USDCAD DAILY STRATEGY

Direction: long

Target: TP1 – 1,0310

Protection: SL – 1,0230

Our setup: 1,0277

Background:  In the whole month the pair has been very bearish. Yesterday the cross made substantial strength. We see this CAD weakness could continue against the greenback  and can confirm today the continuation of the long and steep bullish trend extending back to 1,0310.

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Surprise

Surprise...

that FED stuck to its bond buying program. After two days meeting they chose to keep further the QE, 85 billion a month and said would wait more evidence of progress. All the US indexes hit intra day records on that no tapering news. In a press conference, Fed Chairman Ben Bernanke said the bank might still scale back its purchases before the end of the year, but it will depend on whether growth and the pace of hiring show greater strength. The Fed's decision surprised the traders and broke the consensus on expectation "tiny taper" in a range of $10 billion to $20 billion. The Fed will meet again on Oct. 29-30. We do believe untillthat time the market keeps going in this pace up, because the sentiment is so bullish fundamentally.

Some market datas:

Dow 15,677, +147, 0.95%

Nasdaq 3,784, +38, 1.02%

S&P 500 1,726, +21, 1.25%

Nikkei 225 14,720, +214, 1.47%

Hang Seng 23,512, +395, 1.71%

Technically, as weforecasted at the beginning of this week the market gained a lot and hit our target level on Dow - 15.650.

What comes now? Might be some quiet day, a bit ranging period. But we are still bullish and the next challenge for Dow is the 16.000, which is a key resistance level. But frankly we don't have indication now because we are at new historical high and there is only the sky over our heads. The daily chart clearly shows the big breakout:

HAVE A GOOD DAY!

USDJPY DAILY STRATEGY

Direction: long

Target: TP1 – 99,70

Protection: SL – 98,55

Our setup: 99,08

Background:  The dollar fell toward a two-week low against the yen before the FED announces today whether it will slow its $85 billion of monthly asset purchases that have capped borrowing costs.

Technically we see upside movement possibilty today against the falling trend since 11th September. That could be a contratrend position. But we hope for th ebest target level 99,70.

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Forecast by TIME Magazine

The bulls on the front page of TIME normally doesn't mean good for the market. That breaths for the mass the optimism. Which is an exit signal for me on the bull market when everybody gets started optimistic. I like when everybody starts to fear. The good on the picture that shows the bull is a bit drunken after a party so it is not overwhelmingly positive and optimist interpretation, I find some sarcasm and scepticism in that. That is good. The Media is always legging behind and represent the mass attitude, when they start being bullish I turn into bearish and vice versa. I am happy when I see paranoia.

Here is the statistic from the 20th century what happened after a bullish cover picture by Laszlo Birinyi. It seems this week Birinyi is very active in Media.

 On technical side the European and US markets gained a lot yesterday. The next target for Dow is at 16.650, the previous top and then we will see. But I only see bulls around us.

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Have a good trading day!

Anybody is still sceptical about the Bull Market?

Asian markets started this week massively higher, they opened with gap and US futures rose as well. Maybe it happened due to Larry Summers withdrew his name from consideration for Chairman of FED. Many investors considered him to be a candidate who likely cuts back the FED moves to stimulate the economy. I don't know it is real behind or not, what I only know it is genuine bull market. The party is not yet over that is my approach.

Some fact for this morning:

Asia: Hang Seng Index +1.31% , ASX 200 +0.63%, Nikkei +0.12%, Kospi +0.75%

US futures also show strong starts: SP500 futures up 18.3 points to 1,700.30, Dow +168 points to 15,479.

My bet is that the bulls have arrived back after the summer consolidations. All markets across the board on historical highs or pretty close to that levels. I do really think the current bull market — many argues that— it is not over yet. SP500 will be over 2.000? Nobody knows, but we are only 18% from that level.

Normally the markets has four phases in the bullish sentiment:

1.       reluctance

2.       consolidation

3.       acceptance

4.       exuberance

In the history the biggest moves are in phase of Reluctance and Exuberance. So, we are still far from that euphoria. In Bullish Sentiment index of professional investors has fallen to 50% from 67% in this August, while the Individual Investors' poll last week showed a narrow 35%-31% split between bulls and bears. I think this lack of euphoria might help us extending this bull market sentiment.

I love Laszlo Birinyi, President of Birinyi Associates’s quote:

“We still haven’t gotten to the [year] 2000“ level of euphoria, he said. “I think once you get to the point where you have a page-one story, that’s where you get a good surge.” Or maybe when it makes the cover of Time magazine. “That’s what I call capitulation…., which I see at market tops” as well as bottoms, he said. And because we haven’t seen it yet, does that mean the bull market could go on. 

Technically: No comment. It is so bullish just look at  the SP500 chart:

Have a good trading week!

EURUSD DAILY STRATEGY

Direction: short

Target: TP1 – 1,3230

Protection: SL – 1,3320

Our setup: 1,3270

Background: On EURUSD we are precisely in the middle of a range. Between 1,3320 and 1,3230. Normally and usually the traders don't really prefer and like to avoid the side way moves. Today in our scenario the EURUSD might be testing the downside of the range. Could it come tumble to 1,3230. It is not a perfect position and today is Friday so the market can be pretty volatile, but we have a stop level so we have to take a hit.

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Indexes Momentum Rules

U.S. stocks increases further again yesterday as we predicted. The Dow made its 7th gaining day in row and made a third day of triple-digit gains. It seems the momentum is overwhelmingly bullish and nobody cares anymore about Syria and Apple huge drop. All the leading indexes are on historical high or very close to that level, included the Europeans too like FTSE, DAX, SUI, IBEX, CAC40. The Nikkei is a bit lagging behind, dueto the JPY strengthening pace, but we bet on that shortly it will go to new historical high either.. I was

Across the board all US indexes erasing losses and extending gains into a seventh day in row, the SP500 +0.31%, at 1,689. Only the Nasdaq is solidly lower, it was in red territory yesterday, -0.11% lost to 3,725. The only reason was the plunge of Apple stock. The Dow +0.89% rose to 15,326. As we said our previous article it used to be lagging and in the last 3 dayscatched up a bit its other peers, +0,89% to 15,327.

Despite the Apple -5,4% huge fall the sentiment is perfectly bullish, what the market does is only repricing the Apple to its real value. This is the end of super story of Apple is not sexy any more for the investors. If something comes back from 700USD to 400USD that suggest me not buying anymore. It must be some fundamental reasons behind. If the stock is not able to gaining in this kind of optimism it means something wrong.

In the bigger picture of technical side, we are still bullish across the board mostly on Dow, which is still slower than the others. We havebuilt up nice pyramid positions in the last couple of weeks so recently and in the following weeks we are going to basket the profit. In terms of Dow our first target is at the key level of 15.440 that is only 100 points from the current level. If it is taken and we are pretty sure it should be up to the next support level and historical top, 15650.

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