Dollar Recovery Obvious, but Obvious to Whom? --IFCN Wk 34 -Tue- Equity: $666.73.

In trading, perception tends to become reality only after a period of
time where there are no major conflicts to the new perception.

Any basic commodity group that is priced in dollars and is showing a
decline in prices, is giving the perception that the dollar is getting
stronger, at least in that sector.  If it were just one sector, the old
perception of permanent dollar weakness might remain.

But, it isn't just one sector losing value to the dollar.  Many sectors
are now paling in strength to the dollar.

Gold is providing an unflinching indication of the market’s perception
of risk and dollar sentiment.  Gold prices have been consistently
falling on the back of troubling news in the Arab states and financial
blowups which would normally (in a “weak-dollar” perceptive world) cause
the metal to surge $25 per news shock.   This suggests that the dollar
is likely to continue gaining in strength.

People understand that the US economy is not setting records, but it
isn't falling apart any more either. It was holding its own with
$147/barrel oil prices.  It is inevitable that it should get better when
oil drops below $100/barrel..., just down the road.

Year ago, (when oil was $50/barrel) a veteran trader stated:
“$100/barrel oil is not the problem, it is the solution to high energy
prices”.  That solution is working its magic, but not in a way that most
consumers appreciate.

The building of strength in the US economy will continue if oil prices
continue backing off.  Crude oil is proving itself plentiful, and if the
world doesn't look out--- who's financial institutions and investors
have finally all gotten into energy based funds---  they will experience
a shocking drop in position prices as disinvestment pressures force them
to liquidate at serious losses.

Yin and Yang continue forever. Just when you thought it was safe to
expect permanent high energy prices....

As I've mentioned for many months, the weakness of the US economy has
already been priced into the market, but the deterioration in places
like the Eurozone and the UK is catching many financial units by
surprise.  That too means the dollar will be the new strongarm on the
block for awhile.

The Challenge account finally got long the Usd/Chf.  To bad the
Challenge account didn't have reverse trades entered in the Eur/Usd this
week.   For those of you who did,  good show.  My personal accounts got
short the Eur/Usd and Gbp/Usd because of daily breakouts, so I'm very
glad the dollar is showing some strength now.

The following are this week's FirstStrike entries:

• Eur/Usd: Long @ 1.5767, stopped out at .5707 for a 60 pip loss.
• Gbp/Jpy: Short @ 213.75, stopped out at 214.65 for a 90 pip loss.
• Gbp/Usd: Long @ 1.9946, stopped out at 1.9886 for a 60 pip loss.
• Usd/Chf: Long @ 1.0407, stop 1.0347. Trade in progress.
• Usd/Jpy: Short @ 107.31, stopped out at 107.91 for a 60 pip loss.
  

Note: Any FirstStrike trade not stopped out before Friday gets exited
on Friday just before 15:00 CST.

Current equity is $666.73.

Have a good morning.

Joel Rensink
www.infiniteyield.com

PS: To receive the FREE! trading rules for the Infiniteyield Forex 
Challenge ($499 value) and the semi-monthly newsletter about this 
challenge, send an email to: newsletter@infiniteyield.com
and tell me to which address you would like it sent. Please do not
use AOL, Yahoo or Hotmail addresses. Nothing personal, but
they've been known to filter out more good mail than actual spam.
Try a Gmail address. It's free, simple and perfect for traders! 

Mirror week? Dog days of Summer? --IFCN Wk 34 -Mon- Equity: $668.51.

Sorry about the delay in getting the Infiniteyieldforex Challenge update for last week. My weekend was in many ways a reflection of the previous week, volatile and surprising at the same time. I had great moments and frustrating moments, the most frustrating moments involving a very unexpected hard drive failure on an important trading computer. Back to 95% restored but tired of Microsoft anything at this point.

Dog Day reference:

The "dog days of summer" comprise the 40 days beginning July 3 and ending August 11, coinciding with the ancient rising of the Dog Star, Sirius.

This time period has been attributed to be an evil time "when the seas boiled, wine turned sour, dogs grew mad, and all creatures became languid, causing to man burning fevers, hysterics, and phrensies" - Brady’s Clavis Calendarium- (circa 1813)

And now, when forex trades and computer hard drives turn on their owners.... I have absolutely no belief in such things but the reference is interesting. A few ships sink at this time of year a thousand years ago and everyone blames the stars. And probably a few new traders after the last few weeks.

____________________

We're experiencing a very similar week to last back to back.

We are in four FirstStrike trades that aren't doing handflips. But as I know all too well, we have a long week ahead of us. The news this week will also likely be conflicting too.

The following are this week's FirstStrike entries:

Eur/Usd: Long @ 1.5767, stop 1.5707. Trade in progress.
Gbp/Jpy: Short @ 213.75, stop 214.65. Trade in progress.
Gbp/Usd: Long @ 1.9946, stop 1.9886. Trade in progress.
Usd/Jpy: Short @ 107.31, stop 107.91. Trade in progress.

Note: Any FirstStrike trade not stopped out before Friday gets exited on Friday just before 15:00 CST.

Current equity is $668.51

Have a good morning.

Joel Rensink
www.infiniteyield.com

PS: To receive the FREE! trading rules for the Infiniteyield Forex Challenge ($499 value) and the semi-monthly newsletter about this challenge, send an email to: newsletter@infiniteyield.com and tell me to which address you would like it sent. Please do not use AOL, Yahoo or Hotmail addresses. Nothing personal, but they've been known to filter out more good mail than actual spam. Try a Gmail address. It's free, simple and perfect for traders!

Holding the Course Not for Wimps! --IFCN Wk 33 -Fri- Equity: $675.94.

It takes a great deal of character to take trades over and over again which end up losing.

A perfect example was this last week. After a series of 4 weeks with marginal profits or actual losses, we came into last week and immediately were slammed with 5 losses.  

I got a small net profit from a pair of uncancelled reverse trades that did little to stem the onslaught.

Remembering that this is a numbers game gets difficult if all you've been experiencing recently is losses.  

Colonel Sanders as an old man spent two years driving across the United States looking for restaurants to buy his chicken recipe. He was turned down 1,009 times before someone finally accepted his deal and history began to be written....

That doesn't mean that we want to or have to wait till we are old to "finally" succeed, but strings of losses aren't very encouraging either.

Persistence ultimately rules, but does it have to take so long? We'll see!
___________________

Here's last week's recap:

The data below is as of Friday's close, July 25, 2008:

Start of week equity: $709.06.

OneNightStand Exit(s) on 06/21/08 : 
Gbp/Jpy: long Friday @ 213.64, exited Monday morning @ 213.03 for 61 pip loss (-$ 4.56).

Completed FirstStrike trades this week:
Eur/Usd: Long @ 1.5923, stopped out at 1.5863 for a 60 pip loss.
Gbp/Jpy: Short @ 212.28, stopped out at 213.18 for a 90 pip loss.
Gbp/Usd: Long @ 1.9996, stopped out at 1.9936 for a 60 pip loss.
Usd/Chf: Short @ 1.0160, stopped out at 1.0220 for a 60 pip loss.
Usd/Jpy: Short @ 106.31, stopped out at 106.91 for a 60 pip loss.
Reverse Trades taken:
Usd/Chf: Long @ 1.0260, exited Friday @ 1.0370 for 110 pip profit.
Usd/Jpy: Long @ 107.31, stopped out at 106.71 for a 60 pip loss.

Total losses: 390 pips  
Total profits: 110 pips 
Net losses: 280 pips (-$28.56)

OneNightStand 07/25/08 entry(s)
None--

End of week equity: $675.94.(includes unrealized P&L)
Total Loss for Week: $ 33.12 (4.6% weekly decrease)

The reverse trades as a group had a small positive addition, but were far from a resounding profit.

The forex markets are madly trying to make sense of all the conflicting news tossed at them every few days. Being reactive only creates potential for greater losses.

Have a good evening.

Joel Rensink
www.infiniteyield.com

PS: To receive the FREE! trading rules for the Infiniteyield Forex Challenge ($499 value) and the semi-monthly newsletter about this challenge, send an email to: newsletter@infiniteyield.com and tell me to which address you would like it sent. Please do not use AOL, Hotmail or Yahoo addresses. They've been known to filter out more good mail than actual spam. Try a Gmail address. It's free, simple and perfect for traders!

No sure thing! --IFCN Wk 33 -Thu- Equity: $671.45.

The Dollar is maintaining most of its strength aquired in the last week.  But continued action betrays the fact that many of the market participants have different ideas of how strong they feel the dollar will be allowed to maintain.

The existing home sales news worked out as I suspected, the dollar remained strong and got stronger vs. the Euro and the Pound.

We are still currently long the Usd/Chf and Usd/Jpy FirstStrike “reverse” trades. The trades have diminished quite a bit. If still in progress tomorrow we will exit tomorrow.

• Usd/Chf: Long @ 1.0260, stop 1.0200.
  
• Usd/Jpy: Long @ 107.31, stop 106.71. (Looks like it may get stopped out soon)
  

Note: Any FirstStrike trade not stopped out before Friday gets exited on Friday just before 15:00 CST.

Current equity is $671.45.

Recap tomorrow.

Joel Rensink
www.infiniteyield.com

PS: To receive the FREE! trading rules for the Infiniteyield Forex Challenge ($499 value) and the semi-monthly newsletter about this challenge, send an email to: newsletter@infiniteyield.com and tell me to which address you would like it sent. Please do not use AOL, Yahoo or Hotmail addresses. Nothing personal, but they've been known to filter out more good mail than actual spam. Try a Gmail address. It's free, simple and perfect for traders!

What would you bet that the Fed already knows the numbers? --IFCN Wk 33 -Wed- Equity: $689.56.

Existing home sales for June, to be released Thursday by the National Association of Realtors (NAR), are widely expected to fall to an annual pace of 4.94 million units following a 2.0% increase to 4.89 million in May.

With sparse financial news from the U.S. this week, the currency markets may move on it.

Not all forecasts agree of course.

Lehman Brothers economists are looking for a 1% advance to a 5.05 million pace of sales in the month.

Economists from JPMorgan look for a second month of gains to put the pace at 5.01 million.

The existing home sales data is excluded from many other measures, so in many ways it is a pure information play.

The existing home sales index jumped 7.1% in the April report, which suggests existing sales could see a boost this month, yet they fell back 4.7% in May. The troublesome nature of this report contributes to the wide parameters of forecasts for Thursday's report, which range from from a low of 4.78 million units to a high of 5.10 million.

I believe the Fed already has seen the numbers and released the intent by having its spokesmen make unique and market pushing statements in recent days.

Crude has been falling.  Amazing.

Who'd have guessed?

Supposedly crude oil inventories declined further than expected in the week ending July 18. Despite the decrease in inventories, crude dropped in price to $125.30 when the inventory data was released.

Gold has dropped precipitously, quickly falling $30 an ounce. That too gives additional strength to the dollar.

It is beginning to look like the Euro and other european currencies are beginning to sag versus the dollar. Since so many hedge funds have been simultaneously long crude AND the Euro, capital outflows could be severe.

As mentioned yesterday, we are currently long the Usd/Chf and Usd/Jpy FirstStrike “reverse” trades, the opposite trades of the initial entries. They are both still in progress.

• Usd/Chf: Long @ 1.0260, stop 1.0200.
  
• Usd/Jpy: Long @ 107.31, stop 106.71.
  

Note: Any FirstStrike trade not stopped out before Friday gets exited on Friday just before 15:00 CST.

It would be nice if these trades continued profitable after the five straight losses taken on the initial trades.

The two trades I have have decent potential if the dollar just stays moderately stronger.

Current equity is $689.56.

See you tomorrow.

Joel Rensink
www.infiniteyield.com

PS: To receive the FREE! trading rules for the Infiniteyield Forex Challenge ($499 value) and the semi-monthly newsletter about this challenge, send an email to: newsletter@infiniteyield.com and tell me to which address you would like it sent. Please do not use AOL, Yahoo or Hotmail addresses. Nothing personal, but they've been known to filter out more good mail than actual spam. Try a Gmail address. It's free, simple and perfect for traders!

Weatherman..., Trader- 2! --IFCN Wk 33 -Tue- Equity: $675.23.

Hours after the last posting, we prove that we are long or short..., until we aren't. And, we paid personally for our losses.

The dollar bulged suddenly on Tuesday because Treasury Secretary Paulson vocally supported the currency and the Federal Reserve Bank of Philadelphia president stated that he thought interest rates should be raised. Despite the nervousness implied in the markets recently, at last there is a persistent belief that the Fed is concerned enough about a “too robust” of an economy that will require higher interest rates.

Because of the above utterances, all of the original FirstStrike trades were entered and summarily stopped out. I wasn't surprised, as so many major indications have been indicating that the dollar is showing remarkable strength after so many years of weakness.

Not that I believe, or any other credible economic watcher believes that the current dollar strength is a permanent turnaround. But the current dollar strength should be much more persistent than generally expected, and could be financially damaging to determined dollar bears.

Currently, the Challenge account has only been taking the first trade of the week and cancelling the other side of the weekly FirstStrike orders.

As has happened a number of times in the past, this week I neglected to cancel some of my reverse orders, resulting in long positions in both the Usd/Chf and the Usd/Jpy, as cited below. Reverse trades are valid trades. Although they increase the weekly risk, they also offer additional potential reward when major currency reversals take place so quickly.

The following are this week's FirstStrike entries:

• Eur/Usd: Long @ 1.5923, stopped out at 1.5863 for a 60 pip loss.
  
• Gbp/Jpy: Short @ 212.28, stopped out at 213.18 for a 90 pip loss.
  
• Gbp/Usd: Long @ 1.9996, stopped out at 1.9936 for a 60 pip loss.
  
• Usd/Chf: Short @ 1.0160, stopped out at 1.0220 for a 60 pip loss.
  
• Usd/Jpy: Short @ 106.31, stopped out at 106.91 for a 60 pip loss.
  

Reverse trades taken: (See explanation above)

• Usd/Chf: Long @ 1.0260, stop 1.0200. Trade currently in progress.
  
• Usd/Jpy: Long @ 107.31, stop 106.71. Trade currently in progress.
  

Note: Any FirstStrike trade not stopped out before Friday gets exited on Friday just before 15:00 CST.

Current equity is $675.23.

Have a good morning.

Joel Rensink
www.infiniteyield.com

PS: To receive the FREE! trading rules for the Infiniteyield Forex Challenge ($499 value) and the semi-monthly newsletter about this challenge, send an email to: newsletter@infiniteyield.com and tell me to which address you would like it sent. Please do not use AOL, Yahoo or Hotmail addresses. Nothing personal, but they've been known to filter out more good mail than actual spam. Try a Gmail address. It's free, simple and perfect for traders!

Weatherman..., Trader! --IFCN Wk 33 -Mon- Equity: $701.41.

The Japanese market was on a holiday and other markets were without any reports to encourage strong positions. That is why nothing seemed to happen today.

The economic calendar from the US should give more information as the week wears on. Fear of ruinous consequences in the financial sector have eased somewhat following recent better-than-expected earnings reports from the banking sector.

Nonetheless, the Fed has revealed tan increased concern with their enlightened view of the economy-- saying – simultaneously – out of the same mouth, that they intend to keep lower interest rates..., until they raise them.

What a great job! Like being paid as a weatherman while getting paid a CEO's salary simply uttering, “There will be sunny skies..., until it rains sometime.”

On a third thought, maybe we traders aren't much different. We are long or short..., until we aren't. But at least we pay personally for OUR errors. AND the errors of the Federal Reserve system.

Early this morning, we exited the long Gbp/Jpy OneNightStand trade from Friday – in @ 213.64, out at 213.03. A loss of 61 pips (-$ 4.56).

We entered four FirstStrike trades today. Had a quick loss in the Gbp/Jpy. I would have thought that the short side of the pound and euro might have been a better trade, but the trades we got are below.

The following are this week's FirstStrike entries:

• Eur/Usd: Long @ 1.5923, stop 1.5863. Trade in progress.
  
• Gbp/Jpy: Short @ 212.28, stopped out at 213.18 for a 90 pip loss.
  
• Gbp/Usd: Long @ 1.9996, stop 1.9936. Trade in progress.
  
• Usd/Chf: Short @ 1.0160, stop 1.0220. Trade in progress.
  

Note: Any FirstStrike trade not stopped out before Friday gets exited on Friday just before 15:00 CST.

Current equity is $701.41.

Have a good night/morning.

Joel Rensink
www.infiniteyield.com

PS: To receive the FREE! trading rules for the Infiniteyield Forex Challenge ($499 value) and the semi-monthly newsletter about this challenge, send an email to: newsletter@infiniteyield.com and tell me to which address you would like it sent. Please do not use AOL, Yahoo or Hotmail addresses. Nothing personal, but they've been known to filter out more good mail than actual spam. Try a Gmail address. It's free, simple and perfect for traders!