IIFT Daily Note with Peter Brown

S&P

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With interest rates at 0% and bond yields lower than inflation, American investors are looking for any excuse to buy stocks. Yesterday they got it. Good figures and a sign that he world is taking the Euro crisis seriously. We are not out of the woods yet and will not be untill we get a u-turn from the ECB and they commit to buying bonds as alender of last resort. We may get an idea of Merkel’s tactics tomorrow as she adresses phave changed course will send the S&P through the roof short termarliment. Certainly by the 9th December summit. any sign the ECB have changed their mind will send the S&P through the roof. 1350 the first target.

However if they fudge it the markets will crash. So we are playing a big game here and it’s December so the market is thin and moves will be exagerated. I prefer to wait and see rather than trade. We should get some direction tomorrow.

5 Comments

Wayne

December 1, 2011

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Hi Peter,
On the course, you mentioned the S&P gap of 80pts or more. Is there much point in trading the gap for less? For example, last night’s close was 1246.9. As I type, we are at 1245 and it doesn’t look like it will drop the 80 points. Would you recommend doing a gap trade for a small few points or is it best left alone on a day like today, following yesterday’s action.

Wayne

December 1, 2011

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Looks like I spoke too soon, it’s down over 80 now.

Elva Burns

December 1, 2011

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HI Wayne,
80 points is well worth it, however remember these points.

Gap to the upside is much better.
We are in extraordinary markets up 9th Dec.
You want to be placing the trade as close to US open as possible.
I know u like to auto trade it but it is not ideal as the gap will open and close during European time.
The most success is a gap that the Americans see, so 11.30am is perfect.
As i type we have a nice gap.
peter

Paul

December 1, 2011

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Peter,
is there any point in looking at a timeframe under 15 mins? I have been trying to see what way the market will move on a 5 min (even 1 min) timeframe before trading and I am just losing money chasing the move. What do you think?

Thanks
Paul

Peter Brown

December 1, 2011

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Hi Paul.
No stick to the 15min. the shorter time frames make the market look like something is going to happen when it’s not. You need to think of the direction for the next few hours.
In this market we are waiting for some very big news, so it is very nervous and skittish + December market. Keep using the dummy account, things are going to be erratic untill Christmas. Hopefully we will settle down in the new year.

Peter