Thursday, December 4, 2008

Trade Closed - Cross Currents...

Cross currents… Trade closed for a small profit, but a good follow along example:

The /ES failed to reach 850, and the 30 minute stochastic failed to reach oversold before I exited the trade at 862 because, as you can see from the /ES chart on the right, we reached 855, then popped above the descending wedge… so, I exited to make sure I locked in at least a little something.

Note too, that on the left side is the /YM (DOW futures). We closed a 5 minute candlestick above the mid point of the Bollinger bands and that put my trigger on the finger.

So, even though the trade came close to working out, some “disturbance of the force” made the math targets fall just short. Had it taken us down to 850 I would have had and extra 12 points of profit, but you have to be willing to admit you’re wrong for now. Another clue to confirm just came as I was typing as they both went on to make a new high above the last, and it appears that a bullish 8/34 cross is about to happen.

This is a good example where it “felt” bullish, and I think the reason is the crosscurrents on multiple timeframes and that fresh weekly buy signal are in charge for now. We are probably in a big B wave up/sideways, and thus I am playing small and taking profits when I get them. It could be that the 30 minute wave re-establishes itself and we move back lower, but I'm not willing to risk it further here.

Look at the TNX (10 yr) below on the left… it’s saying something here, that’s 2.5% interest you’re seeing! It’s either saying, “deflationary credit collapse,” or it’s saying, “quantitative easing” with the Treasury buying up their own product (printing). This is a great reason why I am very hesitant to buy any big rally… I am NOT bullish here, and see that the credit markets are still locked on many levels. We’re trying our hardest to do a “Zimbabwe” but I don’t think they’ll be able to overpower the collapse of the biggest bubble in the history of man.