I have felt pretty ropey this afternoon and have therefore not done much except follow the news and watch the markets. I did, however, put on several trades this morning, which I have not written up properly yet. Here is a quick summary:

  • Long Gold: Gold pulled back to what could have been a key level, and I went long again. Actually I wish I hadn’t — the more I thought about this recent breakout yesterday, the more spurious I thought it could be. Last week I wrote that I was sceptical about hyperinflation, but I thought that that fear was driving European investors into gold and breaking its normal relationship with the dollar. That would have led me to fade the recent spike. But I took the trade on a technical basis, and have had another go today. I have also been stopped out.
  • I was also stopped out of EUR/JPY, but that is fine. I put on the trade with half a risk unit in case the market was running away; I will get back in another day if there is another chance.
  • Live Cattle: I have shorted these, again on half a risk unit. Feeder cattle and lean hogs have broken out to the downside and I have found that the live cattle market is not very technical — it is fuzzy around levels and therefore not easy to trade. So I have used the breakout in other livestock markets as a signal. I have been looking to get short for a while — the cattle market is recovering after one of its cyclical troughs, but the story is in the market, large speculators are very long, and it looks to me like the market needs a shakeout.
  • AUD/USD: This trade is going well. Again, I entered on half a risk unit on an opening range breakout the day after a breakout, in case the market ran; it ran, and is still running. I am glad to be in.
I was stopped out of both gold and copper yesterday, while I was away. I was frustrated, but have taken the loss much better than other losses recently.

Update: In other news, the AUD has broken out to the downside against the EUR and GBP as well. I have been waiting for this — GBP had not fallen against AUD as it had against everything else, and the price was making a very tight range. Also, and relatedly, platinum has broken the up-trend that it has been on since around July 2009 (it has kept to a very straight trend line since that time; it has been rising for longer). This is a pretty bearish sign, and shows that the markets are really starting to respond to the Eurozone debt crisis. I wish I had jumped in today, but as it is I will have to look for an entry point from tomorrow. The S&P 500 bounced very neatly off its 200-day moving average for the second time in two weeks. If it breaks it, that will make headlines, and could lead to further selling of equities. The European debt crisis doesn’t show any signs of going away yet.

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