I’m 100% cash.
A very, very rare situation for myself as – when trading longer term charts you very often find yourself exposed to at least “one trade or another” while patiently waiting for profits to come. It’s a different style of trading yes….but the rewards are great.
A full cash position here allows me to take a day to observe, regroup and start developing the next couple weeks plan, even if I end up missing a few pips here and there. You can’t look at it that way. You’ve got to just be satisfied with the trades that you take, and keep on moving forward.
I’m very pleased with the last few weeks trading, as my original framework ( basically citing trouble in Japan as “trouble for the planet” ) has been proven sound. We’ve managed to profit greatly.
Interestingly USD has really not even changed trend, as this entire leg of weakness in “global appetite for risk” essentially saw JPY taking the largest inflows.
A 1H chart of $DXY still has USD “bouncing across the top” so a potential “relief rally in stocks” will again allow us to re-evaluate the relationship with USD.
I’m also eyeing a potential bottom in GBP.
There’s no saying that things won’t continue to slide lower in general, but The SP 500 is getting very close to the 1800 level, where I would have to expect some kind of “bounce” after such a fierce week selling off.
While doing what we can to continue taking advantage of the weakness ( small day trades perhaps – small attempts at “staying short” – but with caution ) what we would ultimately be looking for here “relatively soon” ( short of a full blown market crash ) is some kind of “counter trend bounce”, which I believe will create a “lower high” in SP 500 / risk before we take the next leg lower.
At this point I cant recommend “chasing this lower”, but suggest you keep your eyes on your charts and remain vigilant. There are lots of trades out there, just that it’s a difficult point to make any large commitments.
Enjoying the volatility that is now back in markets, I too will likely be looking for short term “day trades” over the next day or two ( still short risk ), but won’t make any medium term commitments until I see how things play out here over the next few days.
Eyes on USD obviously, as well looking for several trade set ups “if” we see a low / bottom in GBP.