Strategy Spread: Spot CCY vs. Crosses, Stock Futures as Indicator

While taking a que of the Stocks Indices Futures market, the price recovery in Europe has somehow provided a support at the opening prices for the 3 major indices. The Globex market including futures have provided the better alternative to implement strategies that can the least be used as an arbitrary trade either to position a trade in the European session before the US market opens.

No other than a futures strategist / trader has better understanding of how futures can best serve investors especially in Asia that can have access to better liquidity and execution when applied with while awaiting for the economic data. Again volumes increases in this volatile price action where a triple digit decline and a price pull back gives day traders the flexibility to move in & out on both directions by using these 3 major markets.

The relative trade strategy of utilizing Dow/ SP500 & Nasdaq futures for an expected price pullback is an excellent approach either timing an entry position within the trend or carry a short-term corrective move over a certain period of time. The extended decline has already been confirmed with the past two consecutive quarters now has reflected a negative bias for stocks. Which somehow was cemented by the contagion market from China. This includes Asian markets to the list. However, @megatrade101, we do not discount the probability although slightly that there could still be an attempt for a price recovery within the 4th quarter trading for the year. 

Meanwhile, in Asia the JPN225 (Nikkei Average) have taken the lead of decliners by breaking the 17k benchmark previously set on its way higher and reaching the 20932 high (July 2015) and continued to decline at its current levels @17150. A well defined major correction within a major trend has transpired and there is only one quarter left for an attempt to be positive but chances are quite slim at the moment.

As of the current market condition, the Euro has been quite supported with the cross rate currency pair primary with Cable and Yen. As the USDJPY has held well in a tight range while the EURGBP have remained in a positive tone for the past few sessions. 

Not Just Forex: Price Action & Market Behavior Based on Correlation

What's Next for the Market

Taking a cue from the market while analyzing best strategies to apply trades to arbitrage price swings for investors interest from a wide ranging consolidation.

Stock Market conditions apparently have dwindled for sometime now. The trading range can now be found on the lower band of its price consolidation which have weakened since entering the 3rd quarter of the year's trading activity. And obviously affected US investors and spilled over to Asia.

Although, such declines have offered some window of market trades both on the long and short side of the market. However, some investors have failed to recognize such declining signals, yet others have continued to come though by being able to leave the market in a timely fashion before the decline in prices on the Dow Jones showed significant changes in its behavioral price divergences in both directions that added to more confusing signals. Ultimately following the fundamental drivers that led to the volatility of price swings and position adjustments.

As an investor, being able to trade both sides of the continent in the US and Asian markets have been an advantage. Since applying strategic currency hedges and stock market trading through the use of ETFs have apparently played out well since the last quarter. With a few exceptions and a net positive results been the most effective trade strategies applied. But with the present conditions in the market, until such time this consolidation  would find a way to breakout of its range, market price action would be confined within its levels. Nonetheless, there would still be some room to make money from the market in a shorter term contrary to expecting huge swings from a market that goes in both directions.  

Dark Clouds Over Dow - USD Lost Steam

In spite of China and Japan slashing down US debt by diminishing holdings in US Treasuries; the USD barely budge from its recent price recovery yet made no real significant signs as it declined lower from its closing week @97.56 basis point last Friday as of August 8, 2015

The USD resiliency has been supported with the continuing Oil and Gold's declining prices not seen for a long time as it extends bearish market sentiments moving forward well within the third quarter of the year. This was also accompanied by the recent export slump and bearish data coming from China contrary to the well received NFP figures from the US economy leading the FED to its first scheduled rate hike this September. With that said, US Stocks would continue to weaken as it now is below the 17500 and a retest below the all important 17000 may well be on its way. Depending on the current market conditions where investor's sentiments are uncertain contrary to last Friday's good reports on the jobs data. Prices on the Dow will now be as vulnerable towards the lower band of its price range where the 17039 first line of defense would be retested as it continues to decline. But this does not mean that the probable price pullbacks towards a daily price recovery can occur on recent decline. This proves the tug of war between bulls and bears to dominate on every up and downs.

Insight ll: Preparing for Risk Event: EURO USD CABLE

Based on the current reports so far; which is given so far...what is the best case scenario for the market's reaction. Due diligence is a must for those who would be opt to take a trade/s within the next three-to-four trading days.

Preparing for such an important risk event for traders who prefer to trade the Euro, let alone a combination of trades that would be suitable is what we all need to come up with. During our analysis meeting in preparation taking a stand to absorb market price swings can only be accomplished with comparing price action before any immediate reaction not only on spot prices but relatively with futures volume and open interest and how options are being played out.

This is where the "Principles of Trading a Contagion, Contango and Backwardation Correlated Markets" should be carefully understood. A clear example of MegaTrade101 - CIPHER3 analysis; along with the recent COT report already provided how Euro shorts and US Dollar positions have unwind; where a divergent trend has occurred from previous formations. The 2nd quarter position adjustments and roll-overs would prevail post Greece which would show it true colors by then. Watch for our price calls once Asia starts trading for the week.

The primary trend still prevails in a range bound trading pattern for the Dow Jones with a few exceptions for the USD, EURO and CABLE. These are the pairs to consider when taking on the market at this point. So far the USD top heavy configuration on a tech angle would weigh on any price recovery from persistent bull players that have been encourage from positive USD sentiment reports. Thus, a synchronized price action from the USD and Dow would provide a glimpse prior to the real deal in the making. Take a cue from our previous market approach on 'Price Action Analysis' using a simple yet powerful correlation on the market as defined in Forex Trading Methodology 2 as a due diligence point of reference & analysis during the QE from the FED.

Weak Data Triggers USD & DOW Decline

Price Action Reflects state of Investor's Mindset

A Triple Whammy on Data and a quick-snap back is what the market have seen today! This is how the investors and traders in the market has behaved with a triple weak data,in consumer spending, manufacturing and inflation, have refueled selling pressure even in the earlier trading session.

Where market fears have prevailed over the real state of the U.S. economy against a back drop of a global slowdown. Again, this is where Price Action Reflects state of Investor's Mindset in a rapid price action. Just look at the USD move lower and the EURUSD which confirms its move higher and currently @1.2830. A considerable good move to hold the EURO long position contrary and against all odds of a declining market trend.

Today; being a Wednesday and the 3rd day of the week, signaling a confirmation of how effective an analysis has been since the first two weeks of the new trading month of October calling a probable market decline after the DXY have registered a new high @86.87 basis point and where DXZ14 Futures contracts refelected an opening price lower since the end of October 03, 2014. Thus showing a backwardation on the futures market contrary to the Spot.This is where most of our clients @MegaTrade101 have been able to take advantage of the price spread discrepancy between both Spot and Futures markets.

Weak Data Triggers USD & DOW Decline

Market Insight: Dow & USD 5 months from Today!

Price Action Signals Dow & USD Ready for Next Leg (Special Report 

With reference to our previous market analysis and observation, the Dow and the USD has been the Primary Drivers of this market. having accumulated an increase in volume, a wider shift of investors interest flight to quality, and on top of the overall positive figures of growth has been the ideal catalyst for a renewed directional trend for the USD for starters. With a simple exception of the recent figures on the Jobs data have obviously been brushed aside by disbelief from the market place.

'A market brief on the direction of the Dow & USD 5 Months from Today!' is available at no charge; especially for those who may not be able to attend our 'Open Forum In Manila' by simply registering your email address to be included to our mailing list for special reports and outlook on certain market instruments.This is to accommodate our valued clients and viewers who has been continuing to follow our journey of trades in this ever volatile market outside of Philippines for now.

To receive a copy via email please send email address to : 

info@megatrade101.com or directly to megatrade101@gmail.com 

3rd Quarter Financial Market Brief - ReDefining FX Outlook & Analysis

For Experienced Asian Traders & Investors in the Financial Markets in US Stocks, Commodity Futures & Foreign Exchange Markets 

Interbank & Retail Trading are welcome!

Aim: Redefine Foreign Exchange Outlook & Analysis in Currency Trading for Investors & Traders and avoid unnecessary losses that occur in the market.

A 3rd Quarter Financial Market Brief on these markets would be presented. This is a Sponsored three (3) hour Open Financial Forum Discussion & Market Analysis on how it would effectively benefit most trader/ Investors on how to best deal with current market conditions today. A 'Market Insight of the Dow Jones & USD in the next 5 months from Today' would be provided  for all attendees.Co-Sponsored by Pereti Training Institute.

Highlights:

•             The Importance in having ‘Access to Primary & Secondary Markets’ in the Foreign Exchange Market & US Financial Instruments

•             An Over view of how CIPHER3™ Market Analysis is best applied in Foreign Currency Trading & each Major Pairs correlated Currency Cross Rates

•             How best to level the playing fields in Currency Trading by ‘Cross Trading pairs with the US Dollar Index in the Futures Market as a Hedging Strategy

•             What every trader & Investor needs to know before Trading these markets which may have been overlooked before opening any account.

Note: You may send an email for requests on other pertinent topics that you may want to be discussed. Other related topics not listed would also be discussed during the meeting. 

Website: Megatrade101.com 

(Non Foreign IB & No Affiliations or Representations)

Venue: 20th floor. Zuellig Bldg., Corner Makati Avenue / Paseo de Roxas, Makati, Philippines

Date & Time: September 17 & 24th 2014 at 1:00 -4:00 pm   

Send Email for Registration & Confirmation to: info@megatrade101.com 

(seats are limited to 10 only) PDF Copy of this Open Forum schedule

Contact: +63 4659328 Ask for Yolly or Txt msg: 09156486637
Name confirmation shall be provided to main reception.

The forum would be conducted by Sir Alexander of Megatrade101.com.  A 30+ year veteran / authority in the Financial Markets with expertise focus on the Foreign Exchange Interbank Trading with a  US & Asian combined 7-9 digit trading portfolio under management, US Commodity Futures Trading, US Stock Market as a co-trader/investor’s portfolio. Private Equity in M&A to Professional Training & Learning Institutions are the main diversification of the portfolio under management.