Ichimoku Kinko Hyo

To further show my nerdiness; below is a chart of a successful trade if you were to follow the Ichimoku Kinko Hyo trading system...Jarred sent me this screen shot and it's a textbook example. His chart is below...This would have been ~120 pip gain...which again, on 10 full contracts; that would be $12K in about.....2 hours. Any takers?

2 Things

#1. We've slowly started to lift higher this week as I was saying last week that we should. We broke the down trend line from the past several trading sessions, so things are looking good. We still have a few economic indicators left to get through and that could really determine whether we stay up or go back down to last week's levels...Personally, I think net/net we'll stay up for the week.
#2. I've revisited a trading strategy and I'm going to focus a lot of my time on learning this system for currency trades. It's called "Ichimoku Kinko Hyo". The picture of the system is below and don't ask me how to read it or what it even stands for because I have no idea. The 'expectancy rate' is high for this so I'm hopeful it'll produce good results. I'll keep you posted and yes, I'm a nerd; an ambitious one at that!

The Coming Week

Take a look at the below charts...In my opinion, I'm looking for a bullish move (upward move) to be coming...I don't know when but based off of the charts below here's why I came to this conclusion (it might be elementary...but nonetheless here it is)....

Below, the S&P 500 chart...I should have listed the DJI but we've following this one so I'll stay with this for a little bit longer. This is/has been sitting on a longer term support with stochastics looking to turn to the upside...This, along with the rest of the markets, kind of consolidated for about 4 days...It has to pick a direction soon.

The EUR/JPY (pictured below) is a currency pair that follows the US Markets. If the US Markets go up, then this goes up...and vice-versa. That being said, from a technical perspective, the "hammer's" that have been forming for the last 3-4 trading sessions is an indication that a reversal could be in order...so if the EUR/JPY goes up; then we could anticipate that the US Markets will too (The EUR/JPY follows the $DJI better than the $SPX)...

Lastly, we have TLT (pictured below). Which is basically Bonds. And as you can see the bond market has been on fire! But, from another technical perspective, the "head and shoulder's" pattern formed up and the trading broke the 'neck-line' (the black line you see). As a general rule of thumb, if the neckline is broke then the movement of that security should fall the same amount as it rose from neckline (black-line) to the top of the head (122'ish). Assuming that is true, we could GUESS that TLT could move to 100'ish.

The thing about TLT and the bonds is that...Apparently, money is coming out of those 'avenue's' or means of investing. Usually, when stock markets get really crappy, institutions will put there money into Bonds (hence why TLT has had such a great run). Conversely, with TLT coming down and the prospect of it going down further, Money is flowing out of bonds and more than likely back into stocks...That being said, stocks haven't really moved all that much which is why I'm expecting a move higher from where we now sit...

But again, just an opinion and I'm often dead wrong.

Now What?

Looking at the SPX now (because that's what we've been tracking), just yesterday I talked about how I thought we were going lower but there was an indicator (Stochastic) that was telling us the markets are oversold and buying should be coming back in. Well today's action sent us higher and almost wiped away Tuesday's losses. From here, I'd feel better if we got above 850 on the S&P to confirm that this recent run lower is over and that a reversal to the upside will likely take place...

Remember there's never a gaurantee as to what's gonna happen; you just have to take a snapshot at that point in time, assess all of the variables and go from there...

Markets

Just an update and my opinion...'We're going lower in the markets'

I think we'll be testing the lows from November 20-21, 2008. We just creeped under the recent support of 815 on the S&P500 and we'll have to see where we open and where we finish for tomorrow...But I wouldn't be surprised to see us go lower...The good news (or counter argument) is that our Stochastics Indicator is telling us is that this recent run lower, that started on the Jan. 6th, 2009, looks to be out of breath and could stop and reverse back up...

EUR/USD

I want to put something into perspective for you; and make sure you read this whole thing to see what I'm talking about...But in looking for a currency pair to trade, I came across the EUR/USD (Chart Below). As it sits right now and where it sat on Wednesday it looks to be a good low risk entry for a long play(buy the EUR sell the USD - looking for it to go up from here).

Now, between Wednesday, Thursday and Friday it moved in the positive direction 300 pips. If you were good enough of a swing trader; 300 pips on 1 mini contract is $300.00 in your pocket...if you bought 1 full contract (10 mini's) that would have been $3,000.00 in your pocket...And finally my friends, if you had 10 full contracts; well that's a good ol $30,000 you would have banked all in 3 days. Can we say SWEETNESS!!!!!!!

That's the leverage of trading currencies and that's why I do it!

Sorry

Sorry for not posting in so long. My job has gotten a little extra busy because everything has slowed down and I needed to focus 120% of my time to work and potential work that would help us out...

Now that that's out of the way....There's a bubble in the market (Thanks to E for pointing it out)...Bonds. Just look at TLT (which is a way to trade the bonds)....it's going straight up. And when the markets decide to get a good bounce going.....this thing is going to tank!!!

I will try to post more from here on out. I know that starting Jan. 1, 2009; I'll be able to provide more TLC to this blog.

-Matt J

WTF!!!

Alright, so as I'm sitting here in my car waiting for a meeting to get started...I take a look at the markets just to get a snapshot of the day...we're down (go figure)....but I notice GLD, SLV, and TLT is down. Now I barely heard CNBC talking about gold this morning and how it's been down in this collapse...which really didn't register. But as I sit here waiting...it hits me what they were saying on TV!

I went back and looked at a chart of gold & silver and their charts are trending down! This shouldn't be right and it just goes to show how F'd up this market is!!! Gold is supposed to be a 'flight to safety' or a 'safe haven' in times of economic trouble....but there's no safety here either!!! Where the heck is all of the money being put to work at?!?

This market is not behaving like it has in the past and it's defining new rules.

Time for my meeting...

-Matt J
Sent from iPhone

HA!

Wow...what a day. As stated before I was expecting (as was a lot of people I'm sure) or "looking for an 800 to 1000 point gain, in a single day". That day came today and we had pretty good volume to support the move. See below.
The Dow was up 936!!! (See below)

The S&P 500 was up 104! (See below)

Is this the absolute bottom? Who knows, and time will tell. But for now, I'm playing and have been positioned for a reversal to the upside since Thursday (10/9/08).....And if you haven't noticed, we passed Friday and Thursday's levels today in 1 swing.

-Matt J

Quick SnapShot of the Day

As of this writing, we're looking pretty good in terms of gains for the day. We're just over half way through the trading day and it'll be interesting to see if we continue at this rate....I would add a screen shot of the tickers that I'm looking at but I can't add them for some reason (my apologies).

I'll post again later to summarize what happened.

-Matt J