Overview of day: 
 News driven “corrections” such as the one we are caught up in now are one of the more annoying aspects of trading mid and longer term systems. Upon trade entry we are banking on price going in our favor for at least the short term to give us some breathing space, and no amount of technical analysis can predict the U.S. president announcing the possibility of restricting the amount of capital the U.S. banking system can plough into a rising market.



On the upside stops work – always. And while it’s never pleasant to get stop out notifications from our brokers it keeps us alive to catch the bounce and make it back on the rally. It’s also worth noting that while we are only in the beginnings of what going on history could be another multi year bear market, yet certain stocks area already hitting new all time highs, the prestigious “blue sky” trades with no overhead resistance anywhere to be seen. 



So where are these trades? Well you just need to look in the right places. One of the great things about equities is the ability for individual constituents to greatly outpace it’s given index. So while the U.S. may have been struggling to gather a head of steam, the so called “emerging markets” have been stretching their legs, and posting new weekly high closes even after the selling on Thursday and Friday last week. Like all other markets they are having their rallies and declines, but as the new kids on the block they aren’t afraid to run hard when the conditions are good. 

So if you have just been washed out of a trade or two, go back and look at your system to remind yourself why it works, or tweak it as required given your new market feedback. Blue skies are only ever a few good weeks away.



Equities:
  So having masterfully entered a few new trades before our drifting trend finally found a reason to correct, I’ve managed a string of stop outs, although one was prior to Thursdays news, a simple failure to hold a support level after entry. All up three -1R stop outs on the mid term system, one on the ASX, two on the U.S. market. With end of day entries and tighter stops the mid term system always feels the pain first. Added to this was a break even stop out on an earlier U.S. position, leaving just the one established mid term trade fighting for survival in the current market. Having deployed the revised mid-term system late in this recent move (that started early November) some of these trades didn’t get their full allowance to get rolling, so a retracement now should leave the market well set to reload and start the next phase.



Longer term trades are so far un-effected by this recent move, including two recently entered trades which will start to feel the heat over the next few days. With most of the long term positions now well established they can withstand a fair retracement without too many stopping out, the profits are in the longer term moves of the survivors over the next few years.



There is still plenty of support around though on the S&P (figure 1), effectively we are testing a channel support, as well as the November-December price support. With no change in the overall trend yet it’s a simple waiting game for the market to stabilize before moving forward again.





FIGURE 1: S&P 500

FX Market:
  With a series of broader ranges currently in plan I’m still sitting out the current FX price action waiting for a clearer direction to play in. No trades taken, a nice strong FX trend would be nice to get back to regular trades again rather than surging reversal swings that we are currently seeing, not my cup of tea.



Commodities:
  Still cruising holding the one position, boring, but very profitable. Oil continues it’s sideways range and nothing else has really grabbed my attention.



Results Summary:


Equities    -3.0: R (End of day mid term trades)



Observations:
  Long term trend is still in place for now so no need to change tactics, just wait for the setups and take the signals as they come.



Tasks:  
Moving stops towards break even on a few positions still setting new highs even with the recent selling pressure.

 

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