Hello - My Name is Jerry, and I am a Trading Geek!

About a month ago I accidentally stumbled across one of my many market time capsules. A copy of the Wall Street Journal in the middle of the tech bubble burst. Perhaps it was a premonition.

I brought it to the Investors Education Network meeting I held in Ft Lauderdale on January 6th and stated that we were likely heading for similar extreme days.-  days when the DOW opens down over 200 points - by Noon it Could be Up 300 points and end the day virtually unchanged - Days like yesterday!

Wall Street Journal July 25, 2002 - VHS Tape 1 of CNBC for that Day

I submit the image above as actual proof! of my past and present passion for trading.  July 25, 2002 was a temporary reprieve from the final slaughtering off of the tech bubble. There was still plenty of Volatility left for a few months.

Chart of the last major volatility session on the DOW Industrials.

(click to enlarge)

On Monday - I looked at that paper from over 5 years ago and opened up my chest of Video tapes from that era, and out of 100’s of tapes, the exact date of the paper July 25, 2002 was the 3d tape I pulled out! Coincidence? Trust me when I say I have hundreds of tapes…

The equity markets were closed in the US Monday - I did not want to trade in this environment especially  as I was preparing for a trip to New York - So I popped in the tape and enjoyed watching the parade of once familiar pretty CNBC girls of days gone by - and once familiar stock symbols ….. wondering where are they now?….. and happy to trade currencies as my primary vehicle.

But then it occurred to me that Ben Bernanke stated to Congress last week that he watches the Futures to help determine the fair value of interest rates as determined by traders. It made me think… Ben’s looking at the Future - and I am looking at a newspaper and watching a video of the markets from 2002!

That was a time not that long ago - before FX trading was even available to the average retail trader… yeah… no high speed internet, delayed quotes, commissions were still a huge cost of doing business…

I stated in my post two days ago that we were heading for a Bear Market Rally - We got it today. Unfortunately I am hearing people say we put in a bottom. I strongly disagree. We narrowly averted a Black Tuesday of historic proportions - but we have probably only delayed the inevitable.

The Shoe Shine Boy Wears Prada!

As I was getting my hair trimmed today - a new hair stylist asked what I do…. When I explained that I trade currencies, and that I teach people how to trade - she got all excited and told me about how she wanted me to check out the credibility of a firm guaranteeing 3% returns… per month…. based out of some South American country….backed by the Bank of America and Washington Mutual… Hmmmmm  I thought….

It reminded me of the famous anecdote about getting stock tips from the Shoe Shine Boy just before the Great Depression , made famous by Joe Kennedy…

Monday January 21 - Martin Luther King Day kept the equity markets closed as the rest of the worlds markets were melting down.

Tuesday January 22 - The Black Tuesday That Never Was

With the Europeans in mid-session the Electronic US Futures markets were looking into the abyss and the pits in Chicago were ready to open the gates. The FOMC took an unprecedented 75 basis point unscheduled  cut.

The Pundits Reaction - Too Little - Too Late! 

I say Bull (even if it is a Bear market) - This Fed is trying its best to navigate a storm of historic proportions  - and the Fed saved billions from evaporating - at least for now. Good job Ben!

But what are you going to do January 30th?

The Risk for Currency Traders is Huge

At any moment a central bank somewhere may change rates or say something to spook a few hundred pips in a matter of seconds….

You have been warned!

Mark your calendar for January 30th, as you are invited to a free webinar here on FX Street with my live coverage before, during, and after the FOMC announcement showing you live chart analysis and commentary.  Click Here to Register Now.

Jerry Furst is an active trader, educator, and Founder of Investors Education Network (IEN), he is also a Mentor and Trading Coach to Select Clients Click Here for a Free Survey and 30 Minute Consultation

I want to take a moment to address the equity markets as I feel they are becoming a major factor for the currencies. Like an afternoon Florida thunderstorm, I’ve seen and heard these familiar flashes and rumblings before. Ohhh - but wait - Global warming makes it different now!

It’s Different This Time…

The Futures markets crumbled Monday as the equity markets were closed for Martin Luther King Day, and Reuters is reporting that the bull market that began in October 2002 is over.

Hi Volatility - Good Bye DOW 

DOW Crumbles as expectations for VIX to pick up the Volatility.

Click on Image to Enlarge

The Headlines are screaming “Recession” and the traditional news outfits are making room for the financial experts to explain what’s wrong. Contrarians will tell you that means that we are ready for a jolt to the upside. Or in other words - a Bear Market Rally. Click on Image to Enlarge

Although the first part of this market downturn is probably in place -Traders beware - and be aware It’s time to “Strap On” your seat belts - tight (with stops) - just in case - and prepare to enjoy the ride! But only If you have the stomach for it.  As the Daily Chart on the DOW shows we have solidly breached the 200 MA after testing it twice and now we are way south of the 50MA - Which should call for a “Snap Back” - before prices continue to fall.

Currency Traders Watching the Dollar Gain Against the CAD

We all live in this global, Internet based world, So if the dollar continues to lose value - other countries should not need to raise their interest rates - but will they or wont they? Canada and Japan have the opportunity to adjust their interest rates this week. Well they can always adjust their rates at any time (Just like some want Ben Bernanke to do)  - but it’s best to stick to the calendar of events. 

The USD- CAD is trending quite nicely and current price puts it smack in the middle of a channel with upper and lower ranges. If price breaks beyond those ranges - then the dollar may be expected to be moving in other pairs accordingly.

- Click on Image to Enlarge

Jerry is an active trader, educator, and Founder of Investors Education Network (IEN), he is also a Mentor and Trading Coach to Select Clients Click Here for a Free Survey and 30 Minute Consultation

Lots on the Calendar and Lots on the Line! and the TV too…

A full week of scheduled economic events kicks off the first full week of 2008. Store Sales, Pending Home Sales, Consumer Credit, Trade Reports, Import Export Prices all have plenty of weight to push the charts around. Don’t worry about some speed boats playing around in the gulf. Look the other way and move on please…..

Bank of England and European Central Bank Poised to Cut?

Thursday is the really big day to watch as Interest rate decisions are made across the pond from Bernanke and his advisors. The pressure is on the US to lower rates and some are calling for a .50 cut. Is it wise for the UK to keep rates at 5.5% and can the Euro zone hold back from raising rates from 4.0%? It is the wide range of opinions that will likely spike the charts. Be careful! Mark your calendar for January 30th, as you are invited to a free webinar here on FX Street with my live coverage before, during, and after the FOMC announcement showing you live chart analysis and commentary.  Click Here to Register Now.

Classic Chart Pattern - Head and Shoulders

Pound under Pressure as Yen breaks support of neck line. Although nothing in the market is guaranteed, the Head and Shoulders pattern is not to be ignored - especially when it is well formed. Back on December 22 (see prior post) I called this formation at a decision point. Well, if you believe in technical analysis - the pattern is now in play. Being a weekly chart it is on time for a violent move - just in time for Thursdays rate announcement. As always - this blog is for  educational purposes only and not meant to be used as financial or trading advice. (Click on Chart to Enlarge)

US Treasury Secretary Paulson to Host CNBC Tuesday at 8am EST

Say what you want about financial television, It’s entertainment or some might call it “Edutainment”. But traders take note - US Secretary Treasury Paulson is scheduled to “cop a squat” on Squawk Box 8am  EST on Tuesday January 8. This comes a few days after he had a three way with his boss George and Ben last Friday. The friendly banter will probably flow easily between Becky, Joe, and Steve. Maybe Larry Kudlow will be up early to gush on about “The Greatest Story Never Told!”

US Economy -  Mfg and Exporting Rose Colored Glasses

The king of Financial TV networks, CNBC has lately been looking like cheerleaders for US government financial policy with Larry Kudlow proudly standing in front of the US flag, and most of the pundits trying their best to paint a happy face.  Click Here to See article from August 21, 2007

Now don’t get me wrong James Cramer, Rick Santelli, and Art Cashin know what’s happening and are not afraid to say it - but quite frankly I get upset seeing all the happy talk about how great it is that foreign countries are buying the US financial infrastructure and John Thain has to go begging for Meryl Lynch to survive. OK guys - keep re-arranging the chairs and play another tune….

Jerry is an active trader, educator, and Founder of Investors Education Network (IEN), he is also a Mentor and Trading Coach to Select Clients Click Here for a Free Survey and 30 Minute Consultation

Does your broker display a message similar to the one above?

Charts Show Narrow But Active New Years Day Trading Range 

Even though New Years Day is the quietest of all market times, the currency markets are still moving as someone is always exchanging money somewhere.  

Euro Posts 160 Pip Drop During NY Session

( Click on Charts to Enlarge )

Dollar Shows New Years Eve Strength - Will It Last?

As the final trading day of 2007 ticked in and clocked out,  most people in New York were making plans for the ball to drop in Times Square, mean while downtown in the financial district the US Dollar regained some impressive ground in the few hours between the NY open and the London close.

Pound Sterling Drops Over 280 Pips in Two Hours

In the fast paced and high stakes currency trading world, there’s always a trading geek out there somewhere scratching his head wondering which broker, exchange, or institution will let him place a trade on a Holiday - Even New Years! (That would be me…)

Greenback Gains over 220 pips on Loonie  

Dollar gains vs Canadian Loonie in last trading hours of 2007 - but shows a 70 pip retracement on New Years Day!

Are You Prepared for 2008?

2008 is Setting Up for one of the most volatile years ever! The Headlines are intriguing - Sub Prime Mortgage Mess, Gold Spiking, US Dollar Under Pressure, Oil Breaking over $100, Interest Rate Quagmire - The List Goes On!

If you have not done so already, the New Year is the best time to review and/or put together a trading plan and detail your strategies for trade and money management. Have realistic weekly - and monthly goals. Sounds simple and contrite ……right?? But have you done it?

As Always - The markets continue to move and present potentially fantastic opportunities in this New Year! 

Wishing You the Best Of Trading Success in 2008 and Beyond!

Jerry Furst  broadcasts weekly on FX Street with “1stonForex the Week Ahead” and facilitates and presents his own live educational workshops.

Jerry is an active trader, educator, and Founder of Investors Education Network (IEN), he is also a Mentor and Trading Coach to Select Clients Click Here for a Free Survey and 30 Minute Consultation