Friday, September 21, 2007

Break and test

The Usd/Cad did what I said I thought it would yesterday, it bounced a number of times off of the 1.0000 range and then broke and has come up to test that level as resistance. It may be a little early to tell as we could see further consolidation near the 1.0000 level but it is responding as one would expect and a sell near here could be a good play. The big question I have is whether the divergence in oil will confirm and bleed down into the GBP and CAD trades as oil readjusts.

Another great article today by John on the divergence in oil is available. To see it, go here.

Thursday, September 20, 2007

Don't Chase It

I posted this image a while back in the blog, I wanted to find a picture of a little fat kid chasing the bus and having his friends laugh, but because my mom loved me enough she didn't take pictures liked that.
The Usd/Cad is very likely a school bus. If you missed it, don't chase it. I think there is a very good chance that we see a bounce, a psychological bounce, here at the 1.00 level. Even if I am surprised and it breaks through to 0.9800 then I still would expect a pull back to the 1.00 level as a retest of the psychological level. Either way a bounce could be a better sell opportunity and a break would put still give you a chance to short this near 1.00 again. I personally am trying to decide to exit and take the profits. Decision made. Stepping to the side and watching for a bounce or a break and retest.

PARITY!!! PARITY!!! PARITY!!! (yell this like your yelling sanctuary)

We have hit it at last, parity for the USD/CAD. The low in the last hour reached .9998. Let us review the last week and then what that means. I was looking at the pair last week and even prepared an image on the 12th to discuss that this was going to be the run down to parity. Too bad I didn't get this posted then. As you may be able to tell, I got in the trade at about 1.0480. Not too shabby. Today the pair is just a continuation of that move. Rather than looking at the daily candles showing you the last week of the price dropping, here is the intraday chart looking at the hour candles so you can see the magic of hitting the $1=$1 mark for the pair...a moment of silence if you don't mind... Ok that is enough, back to work.
What does it mean? Why have I had a focus on this level? Why can't I think of anything witty to say? The whole world is full of puzzling dilemmas today.
Here is a historic perspective and a trivia question that will make you look smart at the water cooler or your next dinner party. When was the last time the USD and the CAD were at parity? Many of you may be saying never, you're wrong. It was 1976. Now I need you to start thinking of what was happening during the mid to late 70s. If you are not old enough or informed enough, let me help you. The mid to late 70s were riddled with high inflation, high gas prices, high interest rates and rising unemployment. Could we be heading toward similar times? Let's see, inflation and commodities are high, check. Oil is near record highs as well as gas, check. Interest rates were cut by the fed by home interest rates are on the rise, check. Unemployment...we are still OK but we did see our first layoffs in the non Farm payroll numbers this past month. hmmmm interesting.
What does the future hold, short term doesn't look so bright. Future could be "totally awesome to the max." More on that in my next post.

Tuesday, September 18, 2007

Great information and big day today

I was watching my good friend, John's, video post today and thought all of you should take the time to go and view it, if you haven't already.

Watch this about trading options and today's 50 bpp cut by the fed.

Also, I made some good returns today but now I am watching for an add position and new position on many trades, especially the carry-ish trades. Keep an eye for pull backs to key positions and then watch for a couple of longer term trades.