For those who belittle the dollar sell-off, look no further than the crash of 1987, which occurred right after a parabolic rise in equities and a currency crisis. In fact, 1987 saw a heavy sell-off in April, followed by a summer rally ending in the precipitous October collapse. This year, we've had the freaky sell-off in May, followed by the extravagant non-stop binge buying of the past three months and now a steep dollar sell-off. It's not because October is behind us that you should stop worrying. Always worry. I don't want to sound paranoiac, but traders who have been around long enough know the rule: anything can happen. As of today, the long side should only be the realm of day traders and futures traders (24 hour stops) until we are certain this cloud is behind us. Take the overnight bounce if oil drops but exit the pivot, maybe fade it, then play the opening reversal, get out etc.. You know the drill. If they start buying the close, bulls (retail buyers) have a chance. If they keep selling it, something is wrong in the kingdom.
Tomorrow's economic calendar will dictate trade. That includes existing home sales and consumer sentiment, both at 10 AM. The modus operandi going forward might not be chasing performance, but rather protecting gains. Use that in your trading: don't get greedy, book profits.
Tomorrow's economic calendar will dictate trade. That includes existing home sales and consumer sentiment, both at 10 AM. The modus operandi going forward might not be chasing performance, but rather protecting gains. Use that in your trading: don't get greedy, book profits.
This entry was posted
on Monday, November 27, 2006 at 11/27/2006 09:21:00 PM.
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