Tuesday, January 8, 2008

Week 5 - Tues- Current Equity: $533.10

Hi fellow forex traders:

The market is still trying to digest what Friday's employment numbers really mean for the world, and what is going on with the pre-election posturing by Hillary and Obama. Obama is good for the stability of the market and Hillary is not good for it.

My view of course, but I've tended to be right in the past on these issues.

It is interesting to hear what the "big" talking heads have to say about the economy and near term outlook. Even though we have to trade technically, knowing a bit about the arena you are playing in gives you some depth.

Philadelphia Fed's Plosser said today that he doesn't have a problem with additonal rate cuts. But he isn't sure if he would promote the idea either. (I love the way these guys really take a stand!) He mentioned that he thought the markets in general showed enough support last week to be encouraging. But he's also concerned that inflation-- that word that they never would admit even existed anymore-- is becoming broad-based.

Just look at the price action of grains, silver and gold, and oil. That is very broad based.

Our US Treasury Secretary, Henry Paulson said today that he personally expects the US economy to grow somewhat steadily from here on. I agree. Cheap dollars come back to this country much more quickly because the other countries fear that the dollars may be worth even less if they hold them too long. Those actions actually encourage a good economy here in the USA.

There are two days gone in the week and I've been stopped out of 4 of my 5 pairs, for 60 pips each loss. The only pair I'm still alive in is long the USD/CHF from 1.1147, with a stop @ 1.1087. It's been chopping around like the rest but hasn't hit my stop yet. Give it time, and it probably will.

I actually like it when the market stops me out quickly, early in the week on a currency. That action, if continued- spells TREND. Markets that trend can take off at the beginning of the week and charge on all week. They are where we get our money.

We get most of our money from about 2% - 3% of our trades. The sooner I know that the big move is not going to happen this week, I can watch dispassionately and get further information about the strength and weakness in the various pairs. It beats having the feeling that you are going to miss something if you aren't watching the market every second. That puts you in an early grave or actually fatigues you so much that you may not execute when you should.

See you tomorrow.

Joel Rensink

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