend to anyone that might actually be reading this!
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One of the high profile issues this week was the brief inversion of the US interest rate yield curve. Whilst the yield curve generally considers the cost of money from one month to 30 year duration US bills, notes and bonds, one of the closest watched benchmark comparisons is the 2 yr v. 10 yr rates. Here is a chart showing this week’s inversion:
So why is this important?
Its main significance is that every US recession since 1955 has been preceded by an inverting of the yield curve and therefore this week’s reversal may also be an indication of an imminent recession occurring.
This is of concern in the current climate due to the signs of economic slowdown in other parts of the globe and the uncertainties arising from Brexit. However, maybe things are not quite as straight forward as that and there are significant differences in the management of economies in today’s world compared with the last century and, indeed, from the lessons learnt since 2008.
It is relevant to remember that earlier recessions followed a yield curve inversion by even 2-3 years and this week’s brief inversion is not therefore a sign of an immediate collapse into recession. But it does indicate certain possible events in the near future.
US notes and bonds are normally fixed rate instruments and therefore when increased buying raises their prices it creates a corresponding inverse fall in the actual interest rate earned from them compared with their nominal fixed rate. Therefore increased buying depresses the long end of the yield curve,
However, in principle, the longer term interest rates should, traditionally, carry a premium over short term rate to reflect the impact of future inflation. So an inverted yield curve does suggest something “abnormal” is going on.
But it is worth remembering that the US yield curve has been extremely flat for some time due to the outlook for a prolonged period of low inflation rates. Therefore the chances of a small and brief dip into negative territory is greater than in previous times and perhaps not so significant as a barometer reading on the state of the US economy.
Although the negative data in other global markets is pointing to a weakening trend, the US market is not yet following suit. For example, retail sales and wages are strong as well as employment. These are not signs of a faltering economy at all.
At this stage, it would seem most likely that the inversion of longer term rates below the short term is mainly reflecting the anticipation of further cuts from the Fed - which would bring interest rates back into a normal shape of a gently increasing curve, reflecting a strong economy and low inflation.
But one cannot dismiss the situation globally, and when Germany also announces it is introducing debt-related measures to boost its economy, then we can be sure there are serious problems around.
We could imagine 2 scenarios:
-Mr Trump’s aggressive tactics in the form of trade negotiations and sanctions will successfully lead to the US resuming its unopposed economic and political supremacy in the entire world boosted by a strong trade deal with the UK and its partners as well as reigning in competition from other superpowers such as China such that growth in those areas means growth in the US as well. This scenario is also boosted by the US being almost self-sufficient in energy.
-Mr Trump’s policies of attempting to force other economies and sovereigns to toe the American line pushes those economies into a weakening situation that turns into an irreversible spiral into recession that inevitably backfires into the US economy, too. And when recession fears hit the US equity markets, which are now at or near record highs, then the ensuing collapse there will be fast and furious and will have a catastrophic impact on other global markets which are currently already weak and vulnerable.
The main hope at present is that the US-China trade disputes can be resolved satisfactorily and soon, and that the Brexit upheavals and uncertainties will also be settled quickly and relatively painlessly. Afterall, the UK is the 5th largest global economy and the EU is another giant trading entity.
From a trading perspective, one can expect the roller-coaster to keep on rocking and rolling - let’s just hope no economies end up sea-sick and falling off the ride…
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Been a bit busy this week with last of the summer visits, etc. But the SP500 has been relatively peaceful anyway.
But the trusty B&B method still managed one trade per day. Monday’s was in fact a continuation of the move started on Friday and Tuesday’s was an overnight move started late in the NY session. They were both 150 points each.
Today’s trade started early but I missed it through being in the car and entered nearly 2 hours later and 60 points higher than the entry point. So I only got the remaining 81 points from today’s move.
Three trades, no losses this week so far.
And so the seasons start to change once again. The nights are getting darker and the nature is weary and its clothing is looking threadbare and melancholy:
and the autumn skies are filled with powerful cloud formations:
Autumn - oh what a wonderful season!
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Its been a boring and uninspiring week on SP500. As can be seen from this 4-hour chart.
We have been inside only the top half of last week’s range all week and any attempts at the high have been weak and fallen away again quite sharply - only to be met with more buying. But whether that buying is real, long-term or just technical “on the day” is impossible to say.
There were no trade signals yesterday and today looks just as flat - so far. But there is always a message in the latter half of a NY Friday session, so maybe later…
But autumn is a time of powerful sky patterns and at least there have been some lovely sunsets this week:
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We seem to have a sell signal on the downside here, so I have given it a go and see how it turns out.
We had a similar down spike yesterday that immediately reversed into a steady climb back. But the fact that we now have another spike down shows inherent weakness. We also have a slight cross on the RSI, albeit microscopic!
But it has been a great month so far, so I am happy to risk this somewhat uncertain sell trade - no great expectations here.
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That one didn’t go as hoped, but not really unexpected somehow - I just thought it unlikely to get two reversals like that. Still, thats 4 wins/one loss for the week
Huh huh! How the markets sometimes favour the brave and the foolish!
So it collapsed again after stopping me out - so what more can one do than a new, doubled-up sell position! - and then an immediate collapse further, TP hit, and the stoploss covered and another net win in the bag!!!
That is definitely IT for this week! 
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Its been a while. Over two weeks, I see. But nothing much else for entertainment than the UK House of Commons. Would be hilarious if it were not such a serious issue.
SP500 has been in a gentle rise and there’s been nothing much to say and do but buy and sell higher. Makes money but boring to keep repeating…
But it changed yesterday in the charts and the downside took over - and so it continued today - a morning short and cover and then a bigger sell and cover in the ear,y afternoon. Nice pips but not so much explanation behind the moves - but is that anything more than an afterthought on whats has been rather than where we might be going…
The same old 1H chart but with a revamped guppy style GMMA -look. I get bored with the same old look.
Funny thing, how one’s mind can be manipulated as to what it sees! There has been so much talk recently about the future of global food sufficiency and eating insects and even growing protein in basement laboratories from air, bacteria and electricity. And then when I happened to see this recipe in a magazine, what did my mind see? Yes, I saw fried worms on fish!!!.
Interesting that over half the gobal population now apparently live in large towns even though there is so much uninhabited space - but maybe the natural world is not so very different, maybe there is a strength, or at least a comfort, in living in a crowd there, too! This one I call Mushroom Manhattan:
But we are getting into autumn now and there fewer hours to enjoy the natural light. An early evening lake ride with a fast setting sun:
Question is though, is it worth going short SP500 overnight! Stills looks a little vulnerable…Will have to think about that.
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I know I like my MA’s and shouldn’t really comment on other people’s use - but I came across this and, well, it seems the only thing missing amongst all the lines is the price itself! 
How does anyone trade such a thing? (I think I can safely ask that since this was published about 12 years ago - I wonder if the trader concerned is still trading this! 
)
It really gives me an unwell feeling just to look at it!:
I can’t help wondering are all the various indicators added to substitute for something else that is inadequate? A futile search for the 100% Holy Grail system instead of a high probabilty method with sound risk/reward management? There must be a lesson in this somewhere for anyone thinking that losses just mean heaping on more indicators…
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