I noted that there were a ton of short set-ups a couple Thursdays ago, mentioning IYT as a typical set-up. As you can see from the daily chart below, it would have been tricky to enter short without getting shaken out. Assuming you were skillful with your entry, the $70ish target is still a good one to look for.
You can see from this chart how Apple has closed the market cap gap with Microsoft over the last decade. Impressive!
The “news” about new home sales volumes and prices is no surprise to anyone who looks at price charts. Retracing half the move since the 1990 low would put us at 188K and the golden ratio (.618) is sitting down at $170K.
It’ll be interesting to see how recent buyers react when they find themselves 20% down on their “bargain” purchase in coming years.
Amused that my favorite wannabe trading guru was crowing about the success of her “afternoon trading strategy.” She neglected to mention that following the same strategy would lose money nine days out of the last ten.
Don’t be fooled by the well-chosen example. Sure, when prices trend and you happen to be on the right side, you’ll make money. When prices go sideways, you’ll get chopped up and give it all back and then some. Anyone who doesn’t admit this is trying to sell you something.
Some people were making fun of the description of China’s yuan “bolting higher” yesterday, but as you can see from the daily chart, it was a dramatic move which deserved to be so described. I see the CNY moving below 5 by 2020. In other news, after many days of pain, the wolfpack finally catches a break in the Euro.
Taking the long view of the Chinese yuan, assuming gradual ~3% annual appreciation, it should be under 5 by 2020. I wouldn’t get too excited by this news. The Chinese know exactly what they’re doing and will manage their currency’s appreciation accordingly.
Related: Hold Fast To Your CNY
Subscribers to my newsletter and I got long the Gold Miners (GDX) back on April 12 at $48.50. The GDX has been a nightmare for trend followers as you can see from the chart. We’re making money at the moment but it could all disappear in a few bad days.
It’s hard to be a scrupulous investment newsletter writer — it would be so much easier to play to people’s greed and foolishness (unrealistic expectations), but I idiotically refuse to do that. As old Bill Shakespeare wrote: Every man has his fault, and honesty is his.
I thought there were a lot of short set-ups for Thursday, and I tweeted about IYT specifically. The market didn’t cooperate and IYT had a weird close, but here’s the chart to show you what I was thinking. (My old friend “twocents” would say this chart suffers from “line-itis.”)
Since I wrote last week’s post Trend Trading BP, the stock gave one more excellent low-risk spot to get short as you can see in the chart below. Now that the news is out regarding the dividend cancellation, it will be important to watch how the stock stabilizes.
The Baltic Dry Index is my favorite global economy health indicator. You can see that it has been forming an “ascending triangle” over the last year. It will be telling when price finally breaks out of this ever-narrowing range: keep an eye on it.
