Cable News and Network News has done a good job of reporting the violence in Northern Africa and the Middle East, so I don't need to repeat what you already know. What is important is to recognize that it is likely that the world is changing before our eyes and nobody has any idea of how this is all going to turn out. There will of course be winners, and there will be losers. In terms of Capital Risk Management, my attention is on "not losing" rather than on "winning". There will be a lot of investors looking for a seat as this turmoil plays out.... just want to sit in my chair and wait. There will be plenty of time to dance once the music plays again.
After being done 100 points in over-night trading, the market gaped down, trading off nearly 90 points on the open, and has rallied to off 50 by 10:45. Oil, which had a very volatile up-thrust over the weekend, is trading at 91.60 after trading as high as 97. Gold is trading higher at 1401 and silver is trading higher at 33.08, after trading nearly 35. The balance of the commodity complex is mostly mixed, with some of the recent high fliers like cotton, wheat and Rice off sharply.
The Euro is higher at 1.3695 after trading lower most of the past 3 days. The Dollar is lower at 77.60. If the Risk Trade is off, it is sure not showing in the Dollar. Bonds seem to be the catching the frightened money, with the 10 year Note up almost 5/8, at 3.51% and the long BOnd up 3/4 at 4.636.
The indexes are all trading lower, but off their worst levels of the day. The Dow is currently off 52, the SPX off 9.11, the Transports off 90 and the XLF off 0.25.
Our Momentum Change indicators have moved away from Neutral but are not yet ready to again confirm the Sell signal of 1/20. The trading account is flat, and has been since getting stopped out after the last Sell confirmation on 1/28. We await a Sell Confirmation to re-enter the short side, or a new Buy signal to enter the long side. This has been a difficult month, as our Momentum Change indicators continue to be Bearish, the internal measures of the market health continue to deteriorate with new short term negative divergences, but this Bearish momentum and declining market internal health measure have not been enough to halt the advance of the indexes. I am confident that we will be able to identify the next move in the market, and disciplined use of stop loss orders will again protect us.
Best To Your Trading!
Bill
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