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Wednesday 21 March 2007

FOMC update



In my last post I said that I went long JPY, and ER2 as a hedge before the FOMC minutes on the simulator. I honestly didn't expect both to go up. I thought JPY would go up and ER2 would go down. The inverse relationship between the bonds and the stock market hasn't worked at all this week. I will continue to watch the relationship between the two, but will focus primarily on NYSE A/D and NYSE TICK applied to my volume profile trading methodology as my main staple for taking trade signals. It will be interesting to see where bonds and JPY are in 2 days. If they both continue up, I would expect today's action in the stock market to be a bear trap setup, where all the shorts from the last 2 weeks got severly burnt and are now covering, setting up a nice place to short for continuation to the downside for next week.

Market observations from today:
1.I can't tell you how many times I've seen 3pm EST reversals on big trend days like today. First JPY rolled over, then bonds, then the stock market rolled at 3pm EST.
2.Instead of an inverse pair trade between the bonds and the stock market, I'm seeing that the YEN, Euro, and bonds are showing similiar trading patterns in which one may lead the other and give clues to where the future price may be for the lagging instrument at the time.
3.NYSE A/D line topped out at 3:02pm EST, where price reversed on all the stock indices.

Today I burnt some time youtube surfing and found a video that I thought was funny and ironic.

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