It’s All About the Benjamins, Baby!

Ok, yes, calm down! Sit down, please, everyone will get to speak!  Thank you.  Yes, the Edgy Investor has been AWOL for a while, but I haven’t been KIA!  I’ve had some actual deadlines placed on me at work and haven’t been able to chat on a daily basis now, but I hope to come back to hang with the pros when the opportunity comes.

As for the Benjamins and their master, Big Ben Bernanke, they are just as helpless as the rest of us while we ride in the back of a driver-less EuroBus.  But I suspect the Chairman is pleased with the prospect for growing Dollar strength, which will pave the way to more printing (QE3).  But until that happens, I see the major US indices being controlled by the whims of the strength of the US Dollar.  When the Dollar goes up, stock prices fall due to passive deflation, and vice versa.  How else would you explain 5% overnight gaps with flat trading during the day?

However, looking at my EUR/USD pair chart above, I see short-term pain ahead.  I am expecting to see it retest levels around 1.336, where there is good support, and to form a base there.  But realize, too, that I don’t have any money on that (yet).  I’m not trading FX at this time.

What I AM doing, however, is working on my daytrading skills with a 3-min IWM chart.  If I ever get to a scanner I’ll upload some super-busy charts I marked up for personal training.  I’ve found it rather effective in boosting my running game!

I still look longer term, I need a good passing game if I’m gonna have that nice retirement Mrs. Edgy deserves.  The hourly chart of IWM below shows determined consolidation around 73.50.  I’d like to think that this wedge will end in higher prices and double rainbows, because that’s what the cheap technical analysis books used to tell me.  But I’ve seen these wedges go either way in the cold, harsh world.  This wedge is way too long in the tooth, and it’s starting to look more like a Stage 3 exhaustion than a continuation pattern.

But if IWM keeps correlating to the EUR/USD pair, then this will break down.  Too bad, I had such high hopes for future prices.  On the other hand, my optimism reaches 13-14 months down the road, so it might not be over yet.  I’m thinking another quick shakeout would be in order before the uptrend continues.  There’s good support just above 72.00, and i’ll be watching for opportunities to buy here.  I’ve noticed that when price breaks trendline support, it makes a serious crossover and then either reverses on the suckers or accelerates.  Dangerous stuff, so remember to wait for retest confirmations, buy on trendlines, etc.. whatever it is you do!

Just for fun, here’s the S&P 500.  It looks more optimistic than the fence-sitting Russell 2000 etf.  But remember that the Russell 2000 usually leads the S&P in trends.

Until next time, happy trading and keep it solvent!