The Propitious Squall

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Passion is Overated

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Written by nitefly

January 19, 2012 at 7:22 pm

Posted in General

Update on USDI Progress

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USDI is currently moving as what i have explained in the the previous post back in October (here). Some resistance is coming in at the 82 level, but i expect it not to hold and further test the 83-84 level.

From a normal perspective, we should be seeing a continued down trend across instruments, but the problem here is that there are some seasonal effects currently in play (Nov-Jan), which is why we are seeing a slight decoupling of the USDI performance with commodity, commodity – Asian – European currencies and Equities.

The better reference i would think is USD/SGD –  currently its holding a 3 top formation on the daily chart, failing to break the 1.32 level and looking very bearish for USD. If 1.270 breaks, it is likely we will see a 2-3 week rally in Equities and perhaps commodity currencies. There is a potential change period coming late Jan or early Feb; either the 1.27 break rally as mentioned or a trend change, depending on which happens first.

Stay safe.


Written by nitefly

January 13, 2012 at 11:32 am

Posted in Trading

What should i do with (X) numbers of dollars?

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This is a question i get a lot when i tell people that i am doing trading.

And the answer i always keep telling them back is:

Keep the money,  learn how to control your spending  and concentrate on your task at hand, for example:

– Good Employee/Employer  – adding skills on the job and outside of it, instead of bad mouthing the boss. Spend some money to improve your skills if necessary
– Being a good parent; Good son/daughter to your own parents or in general improve on your relationships with people
– Improving your health, cultivating positive habits and spiritual development.
– Your hobbies

Sure there is inflation, prices are going up every year and perhaps the salaries cannot ‘keep up’, but do not whole heartedly believe fabled fears that newspapers are spreading. The key problem that i find for most people is lack of quality in their own work (hence not keeping up) and more importantly excess consumerism that is the real cause of ‘inflation’.

The problem isn’t about you needing to be SMARTER about investing your money.

The problem IS the need to be SMARTER about SPENDING money.

Do you own Apple products? How many variations of them do you have? How many game consoles do you have? How many times a week do you dine out on meals costing more than 50 dollars? If any of the answers come back as more than 1, yes unfortunately you have the sickness called excess consumerism.

There is no crime in not knowing about trading/investing. But there are dangers – not because it is a RISKY activity but because it is the result of people’s behavior that makes it risky – like the following:

– It is not a hobby. Most people don’t take it seriously enough – even if there is alot of money at stake.  That is for example spending time off work studying companies, reading financial reports and looking at technicals, yes and pissing off your wife by ignoring diaper duties.
– It is not a casino where u can get lucky. Gambling is safer – if you put in 100 dollars you know you’ll lose 100 – that is – your investment becomes zero. Markets tease and taunt your 100, today you are 200 up and feeling happy and come tomorrow it would be -1000 down.
– Most don’t stay in the game long enough to find that edge, due to impatience, lack of finance and or mental strength.
– Most people have too many problems to start with e.g. undercapitalized, emotional, health and relationship issues, and more seriously addiction issues- smoking, drinking, drugs.
– Most forget how to learn beyond a certain age. If you are a creature of habit(s) and fail to adapt quickly to situations, you will never be successful, especially in trading/investment.

And please, if anyone tells you that you can make X % out of your X$ while you continue to work and enjoy your life IF YOU JOIN MY TEAM/FUND, sure, take it but be prepared to lose whatever you have put in. Parking your money somewhere WITHOUT your intervention and thinking you can be profitable is only but a very big and very wet dream in the current market context.

I’ve been doing some thinking, and the way i understand how ‘money’ functions in our society is 2 ways:
1 – You use the skills you learnt at school or on the job to make money i.e. it replaces barter trade from 100s of years ago, so you can buy food, shelter, entertainment, etc.
2 – You understand the game of money, how it is manipulated and find pockets of opportunity for yourself to benefit from.

If you have the opportunity of having (2) as a job as well, congratulations; you’ve probably more than you ever need at the age of 40. If you are (1) and your services, skills or products are so brilliant that you can start tapping on the game of money (Board member, Franchiser, IPOs, M&As) good for you too; by the age of 60 you are made for.

But for the vast majority of us, we are too caught up in (1) and not good enough to eventually tap the game of money, and start playing the game DIRECTLY like in (2) thinking we can succeed quickly, and that’s when shit hits the fan.

Don’t get me wrong, I am not discouraging anyone from going into it. In fact i would like everyone to try it sometime in life. It is a very enriching experience if not extremely profitable – you will be scrutinizing every nook and cranny of your behaviour, character, impulses, biases – your own psychological makeup, and amongst others, your personal health and your relationships. I guarantee you that the market will mirror the resources that you lack in an excruciatingly brutal way – e.g. an argument with your family member(s) can mean a 100,000 dollar loss the next day.

So where to start?

– Find out everything about what you intend to do from the internet, news, books, from teachers, and people who are already in it. AND I REALLY MEAN EVERYTHING.
– Develop a plan that covers strategies, execution and risk management
– Get your nose wet with demo accounts, paper trade or put a small amount of money in the product/instrument of your choice.
– Stay committed to your plan and improving it for LIFE; those days where u can happily let the money sit somewhere or have only a few strategies for years no longer exist;  or at least not at this present moment.
– Inculcate positive behaviours eg. stop smoking , eating good fresh foods, exercising and meditation
– And unlike many other endeavours in life, once you have done all that, you are primed, ironically, to learn HOW TO FAIL FIRST, and sometimes in a string of multiples. Once you get past that phase – with time, capital, knowledge and fluid thinking finally all synchronised – that’s when you will be rewarded.

In short its real hard work that’s only rewarding for a few. As i have mentioned its unlike other tasks in life – i’ll use boxing as an analogy – you can join the ranks of amateurs and fight in the lower division before progressing on to bigger competitions, but in trading/investing, you will step in the ring with Mike Tyson on the very first day. Put in this context trading/investing it seems like a losers only game –but at least going in being prepared will allow you a slim chance to give Tyson a run for his money.

Cheers and good luck, stay safe!

Written by nitefly

January 9, 2012 at 6:56 pm

Posted in General

Technical Review: US dollar Index

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While everyone’s eyes are on the Major indices (DOW, SP, HSI, STI), lets have a look at the dollar index:-

a) In a consolidation/range zone A/B/C/D/E (from main down swing X/A 2000-08)
b) Swing D/E completed

Will a new E/F and eventually G/H develop?

Current level Check:
1) The force of break out from E was good – Clear break out candle, followed by a weak correction and a follow through of the break out candle.
2) Break out was above the 55MA but strong rejection at 100 and 200MA (Pin Doji and Engulfing candle down). Level is alsostill under the 50% FR of A/B swing
2) Crucially though, priced closed above 55MA this week and above the top of congestion at E, which may mean that it is only a short correction.

What do i need to see:
for E/F swing to happen-
1) Levels hold above 76/77 + a failure of the recent engulfing candle down  for a new swing up to develop
2) A consolidation of no more than 4 swings and the completion of E/F by challenging RSZ1 (80level+ MA100/200 Break), forming a clear Triad swing high in RSZ1.
for E/F not happening-
1) A break below 76/77 suggest the swing up may negated, and if E/F were to still develop, it would be a weak swing up to 79-81 level only (50FR- 80Level)
2) A further break below 73 will suggest that the current D/E swing is not completed

When will this happen?
Given that the seasonal rally is typically in Nov-Dec , i would expect the USDI to start falling only in Oct – Nov. As it is we’ve had a fall in the last 2 weeks. I expect to see a fall continue next week, followed by a swing up in last week Oct or Nov to retest RSZ1 (E/F complete) and a correction in Nov- Jan2012 to form F?/G?

What does this mean?
1) The real rally in equities will perhaps only occur in mid to late Nov. This may coincide with QE3 or  new initiatives by the European governments. This will be the F/G swing down on the USDI.
2) If the USDI shows no productive developmen in Nov-Jan, it suggests that the range low A/C/E is still holding and market players are still waiting for development. However if this happens it would be a bearish signal for me – it shows the typical expected year end rally is negated, and the market structure and understanding has changed.

– Short term rally in equities from now till end Oct or early Nov
– Continuation of bear in Nov or until announcement of new fiscal measures
– Good equities rally in late Nov/ early Dec to Jan-Mar2012

Just a final spooky note: Notice how A/B swing development (in2008/09) is very similar to the current E/F? (2011/12?) ? There was a long consolidation at A (~same 6 months period), a rally up followed by a small correction like the one we are having now.

Cheers and be careful out there!

Written by nitefly

October 16, 2011 at 12:54 pm

Posted in Trading

Technical review: Wilmar

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1) Trend is still down a) Channel down b) Price is below 55,100, 200 MA
2) RSZ (Resistance support zone)1 has been broken, Price holding at RSZ2 but this area is typically provides only weak resistance, prices will tend to break this area
3)  Price is now holding above 50% FR (Fib Retracement) from the ’08 low to the ’09 high; the bounce occurs as the 50%FR level typically will attract sellers and buyers
4)  The current swing low from week 29 July is not complete
5)  7 Oct week (arrow) was a hammer with new recent low and high volume; shows that while price is still going down, sellers may be exhausting

Is it a bottom?
No, the swing low is not completed

Should go Long?
Usually i would not trade against the hammer formed in 5) as to me it indicates further weakeness (even though the sellers appear to be losing strength)

Should go Short?
This is still tricky to place a position as it is in a middle of a range now. I would have placed a short at 4.95-5.05 Level, around retest of 200MA, and expect price to swing low for another 2 weeks before consolidating again.

What i would like to see?
1- Complete swing down
2- A candle close above 5.2. If this fails, then it may be come a short entry level.
3- Break below 4.4 and it should mean further downside into RSZ3

Cheers and good luck!

(Chart courtesy of Chartnexus)

Written by nitefly

October 13, 2011 at 7:14 pm

Posted in Trading

No IMO, please

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Whats the point of yabbering about where the market is going to go, or how that car and food prices are going up in the next few months, when you are doing nothing about it or worse FEEL helpless about your circumstance?

Keep an opinion only if it counts for something.

For example if you think the markets will go up, but prices keep falling, then perhaps it is time to re-look your understanding and drop your bullish opinion. Your bank account will eventually thank you plenty for that.


Written by nitefly

October 11, 2011 at 8:31 pm

Posted in Trading

Up or Down?

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Well no one really knows!

But from some of the current and past information, we can gather a few clues:

– Not all stocks are at its all time lows, the stronger blue chips have yet to break important resistance zones
– However the 2010/11 top is looking a lot like the  2007/08  consolidation prior to the large drop
– The new market players from 2009/10 may not have been completely washed out by the recent drop.
– Possible recency bias: There will be high volatility but market will stay in range bound as buyers or sellers refuse to dominate; More ‘Risk On’ rather than ‘Risk off’
–  There is usually and end of the year seasonal pick up, additionally next year is  a US election year
– Post 2008 rallies have all been driven by intervention, while more interventions may be made, the scale may not be as large as those previously.
– USD Index is around 78-79, for a market ‘bottom’ to occur USD would probaby have to strengthen to the 80-90 level.

Possible Triggers in Market weakness:

– Ratings downgrade
– Changes in the European Union make up due to defaults
– Failure of the Euro dollar

– Ratings downgrade
– Continued weakness in US economy

– Inflation
– Economic slow down
– Possible housing bubble

The biggest threat is from Europe, but again for something to have a large effect it would have to a ‘surprise’ element, which none of the above are. Certainly any of these items mentioned will trigger a fall in the markets, but perhaps not like that in 2008.

So in Summary:
I believe there will be a short relief rally; value buyers will start to come in about now  and probably hold out till end of the year before  a major correction hits, and that is when the market would have possibly ‘bottomed’. However i wouldnt be too eager to expect a quick rebound like that in 2009 and later in mid 2010.

Good luck and stay safe:)

Written by nitefly

October 9, 2011 at 8:08 pm

Posted in Trading


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