Light Volume, Last trading Day before Christmas, Moving Average Bounces, Downtrend --> $550 profits
Hi,
Yesterday I said it is more logical to go short rather than long? Well, fundamental data released today seems to suggest otherwise. Core personal consumption expenditure (PCE) deflator which is an indicator of inflation is flat at 0.0%. This means that infation is under control.. and we know that that is exactly what the FED has been trying to do.. i.e. control inflation... So a lower rate of inflation means that the FED will relax its monetary policy and is more probable to reduce interest rates in early 2007... This is a long term "good news" for the market.
Well, That's the fundamental analysis... if you believe that crap, and go long today.. you will be killed... I don't disagree that in the long term it might be good, but I have to base my judgement on what the charts tell me....
5min Nasdaq 100 Emini
Daily Nasdaq 100 Emini
Today's trade is similar to yesterday's.... I already know that if anything, I will have to go short, long is a NO NO.... At 10:30, I shorted 1 contract at 1782.5 when price bounced off the moving averages and stochastic begin to twitch down from the overbought region... At 11:10, I shorted another 2 contracts at 1777.5 ... I covered my position at 1770 at 12:30 when price action showed some weakness.... Profits of $550... Notice that during this festive season... the volume of trading is light....well, I think I should be buying christmas presents also instead of trading... :P..
From Briefing:
The November core personal consumption expenditure (PCE) deflator was flat (0.0%). This follows 0.2% gains in September and October. It confirms that the November core CPI at 0.0% as released last week was not a bad read. Inflation pressures are definitely moderating as a result of slower economic growth.
This is very positive long-term for the stock market. It increases the likelihood that the Fed will ease in early 2007.
Less favorable news comes from the November durable goods data. Although total orders jumped a larger-than-expected 1.9%, the underlying trend is soft. Excluding the volatile transportation component, orders dropped 1.1%. This follows a 1.6% decline in October. Overall orders are now up only 0.3% on a year-over-year basis, down from 10% levels earlier this year.
Businesses are becoming more cautious and slower order growth means slower business investment growth in the GDP numbers. This is one reason real GDP growth will stay near the 2% annual rate of the third quarter for a few more quarters.