This week +206 pips

Today +81 pips

Current Market Vision

To analyze what could have happened over the past two weeks with our FX trading, we have dissected the results of the European Morning Technique EUR/JPY at 3am EST.  These are the results this technique has yielded over the last months.

	POSITIVE	NEGATIVE	POINTS
FEBRUARY	0	2	-80
JANUARY	8	4	120
DECEMBER	12	3	310
NOVEMBER	15	3	580
OCTOBER	8	4	240
SEPTEMBER	12	4	250
AUGUST	4	1	160
JULY	7	1	310
JUNE	9	1	400
MAY	8	1	360

And these are the results since January 14th, 2010.

02-Feb	-40
01-Feb	-40
29-Jan	0
28-Jan	0
27-Jan	0
26-Jan	0
25-Jan	-40
22-Jan	0
21-Jan	-40
20-Jan	0
19-Jan	-40
18-Jan	0
15-Jan	0
14-Jan	-40

The following is a chart with data as of January 14th for the EUR/JPY.  There is a strong downward tendency as the price fell from 133.50 to 124.50.

Why do we believe our technique is failing right now? It is because we are seeing downward volatility during the Asian session and then, when the European session starts, the pair is normally arriving to nightly ranges of more than 100 pips and, in the European session, we are seeing movements without any upward or downward tendency which is why this technique, which works when the price breaks a specific range, is having difficulties.   We see that in the European and US sessions, the price is completely stagnant and the price tends to gravitate towards the opening price of the previous day.  This makes for a stagnant market, as you can verify in the graph below.

This is not the first time this has occurred: It happened with less intensity in May, July and August of last year.  This are simple market “ruts” and we expect that, in this particular case, it lasts for at most 15 – 20 sessions and then the market will return to normality and we can begin again to add up gains as we always do.

Today +83 Pips

Review of our operations for the past week

As we do every weekend, the following is our review of our operations for the past week at www.dailymarketadvice.com as well as a look at our results for 2010 thus far.

First of all, as you are probably already aware, we haven’t employed our stock trading techniques since mid-November, when the US markets began a lull that stopped only this past week when the S&P went below 1125 points.  We could not execute our stock trading techniques during this period because there was little volume in the market and the majority of price movement was generated outside of market hours.  Both of these factors made it difficult for our techniques have an acceptable success rate.

We begin by reviewing the results for our Forex techniques for this past week as well as for 2010 to date.

With regards to the European Morning Technique Gbp/Usd, we executed 5 operations (3 with a profit and 2 with losses) for a total profit of +11 pips.

For the European Morning Eur/Jpy Technique, we executed only one operation with a loss of -40 pips.  As you know, according to the technique, when the range at the time of entry is greater than 100 pips, we won’t operate.  This is precisely the reason we only generated one trade. As it turns out, the fact that we only made one trade in a week for this technique was quite exceptional.  We

reviewed our historical data and found that what occurred this week had not  happened since last September and, in fact, we had not had a losing trade for this technique since the past December 23^rd.

In the case of the USA Morning Technique, this week we executed only 2 operations for a loss of -20 pips.

To summarize, this week we recorded a loss of -49 pips for the sum of our Forex operations and it is our worst one-week result for our techniques since the first week of November, 2009, where we recorded the following results.

But, as we always say, we are in this game for the long haul and, therefore, one must look at our numbers over a period of three months and not over one week to judge the effectiveness of our techniques.  

For the European Morning Technique, we have realized 21 operations this month:  14 positives and 7 negative for a total of +188 pips.

 For the USA Morning Technique, we have realized 9 operations this month: 6 positive and 3 negative for a total of +120 pips.

Thus, for these first three weeks of January, we have executed 30 operations; 20 positive and 10 negative for a total of +308 pips with a 66.66% success rate, which is slightly below our goal of 70%.

Taking a look at our MiniSP Futures techniques, we see that the results for this past week were spectacular.

As we have explained on many occasions, since the middle of December the S&P has been absolutely stagnant, with daily ranges that, in many cases, were smaller than 5-6 points.  In addition, when the index did rise it would do so outside of trading hours, when we cannot apply our techniques.

However, as we indicated last weekend, since last Friday we have begun to see strong sales in the S&P as well as appealing price variations and, as we expected, our techniques have begun to again give us attractive outcomes.

Here is a summary of our MiniSP operations for the current month of January.

As you can see, up until this past Friday, we had executed only 5 operations for a gain of 16.50 points ($825 for each contract).  But, since then, we have realized 10 operations, each of them positive for a total gain of 34.5 points ($1,725 earned for the week).

Therefore, for these first three weeks of January, our techniques have given us 20 positive and 0 negative operations, a perfect 100% record, and a total of 51 points gains which is the equivalent of $2,550 for each MiniSp contract.

For the next week, we expect MiniSP futures to continue their roll and that Forex trading will repeat their positive performance of the first two weeks of the year.

Have a great weekend.