Monday, October 18, 2010

Skelton Shift Update: October 18, 2010

6:34 AM

From my last post on the EUR/USD

It turned out my analysis and entry were off. The trade entered was good but turned out to be a looser. Getting shadowed into my entry with 1 candle below the hourly 200 SMA should have signaled me to exit right away. Instead I rode it out and got stopped out. I should have been looking for a few candles of consolidation below and a daily close below the 9 day SMA.

Learning from my listen from that day, it seems early London trading is a repeat of that day! Asian traders were playing catch up from the sell off seen on friday and now we are seeing London trades trading back the lows from this morning of 1.383 all the way back to 1.39125, my instincts telling me this trend will continue up by mid NYC trading and then Asian trades will take it to the 1.41 retest.

However, Trading in this 1.377 to 1.41 is ALL noise… Making sense in these ranges is senseless and one is either better taking a long term position with wide stops to take advantage of a big move in either direction (for you well capitalized big boys) or just waiting out the price breakout to play it safe.

It is compelling to catch a short term long trend on the way up to 1.41 but I think I will play it safe for now.


The majority of Asian indices ended up on a lower note; again a possible lag from fridays trading. European equities are opened up mildly stronger:

  • Cac40 +0.14%,
  • Dax +0.30%
  • FTSE100 +0.12%

This week can be a week of consolidation as there are not many short term market movers expected on the economic schedule. Also, my take on the SPX has stayed the same the past weeks, at these levels I expect the SPX to stall out below 1200 and correct. A clear strong break above, would mean I'm completely wrong and 1300 would be very feasible in a two weeks or so.


Gold, Silver, Copper all pulled back from their overnight highs and continue to trade lower.

GC (NYMEX) OCT10: -0.78% - 1360.40
SI (NYMEX) NOV12: -1.09% - 24.015
HG (NYMEX) NOV10: -1.02% - 3.7985

CL (NYMEX) NOV10: -0.17% - 81.6
NG (NYMEX) NOV10: -1.41% -3.487

Take away:

Overnight we saw dollar strength and metals went into higher territory and interesting crude strengthen (nat gas following its own fundamentals). Going into mid day London trading we are seeing relative dollar weakness and with the commodities lagging in correlation. With the temporary dollar weakness we are not seeing oil or the metal budge from their current lows.


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