Trades Backlog

Back in Singapore today. Trades done last 2 weeks while away :=

• 23Jan15 : Sold GBP/USD @ -1.5029
• 23Jan15 : Sold ESH5 @ -2055
• 26Jan15 : Bot ESH5 @ +2036
• 26Jan15 : Sold HGH5 @ -244
• 27Jan15 : Sold GBP/USD @ -1.5158

Outstanding open positions now = 1. Short HGH5 @ -249.50 and 2. Short GBP/USD @ -1.5156

Late start to trading in Jan, after the big moves had been made. Marginal up for the month.

Internet access in China now reached hair tearing vomit inducing nose bleed levels of inconvenience. VPNs now works very intermittently, perhaps 30% of the time. Arrrrrggghhhh !!!!

S&P500 : Watch 1982

• Million dollar question : Oil + Copper(Dr) down, US yields down = foretelling economic slowdown? Are stocks behind the curve and thus over-valued?
• Monthly : Still uptrend, no sign of turning yet.
• Weekly : 2nd hiccup of the strong uptrend in the making.
• Daily : Possible SHS top being formed. Neckline at 1982. Sell stop-in below. Attempting to sell too early will only lead to endless frustration.
• [This potential top in equities makes me wary to going short ED and TY tempting though it might be at these lofty levels]

S&P500 : Spring Bear

• Weekly : Close last week = dark cloud cover. Should see follow through next week to around 1780 where we shall see if the uptrend line holds.
• Daily : Since the shooting star last Friday + evening star thereafter, market has been soft (as per candlesticks theory). Last night's close at 1839.50 is below a significant previous high at 1846.50. Expect the coming days' trading to either 1. be choppy while we try to form the right shoulder of a SHS top, or 2. we go straight down with some force. In any case, being short is right.
• Trade : -1859 / + 1839 / -1844. So worked into a small starting short position at -1864 average. Planning to build on this patiently. Will not lose money on existing position with protective stop below entry. It's the new positions where the play is.

S&P500 : This Little Sucker Got Lucky

• Shorting US equities. Many have tried, many have died trying. True sucker's trade. Even so, after a long period of absence, yours truly put on a new short 2 nights ago, -ESM4 @ 1859.
• Trade decision based not so much on SP500 technicals but justified on divergence between  Dr Copper (bellwether says serious growth slowdown) and SP500 chart (everything hunky dory).
• Now we have a reversal on SP500 daily chart. Original stop loss set based on cash new high above 1887.50 brought down to at worst a small profit on original trade entry. Watch weekly closing as well - possible reversal to downside.
• [Was a toss up between selling ES and buying USTs. Given my natural inclination to be short bonds, decided on ES. Copper chart has tempered my bond bear disposition].

S&P500 : Daily SHS

• Longer term charts remain in good shape.
• Short term however, a close below 1674 will confirm a SHS top on the daily chart. Good for 30 points to about 1644 only though. Not terribly exciting but may be worth a quick punt given the dearth of good ideas here. Wait for confirmation on a closing basis.
• Can also make out a completed 5-wave upmove on the daily chart. Also re-trade back below previous top at 1685 adds to the bearish short term outlook.

Ponder Ponder

• 1. US 10 year yields up from 1.60% to 1.96% now.
• 2. USDX trying to take out 2012 highs.
• 3. S&P500 at new high.
• 1+2+3 => Pricing for US recovery (without inflation). Don't fight the tape, even if I think the central banks are doing the wrong thing and it will all come crashing down hard eventually. DO NOT TRY TO SHORT S&P. Accept it.
• Recovery = Time to buy back balance of Copper short (still in the money). Trade : Bought HGN3 +325.70. Square now.
• Free up room for taking more risk in Gold and Cable; both charts look good. (Enough long USD/JPY already. In fact, am in risk excess at 35% vs limit 25%).

S&P500 : Ending Diagonal

• Wary of trying to call a top in S&P having been burned over and over again this past year. So, just highlighting (no trade!) the contracting ending diagonal that is now apparent in the weekly chart.
• Price is trading above the upper diagonal line. A re-entry back below 1515 would form what Bulkowski calls a throw-over (basically a false break) and would be my starting point for getting bearish.
• [See also rising wedge].

S&P500 : Long ESH3 @ 1476

• Weekly : Taken out post-financial crisis high + Sep12 high of 1474.75. Therefore, just gone long ESH3 at 1476.
• Monthly : Can reasonably expect a challenge of Oct07 pre-crisis high of 1586.

S&P500 : Back > Neckline & Trendline

• Back above TL on weekly and SHS NL on daily.
• Stopped out 1396.50.
• Bloody pain in the ass. "Fortunately" in experimental phase now, P&L in the hundreds instead of the normal thousands, but small comfort really.

S&P500 : Short Term Oversold

• Weekly : 2nd consecutive close below the UpTL, confirms short is right. [Original trade : -ESZ2 @ 1421].
• Daily : Friday night's hammer, indicates perhaps a reversal of the downmove for this shorter time frame. Thus, risk pyramiding was delayed here. Instead, an equivalent (to the existing short S&P) risk amount of short US10-year Notes was put on as a hedge, at 134-10. The hedge has a hard stop. Risk neutral now.
• Any equity rally next week will be taken as an opportunity to take profit on the TY hedge and increase the ES core short. Somewhere just below 1380 would be perfect.

S&P500 : Weekly UpTrend Line Break

• Weekly ESc1 uptrend line support last week at 1385. Closed week at 1376, first break below the UpTL.
• Selling rallies the more sensible option from now, stop on weekly close back above 1385.
• Still early days yet; would prefer to see a 2nd consecutive weekly downside break confirmation before strong commitment to the bear trade. Been burnt too many times before already. If this works, it is going to be a multi-week trade, so no rush.
• Daily SHS top call is playing out nicely. 

S&P500 : Daily SHS Top

• Gaining confidence on negative view here after poor price action of past few days.
• On the daily chart : SHS NL at around 1397 (lowest candle body). Top at 1467 (highest candle body). = Measured objective at around 1327.
• Last night's close at 1389 confirms the NL break.
• Initial short made at 1421. Original stop at 1436 now lowered.
• Awaiting 2nd consecutive close (ie tonight) below NL to consider adding. Shorting equities has not been an easy trade so want to be careful here.
• [If above works, then on the weekly chart, we would have broken the uptrend line which stands at around 1385 this week].

S&P500 : Sold ESZ2 @ 1421

• Tentative negative view adopted here based on 1. weekly evening star and 2. failure to hold above old high at 1421.
• After recent peek below 1400, Risk On has taken this back towards 1421. From daily chart, there is a band of old support (= new resistance now) around 1425/1430.
• Thus, gone short ESZ2 @ 1421, anticipating attack on uptrend line at 1378. But first, we have to see if it fails to hold around here.
• Addendum [post >E NFP release 10:47 PM : turned out entry point sucked, high of day 1431.5, but market seem unable to push higher beyond and now all the way back to 1421. Price action encouraging for bears. Logic : Good NFP = Less chance of QEx ?]

S&P500 : Storm Warning

• Weekly : Back below 1420 (a significant previous top) is not a good sign. Bulls would have expected a more powerful move after finally taking out the old high. 
• Nearby we have another very significant chart-point at 1375 (previous top on monthly + weekly uptrend line support).
• Daily : This looks very much like Copper in the middle of its recent sharp decline.

S&P500 : Possible Top?

• Put aside promises of QE3, look purely at the chart pattern.
• Trend is up on all time frames.
• However, it might be worthwhile to attempt to pick a top against a 1426 stop.
• Monthly : Mature uptrend? 
• Weekly : Potential for a double top. Risk/reward of short more attractive than long.

S&P500 : Short ESU2 @ 1346

• Observed here time and again (also paid the price in bad trades) the danger of trying to go short S&P. However, gut feel is telling me that a long drawn top is in the making.
• Thus, initiated fresh short ESU2 @ 1346. Stop loss @ 1362.
• Daily : This is the early hint. Rally from 1262 to 1377 comprise of a series of big overlaps, suggesting that the impulse is the other way ie down. If we close below 1329, I will put on an additional unit short on basis of daily DT.
• Monthly + Weekly has potential to turn in very bearish patterns although a bit early to discuss this now. Let's watch the daily price action get bearish first and then see how that impacts the chart patterns here.

Risk On/Off Differentiation

• QE expected from ECB/BOE. Choice of instrument for Risk On/Off proxy important now.
• QE = asset prices rally eg S&P, commodities.
• EUR + GBP should soften. Fortunate that my Risk Off positions only in short EUR/USD and short GBP/USD.
• Accompanying charts = EUR/USD (down) and S&P500 (up) reflects clearly this different proxies' behaviour.
• If ECB+BOE disappoint, then my positions will suffer.
• If they deliver, probably see more strength in asset markets but I want to fade these. For now, cannot blindly sell if you believe in Risk Off.

S&P500 : Short @ 1316

• Caught off-side by Spain EUR 100 bio bailout. Trade size too large and received margin call with the large gap up in EUR/USD open for the week. Cut the entire position at 1.2622 and did not have the mental fortitude to get back in when it was apparent later in the day that the market had topped out.
• Did however, sell S&P at 1316 to re-establish some Risk Off exposure.
• Trading badly of late. Too many "almost but not quite" trades. Solution : Trade smaller, stay longer.

S&P500 : Get Serious Short

• Initial trades : Sold ESM2 @ 1328 and 1321. 
• Post NFP : Sell stop triggered at 1284.5. Added on at 1288.
• Average in short at 1305. Trade status upgraded from tentative to serious.
• Close below 1290 last Friday = bad sign. Original stop >1350 can now be tightened to just >1300, so have worked into a reasonably sized short (31%) that is at worst breakeven now.
• Direction down is clear to me. Worry now is whether we go back up to form a right shoulder around 1350/1374 before the big bear; I would prefer straight down but of course, it's never ever so easy (eg wall of money, QE3, etc).

S&P500 : Added to Short @ 1328

• Initial trade - sold @ 1321.25. Just added @ 1328 on spike up after EU said open to direct European bank recapitalizations from ESM.
• Monthly : Back below 1374 = negative phase. Hard to say how far down we can go. I would say 1218 is possible.
• Weekly : Current recovery from 1287 to 1335 is merely a temporary reprieve. This is a pullback to sell into.
• My stop on this trade on a standalone basis is weekly close > 1350. Or earlier, if we get a sudden turnaround in sentiment and I am forced to give up on Risk Off.