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Archive:31st July 2006:
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The Lion's Blog... Week 35September 1st (8:30 am New York Time) USAWe have non-farm payrolls coming out of the U.S. for the month of August. Consensus varies between about 120K and 130K. Last month the number came out at 113K. So they are expecting a better number. Historically in 2003, 2004, 2005, the non-farm payroll for August always came out lower than it was in July, so we'll see what happens this year. If the number comes out at 150K or above, I will go short on EUR/USD. If it comes out at 99K or below, I will go long on EUR/USD. I will definitely watch out for revision of previous number. If it's conflicting, I will exit right away. If revision is the same way, I may stay in the trade a bit longer, trailing my stop to lock in profits. Depending on the actual number, if my triggers are hit, I am expecting a move of about 40 pips to 120 pips. Of course, the more the number will deviate, the more possibility there is for a bigger move. Based upon the current consensus forecast if the actual jobs number is 66k or less the US dollar may weaken and EURUSD may possibly increase 90 points or more above the pre-release price. If the actual jobs number is 174k or more traders may view it as dollar positive and EURUSD may possibly decrease 90 points or more below the pre-release price. September 1st UpdateNon-Farm payroll came out pretty much as expected. It still moved EUR/USD down by about 60 pips. In my opinion, what's been happening is most of the U.S. reports have been coming out worse than expected for a while now, so everybody expected a worse number for the U.S. The number was expected at about 120K to 130K, it came in at 128K, it still strengthened the dollar by about 60 pips due to the expectations and the fact that last month was 113K. August 31st (7:45 am New York Time) USA
Today, is the last day of the month, and it's
looking VERY busy. If you are a technical trader and you know very
little about fundamentals, and don't know what you are doing, I suggest
staying out of both London and New York sessions, because it will be
driven based on fundamentals in my opinion. Just trade these signals
and nothing else, as you know I normally don't say this. But it applies
for today. We have housing prices coming out
of UK at 1:00 am New York Time, then it's followed by a bunch of E-12
reports, and it's concluded by UK consumer confidence at 4:30 am New
York Time. Then we have E-12 interest rate announcement at 7:45 am NY
Time, followed by Trichet speech, followed by CAD GDP, a bunch of U.S.
reports, Chicago PMI, and concluded by Bernanke speech at 12:30 pm NY
Time.
Here is what I am going to do personally today.
August 31st, 2006 (7:45 NY Time) E-12We have Interest Rate statement coming out of Europe. It's pretty unanimously expected that E-12 won't raise the interest. If they do however raise it to 3.25%, I am going to go long on EUR/USD, and will be looking to cash out about 80 pips. There is very little probability that the rate will be hiked though. August 31st, 2006 (8:30 NY Time) USAWe have Personal Income, Personal Spending, PCE Deflator, Canada GDP, and Trichet speech coming out. I've never seen so many reports all at the same time. My focus will be Trichet's speech, and I'll be planning to trade EUR/USD. If he is hawkish and talks about continuing rate hikes on the Euro, I will go long on the EUR/USD. If he is dovish and talks about stopping the hikes, I will go short on EUR/USD. I do not believe the U.S. reports will be deviating that much from consensus, I've been watching and trading this set of U.S. reports under normal conditions, and I'll tell you, these are very bad reports to trade. Personal Income and Spending often comes out conflicting, and it's tough to predict what it will do to the market. Last month, all the reports pretty much came out as expected. Trichet's speech is specifically about interest rate, so I really think it's the most important thing at 8:30 am, and I believe that there is an extremely high chance that the EUR/USD will move over 50 pips between 8:30 and 9:00 am. Maybe even 100 pips! August 31st, 2006 (10:00 am New York Time) USAWe have Chicago PMI coming out. I personally won't be trading it. This year, the number deviated majorly twice, and it was pretty much without any major reports, and in my opinion, it didn't do much to the market. It did do some stuff to the market on two other occasions, when it also deviated by a lot, but it came out together with other reports, like Consumer Confidence and Consumer Sentiment. So I won't be trading this one. August 31st, 2006 (12:30 pm New York Time) USAWe have Bernanke speech coming out of U.S.A.
Fed Chairman Bernanke
will be speaking on productivity at the Clemson Institute for Economic
and Community Development, in Greenville, South Carolina. Bernanke spoke
last Friday to the attendees of the Kansas City Fed's annual economic
symposium held in Jackson Hole, Wyoming but did not discuss the US
domestic economy, inflation, or interest rates (topic of the symposium
was Global Economic Integration and he spoke only on that particular
subject). Traders will listen to what Bernanke has to say in hopes
of getting some hints about future interest rate changes. If
Bernanke stresses that inflation is well contained and moderating and
also that the economy is noticeably softening then EURUSD might possibly
increase 50 points or more above the pre-release price. If he says
inflation remains a major threat and the economy is not weakening then
EURUSD might possibly decrease 50 points or more below
the pre-release price.
August 31st Update
If you traded today, we had a few possible opportunities but they just
didn't happen. The Trichet speech was very
uncertain about the plans of E-12 interest rates.
The Bernanke speech didn't reveal much either. As I said in
yesterday, August has been a pretty slow month, especially the 2nd
half of August. I sure hope September will be a lot better.
August 30th (8:15 am New York Time) USAWe have ADP Employment report coming out of USA. The forecast is somewhere between 110K to 130K, depending on the news calendar you use. This report is relatively new, and I've never traded it before. The ADP national employment report provides an estimate of what they expect Friday's non-farm payroll report to be. It is from the company that claims to process one out of every 6 paychecks in the US. The number has only been published for the past 4 months; however, data going back a few years has been made available. Comparing the ADP estimates to the actual US government non-farm payroll numbers reveals that ADP has been as good as or better than the market consensus forecast at predicting the non-farm payroll number. As such, the market may adjust its consensus forecast for Friday's non-farm payroll - and possibly the price level of the US dollar - based upon the ADP release. If the ADP number is 66k or less EURUSD may possibly increase 50 points
or more above the pre-release price. If the ADP number is 174k or more
EURUSD may possibly decrease 50 points or more below the pre-release
price. August 30th (8:30 am New York Time) USAWe have U.S. quarterly GDP coming out. The number is pretty unanimously
expected at 3%. Preliminary GDP is the first revision of the second
quarter GDP. The first release, called the Advanced GDP was 2.5%. Since
then additional information that was unavailable at the time of the
Advanced GDP release indicates that preliminary GDP may be 3.0%. If
preliminary GDP is 2.5% or less EURUSD might possibly increase 50 points
or more above the pre-release price. If preliminary GDP is 3.5% or more
EURUSD may possibly decrease 50 points or more below the pre-release
price. August 30th Update
We had no trades on the ADP & GDP news
announcements. I have to admit, this month has been very slow. A lot
of reports came out pretty much as expected, and didn't give us a whole
lot of trading opportunities. I think September will be much better.
August 29th, 2006 10:00 am New York Time.We have consumer confidence coming out of USA with a consensus of about 102.5 to 103.0. This report has been coming out mostly together with the housing sales, so to know how much of significance this report has on its own is very unclear. Conference Board consumer confidence takes on added significance this month as the market assesses whether the weak housing data reported last week is having a substantial impact on the general economy. If the actual number is 100.0 or less the market may view it as US dollar negative and EURUSD might possibly increase 50 points or more above the pre-release price. If the actual number is 106.0 or more traders may see it as US dollar supportive and EURUSD may possibly decline 50 points or more below the pre-release price."
If the report comes out at 100 or below, I will go long on EUR/USD. The
price will probably spike up at least 15 pips, question is whether
it's going to continue going up to hit the 50 pips target or it's
going to go back. If it goes back to pre-release price, I will exit
immediately. If it continues climbing, I will be trailing my
stop/loss by about 10 to 15 pips, having an ultimate take profit at
about 50 pips or so. If the number comes out at 106 or higher, I
will go short on EUR/USD, and do exact same routine as I mentioned
above, except the opposite direction. As always, I'll keep my ears
open for revisions and such, and exit immediately, if there is a
conflicting revision by at least 1 point from previous month. What
I mean is last month the number came out at 106.5, if it gets
revised to 107.5 or higher and it's conflicting, then I'll exit
right away, or if the number is revised down to 105.5 and it's
conflicting, then I also will be looking to exit.
August 29th, 2006 2:00 pm New York Time.We have minutes of the FOMC meeting coming out of the U.S. The FOMC raised interest rates by 0.25% at every meeting from June 30, 2004 to June 29, 2006 - a total of 17 consecutive interest rates hikes - bringing the federal funds rate from 1% to 5.25% in 2 years time. At the last meeting on August 8th the FOMC voted to leave rates unchanged, while leaving the door open for future interest rates hikes by stating inflation remains a concern and future interest rate changes will depend upon incoming inflation and economic data. Traders will peruse the minutes of the August 8 FOMC meeting looking for clues and hints of what lies ahead for interest rates. If the minutes are particularly hawkish (stressing inflation concerns and playing down the weakening economy) EURUSD might possibly decrease 50 points or more below the pre-release price. If the Fed is particularly dovish (stressing the weakening economy and their view that inflation will moderate) EURUSD may possibly rise 50 points or more above the pre-release price."
In plain words...if U.S. is talking somewhat positively about its
economy after such interest rate hikes, and are suggesting that they
may do another hike, the EUR/USD will probably go down. However, if
the U.S. is pessimistic about the economy, and are expressing no
plans of anymore rate hikes, then EUR/USD will probably strengthen.
August 29th UpdateConsumer Confidence came out and hit our trigger to go long on EUR/USD. I told you that I am pretty much expecting a 15 pips spike on this report, and after that, the price might continue climbing, or could suddenly retrace, in case it started to retrace, to exit immediately at pre-release price. So the number did come out, and hit our trigger, we did get a 15
pips spike as expected also, but then EUR/USD turned around, and
started dropping like a rock, so we were supposed to exit at
pre-release price. In the perfect world, this should've been an
either profitable trade, or a break even trade, however, because of
the higher than normal spreads during news times on some brokers,
and possible few pips slippage on other brokers, it's likely that
you may have lost some money. Bottom line is in my opinion, this set
up didn't work out, and everybody should've ended up with either a
small loss or a small win. I think it was definitely worth a shot of
a possibility of a 50 pips profitable move. August 28thWe have no trades on Monday, August 28th, 2006.
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