Weekly review 7/11/2010

Greetings everyone,

As we do every week, we are going to review our trades over the last week and we will start our review with Forex trading.

FOREX

Trades this past week:

We again closed this week with a profit.  This time, we didn’t make 297 pips as we did last week but we did make +58 Pips. We traded less than usual, only 3 trades for the European Morning Technique, none for the Pound, but we made gains, little by little and by being conservative. A good example of why we didn’t trade the Gbp/Usd for the European Morning Technique can be found if we analyze Thursday, July 8^th, when hours before announcing interest rates in the UK, the following happened.

We saw ranges in one minute of more than 20 Pips, both up and down.  Therefore, it is impossible to trade with stops of 30 Pips both because of amplitude and lack of tendency. On Monday, July 5th, banks and markets in the US were closed for a national holiday and, therefore, we could not trade, following our norms for the USA Morning Technique. Given the fact that we traded less than we usually do, the numbers for the week were good.

With reference to the lack of tendency for the British Pound, here are two graphs with data over 10 days where we can see the progression of the principal world stock index - Sp500 – together with other pairs. The Pound is not normally characterized by a correlation to other markets but, without a doubt, what happened over the last week is abnormal and we expect more profitable activity in the near future.

Gbp/Usd - Sp500

Eur/Jpy - Sp500

FX 2010 Summary

EUR		US
GBP/USD	EUR/JPY	GBP/USD	EUR/JPY	CAD/JPY	OTHERS	DISCRETIONAL
-32	556	-207	458	151	60	50

FUTURES & STOCKS

Now we will review futures and stocks.

This past week, we traded the Sp very little for a loss of 8 points ($400 per contract).  We should have traded much more and have executed all our trades as this last week our normal techniques would have performed well giving us 19 points per contract, even though Monday was a holiday.  Nine of those points would come from one single trade from Wednesday evening that we didn’t execute because over the last months that technique has not been working well at all.

DAY	TECHNIQUE	OUTCOME Normal
Monday	Morning	0
	Opening	0
	Evening	0
Tuesday	Morning	4
	Opening	5
	Evening	-4
Wednesday	Morning	-4
	Opening	5
	Evening	9
Thursday	Morning	-4
	Opening	0
	Evening	3
Friday	Morning	0
	Opening	5
	Evening	0
		19

Here is the trade from Wednesday evening.

Now let’s review the Last Wave trade.  The problem with this technique is that, right now, the stocks that are trending one day then stop completely over the following days and their original trend does not continue.  And stocks that have big falls one day recover the next day while those with tremendous gains one day, fall the next as we can see for the majority of stocks during the last several weeks.  This makes it impossible for us to string together series of interesting trades as we did in past years.

We developed the technique in 2005 for our Spanish-speaking service although our results are only summed up on our web page since 2006 as we applied this technique with a variation in 2005 and we have not computed strictly Last Wave results from that year in our statistics.

As you can see, from 2006 until 2008, the technique gave us extraordinary results, buoyed by the volume and powerful tendency in the market at that time.  Last year, we executed the technique a bit and this year we are making gains, little by little, but many stocks can only be traded for one day and others have difficulty following a trend which is exactly the opposite of what happened in prior years when the majority of stocks in the same session would make the target.

The week before last, for example, the technique worked well with 5 consecutive positive operations but this last week did not go well with 3 negative trades.

Have a great weekend.