Weekly review 05/30/2010

Good day. 

We are going to start our weekly review with Forex trading.

FOREX

FX operations from this past week:

European Morning	US Morning
-42	-69
50	-65
40	-77
50	77
-59	-59
-49	73
-52	100
5
-57	-20

As you know, this past week was flat or slightly negative which, when coupled with the previous weeks, leaves us with a flat/negative month.  In today’s review, we will dissect a little each technique and pair to analyze this flat result we have been talking about.  We will also summarize the Drawdowns we’ve experienced in all of 2010.

We’ll start with our “star” pair that, after its last month with average results (December 2009 +689 Pips), still hasn’t gotten going. 

Gbp/Usd for European Morning Technique:

Over the last several days, subscribers new to our service this year have been asking us about our maximum DrawDowns to date. For the pair we are now reviewing, its maximum DD in the last two years was between 350/400 Pips. As you can see in the chart above, we experienced this DD in the middle of the year, then recovered to approximately +150 Pips and now have fallen again to the low of the previous DD which is approximately at our all time low.

Does this mean the Gbp/Usd European Morning Technique no longer works?

No, it doesn’t as you will see in the following analysis.  FOREX has never been as volatile as it has been over these last months.  The SPOT market we’ve known over the last decades had never seen rises and falls of 400 Pips in the same day.  Therefore, one must keep in mind that a 200 Pip DrawDown in 2008 is not the same as a 200 pip DD in the current markets. 

We are going to be very attentive next week.  In the chart, one can see how our results have been flat: we haven’t broken up (+150) nor down (-250/-300). The statistics and historical data are in line and the techniques and studies indicate we should continue forward.  Making hastened decisions is what the market uses to make us lose and, extrapolating the analysis of our result, one could say we have a strong support.  As you know, when one has support, one must buy and never sell until the break is confirmed.

Now let’s review the EUR/JPY for the European Morning Technique:

As you can see, the results are good except for a couple operations of approximately 75/100 pips.   The majority of the trades are gains which add up little by little with low risk.  The average operation has a stop of 40/50 Pips. This year, we made it to +500 Pips for this pair for the European Morning Technique.  Now, we are at about +350 with a maximum Drawdown of 200 Pips which is an average Drawdown and in-line with our historical results.

GBP/USD USA Morning Technique:

There have been problems again with the Pound, as you can see in this chart. We have executed very few operations and have an average Drawdown of 200/250 Pips but without having obtained any notable positive performance. As you likely have noted, recently we almost never operate this technique because, at this time, there are so many stops and false breaks that it doesn’t make sense to operate this pair in the US session.

Eur/Jpy USA Morning Techniqe

In this chart you can see clearly the flat results we have been experiencing. Look at this series: +100, -100, +100, -100, +200, -200, +300... Again, these Drawdowns are within our historical average yet our gains have been very hard to maintain.  As of today, we have a gain of +250 Pips so far for the year.

Now let’s review pairs we use only occasionally, depending on market conditions (macroeconomic data, excessive volatility, etc.) such as the CAD/JPY and discretional signals that, unfortunately, we haven’t sent in a while due to unfavorable market conditions.

 In the case of these operations, we have had a good progression.  Our Drawdowns have been approximately 150 Pips and we have had gains of up to +300 Pips. There have been very few trades, approximately 20, as you can see. Many of these trades are based on divergences and other parameters which we wish would occur more frequently as their success rate has been high but, this year, the conditions have not been favorable. 

And, to close, here is a chart containing all our operations for all pairs we have executed so far this year.

 We made it to approximately +1.000 Pips even though you can’t see it in the chart as we are having difficulties with our database and the chart does not take into account one week of trading. You can see that, right now, we have a gain of approximately +250 Pips in an outcome zone similar to the first months of the year and without having entered losing terrain.  We are not obtaining the gains we expected but we are also not experiencing losses that would put us in danger.  We simply must be vigilant in the coming sessions to see what we can do in this exception market we are experiencing. 

FX 2010 Summary

EUR		US				EU/US
GBP/USD	EUR/JPY	GBP/USD	EUR/JPY	CAD/JPY	OTHERS	DISCRETIONAL
-248	353	-207	264	36	60	90

FUTURES & STOCKS

Now let’s review futures and stocks.  First of all, keep in mind that Monday is a holiday in the US (Memorial Day) and, therefore, we won’t operate Sp futures until Tuesday.  Our panorama has been very difficult but, before reviewing it in detail, we want you know that starting on Tuesday at 14:10 EST (19:10 GMT) we will begin to execute a new stock technique.  Actually, the technique is not new for us as we have been executing it since 2005 in our Spanish web but we have not executed it for the last several months due to low performance.  Finally, this technique is working well again as we will show you now.  The technique is called the Last Wave.  This technique has been registering good numbers in tests for the last several weeks so, starting Tuesday, we will start trading it officially. Here are the numbers Last Wave registered last week:

Aone +4.74

Sgy +4

Ire +15.42%

Jns +4.21%

Usu +4%

Csr +1.23%

Ttmi +1.41%

Total gain of +35.01% for 7 trades.

We hope the Last Wave performs as expected next week unlike the Ibex which worked well in our study trials but, since we started executing real trades, the sessions have been flat and strange things have happened to impede its success.  We hope this doesn’t happen to the Last Wave, a technique which worked very well since 2005 and now has started to work well again.

With regard to the Ibex technique, our team has been actually trading this technique for two months now and, in April, we gained approximately 600 points per contract.  In May, prior to publish our signals to subscribers, we had close to 1000 points.  But, once we started sending signals to subscribers strange things started happening, like yesterday when the Ibex has a completely stagnant session with its most narrow range in the last months, 120 points, when the normal range per session is 250 points.

 The only interesting day was last Monday when the mini just hit the stop and the large or Cfds would give 150 points for the Ibex. We’ll see what surprise we have in store for us next week.

 With regard to the Sp, as always, a picture is worth a thousand words.  We want to show you the last 15 minutes of Friday’s session with a one minute chart.  Take a look at the following:

• 21.45, 1098
• 21.49, 1090.5
• In 4 minutes, 7.5 points down.
• The show continues
• 21.54, 1096.5
• In 5 minutes, a rebound of 6 points
• 22.01, 1084
• In 6 minutes, 12 points down.

To summarize:  In 4 minutes, 7.5 points of movement; in 5 minutes, 6 points of movement; and in another 6 minutes, 12 points of movement.

 It was crazy.  Here are the numbers applying the normal technique or the inverse of the technique. As you can see, we are being as cautious as possible when we execute trades because the numbers are not good and the reason for this is the market, as you can see in the previous chart. 

DAY	TECHNIQUE	OUTCOME Normal	OUTCOME Inverse
Monday	Morning	0	0
	Opening	0	0
	Evening	0.5	-4
Tuesday	Morning	-4	4
	Opening	0	0
	Evening	4	-4
Wednesday	Morning	-4	4
	Opening	0	0
	Evening	2	-4
Thursday	Morning	4	-4
	Opening	-4	-4
	Evening	-4	2
Friday	Morning	4	-4
	Opening	0	0
	Evening	-4	2
		-5.5	-12

Applying our normal signals, we would have a loss of -5.5 points and, applying the inverse signals, we would have a loss of -12 points.  Interesting, isn’t it?  Well, it is easy to explain.  Strong price movements without any tendency and with wide ranges that make trading with 4 point stops enviable – Friday evening the market moved 5 points several times in less than 10 minutes and without any trending in the majority of cases – one can be kicked out of the market almost immediately.  Therefore, we must be patient with the Sp while the numbers aren’t stable. 

Next Tuesday, we start a new month, June, which traditionally has been one of the worst months of the year, along with September.