Equities Pause For Profit Taking After Dow Briefly Hits 7000
The equity rally coughed and spluttered a bit; the Dow (^DJI) briefly hit 7000, but profit taking took prices lower and FTSE (^FTSE) failed to hold above 3700.
The curse of the early gym continued today (Sod’s law works brilliantly on this one). On the days I put work first I either don’t trade or put on a losing trade and wish I’d gone to the gym instead. On days like today, when I popped in for a quick 30-minute workout, the markets get up to all sorts of monkey business.
Today, whilst I was playing with small bits of alloy, the FTSE fell just far enough to trigger my ‘safe’ stop loss before rallying hard and fast to where it was when I left. In fact it was only the ‘0′ in the profit and loss account that alerted me to check my trades. It was only a minor frustration, as the stop loss had locked in a £50 profit. It was just annoyingly ironic as I was targeting a setback to add to my position, not lose it! Another case of stop-loss mis-management.
I decided to stand tall and buy back my long at 3708, then I lost my discipline and added to the position at 3734. For a while this seemed pretty sensible, with the index looking good at 3765, but to be fair I’ve had bags of opportunities to put money in at lower levels since then. If you haven’t seen it yet, why not check out today’s article Have Equities Bottomed Out?
In forex land I had two successes and one trade that wasn’t worth the effort. The successful trades both involved betting long on the Euro; a bitter taste sweetened only by making money. This morning I bought EURUSD in a fiver at $1.2664 after it bounced off its 21-MAV on the 5-minute chart. I sold £3 at $1.2679 and brought my stop loss up to break-even to lock in £45. I then trailed my stop at a safe distance but decided (wrongly) to bin the trade after appalling German factory orders. The chart proved stronger than the news and I had to be content with an overall £137 profit while the price continued ever-upwards, breaking back above its 21-day moving average.
This afternoon I bought £5 of EURGBP when the price made a new recent high. Again, I paid over the odds to get in; I could have bettered my price of £0.9254 by 10-pips if I’d been patient, but in the event I was able to sell £3 at £0.9270 and a further £1 at £0.9266 for a profit of £60, with a £1 balance still running. I think this one’s got further to go and will look to add to my position, but with a bit more patience this time. I’m looking for a pullback to the £0.9245 area, to see if the previous resistance will now act as support.
I haven’t bothered with gold today as it’s been looking indecisive at $900.