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Archive for December, 2007

It’s just incredible how some people have nothing better to do. My blog has been flooded with spam comments. I’m trying to find technical workaround (probably a plugin or upgrade) but in the mean time I’m turning off comments. If you need to reach me please use the Contact Me feature.

Sometimes you just need a push to do what you really want to do. This morning I’ve received this most interesting comment from a reader named Pete. Here’s a summary of what he wrote:

Hey there,
I really like your trading style and commentary. Just read through the last couple posts. I feel compelled to warn you about the dangerously receding U.S. dollar. As you mentioned about how you were thinking of hedging against the currency movement, to lock in profits.

Overall the USD is looking very scary. Of course its already lost 60% to the Euro in the few years, and this does affect US citizens being part of a global market. All the imports will cost more and eventually the price of living goes up, as you may be aware.

Some people are predicting 1929 style world wide depression with US being very majority hit. And are advising to get a basket of foreign currencies to hedge against the downfalls.

I’m a firm believer this is the case as we have seen starting to happen since Sept 07 as predicted by LaRouche, we should continue to see things like Oil, Gold and other metals strengthen while the USD continues on down, and eventually the solution will be to create the Amero (the north american union).

For more good info on this check out www.infowars.com , and they broadcast a radio show over the internet constantly for more developments.

Best Regards
Peter.

Pete, first of all, thank you so much for your comments. I think they’re very valuable and you have a great point. As per my previous posts, my portfolio is doing really well lately and I’m comfortable with the US stocks I own but my profits are being eaten up by the US dollar drop… as you know, it’s hard enough for us traders to make profits on trades, leave alone fight against a 4% or more drop in the US. I personally hold all my funds in Canadian dollars. The following is the chart for the USD/CAD - it has dropped 4% over the last days and I don’t see it stopping..

I prefer to trade the US stocks as there’s a lot more volume, readily available information and also participation but unless I come up with a very serious and strict hedging method for it it will be hard to keep up.

I also believe Gold is going to continue up and wrote about it here. Here’s the latest chart for Gold and it has appreciated 4% since my signal here.

Crude oil is no different, just broke to the upside and my system quickly captured the signal…

The Euro recovered very nicely and my system is almost ready to give me a buy signal, in addition it’s displaying the same "failed break setup pattern" I post so many times in the past…

As Pete correctly pointed the strength on Gold, Oil and other metals contribute and talk about the further US stock market and USD weakness…

Last but not least, looking the weekly chart of the Dow Jones (INDU) — what do you see? Unless it breaks the 14,000 things could get really ugly.

Here’s what I’m doing today (December 28, 2007) # 1

I am closing most of my USD position which are all profitable at the moment but could’ve been 4-5% more profitable "IF" I had a USD/CAD hedging in place. Here are my closing results.

=>ENTRY:2007/12/12-Long LH at 74.148, stop@71.4, risk/unit $2.86 (1.7%)
=>EXIT :2007/12/12- 500 at 75.51, Net PL $ 1,108.50 (2.9%) 16 days

=>ENTRY:2007/12/12-Long LH at 74.148, stop@71.4, risk/unit $2.75 (1.7%)
=>EXIT :2007/12/12- 500 at 75.435, Net PL $ 1070.20 (2.8%) 16 days

=>ENTRY:2007/12/11-Long DAR at 11.4, stop@10, risk/unit $1.40 (1.7%)
=>EXIT :2007/12/11- 1000 at 11.59, Net PL $ 331.20 (2.8%) 17 days

=>ENTRY:2007/12/26-Long TIVO at 8.58, stop@8.4, risk/unit $0.19 (-2.6%)
=>EXIT :2007/12/26- 3000 at 8.3676, Net PL $ 202.60 (0.8%) 2 days

=>ENTRY:2007/12/14-Long IBKR at 30.459, stop@29, risk/unit $1.52 (5.5%)
=>EXIT :2007/12/14- 1000 at 32.2, Net PL $ 588.10 (2.0%) 14 days

Total PL$ of closed positions: 3,299.00.

I do believe that most of these stocks can still try fighting the trend. I keeping a partial position on LH and X. Here’s the weekly chart for US Steel (X).

Here’s what I’m doing today (December 28, 2007) # 2

I am transferring the funds from the closed positions to Gold or shares of GoldCorp (G.TO) — I wish we had in Canada a Gold ETF tracking just like GLD  or IAU in the US… we do have one but the volumes are too low and I’m worried about the spreads. Here’s what Goldcorp looks like today:

Please note the stop line on the daily chart at $ 31.36.

That’s it for today folks — WISH YOU A HAPPY NEW YEAR!

If you follow this blog you probably know that one of my favourite setups is the "failed break patterns". Why do I like these setups?

• Simple and visual - only require 2 steps
• Capitalize on emotions, supply and demand
• No indicators required
• Can be traded using any instrument

I’ve shown a number of example in the past using stocks, now let’s look at how I’d trade the EUR/USD and USD/CAD pairs using this method…

(please click the chart to see it bigger)

Other failed patterns posts/articles around the web:

• TradingMarkets, succeeding with failed patterns
• SFO Magazine, An "F" may not be bad

Most of my positions went up today but the big help came from US Steel (X:NYSE).

Today I closed my position on Citicorp (C:NYSE) at break even, decided to move my funds to TIVO INc (TIVO) and the position is already profitable.

The USD fall is killing my profits slooowly as my broker converts my USD positions to CAD a the time of buying/selling. I have to think of some hedging mechanism to protect my positions from this fluctuations.

Here are some of the highlights: