Which way will oil go? 2 charts -USO daily and Dug 2 hr. Daily chart appears to indicate a decline, while 2 hr indicates a potential price compression -Asc.Tr. which looks prepared to break one way or another - I will favor that it goes higher -looking to buy $51.60 on a buy-stop. World supply concerns could pobviously force OIl prices higher based on political tensions- but i would think the breakout entry could use the bottom of the wedge as a stop-$50.20 expecting higher momentum- The recent up move is well above the lower momentum trend line drawn below- so an increase in momentum needs to be maintained.
As I was looking at a chart of the US Dollar- UUP & a chart of the Euro short EUO- I was surprised -by how similar the movements seem to be hand-in -hand- Actually, I had to refresh the charts and double check that I had entered a different ticker symbol As a follow up- On CNBC Fast money had a guest that proclaimed the EURO was a short, and the DAX (Germany) would be the hedged trade with a Euro short position. Brian Kelley recommended DXGE as bullish Germany/hedged against the Euro- Which also declined today nearing a recent triple bottom- it was commented that a weak Euro would mean a strong US dollar- and would that be a negative for US stocks? These charts show that the weakening dollar and the Euro Short decline directly. These movements are almost precise 100% mirror images - of each other- Like Siamese twins- over a period of 3-4 weeks- in lockstep - very minute intraday differences. Crud- If the ETF that is short the EURO declines- and the US Dollar also declines-Euro strengthens- Is a stronger Euro good for the European economies/ OK- So now i really don't understand what i don't understand about what i thought was 2 entirely different ETF's- one dealing with the US dollar and one with the Euro short- I never realized how exactly they seem to mirror one another- I'm certainly showing my ignorance here, and lack of due diligence into understanding the depth of an ETF .... These 2 products essentially look virtually identical. minor price fluctuations- but the essence is they move in tandem. stepping out into a longer time frame, the correlation seems persistant. Undoubtedly, somewhere in the prospectus will be the information that says - these ETF's respond to an identical financial product- Else - how could these charts be so mirrored? Is there actually a direct correlation between the Euro/Dollar that makes these 2 ETF's move so identically? they have to be linked to each other directly- I guess this is an "Eureka" moment- Over a 5 year period - there is only some minor difference -major moves follow in sync- Getting a bit of a wider awareness of the bigger picture! look at the 1 year charts...
Would you rather hold your currency in your pocket or RISK exchanging(buying) something else with it? As soon as you take that risk and make an exchange you are "selling", shorting, the currency in your pocket and buying , long , the other asset. Draw a green horizontal line on top of a red horizontal line to model the long and short respectively to represent a flat opening position. Tommorrow the value of both will change . Extend the green and red line. That is now a spread where the green line must remain above the red to remain profitable. For example, both lines can fall but if the green line falls less than the red line, the spread widens and becomes more profitable. Now, draw two spreads with real values. Use SPY and FXE for one spread and SPY and UUP for the second spread. Chart the daily percentage changes of each spread for a week. Week ending , one spread will be wider, a higher net percentage than the other. It would have been better to have (sold short) that currency to purchase SPY with that currency rather than the other. It is clear to see on the drawing that it is good for the sold, shorted "leg" to decrease in balue and the green long leg to increase in value ideally, simultaneously. It is informative , for exmple, to see that if SPY has increased by 3% and UUP has increased by 2%, that effectively the "spread" is only 1% wide. Assuming you have idle cash in your account your account would be better off if you hedged Your short effective USd leg with a seperate , equal, long UUP position to offeset that 2% loss. This is a different way of thinking. Someone else may have similarly taken a long SPy and long uUP positions and not thought of as a hedge. Yup, UUP is uup/fxe . FXE is fxe/uup . EUO is iverse FXE so EUO is uup/fxe which is the same as UUP. Forex traders buy or sell EUR.USD
Thanks for the instructive explanation! I will have to learn much more about currencies and their relationship- large void space in my grasp of the economic forces that are at work. As I think I understand it - as a foreign currency decines in value against the US Dollar, it makes it's exports less expensive - relativey, and so a strong US dollar allows US consumers and businesses to purchase more of the products of the countries whose currencies are weakening. Is that essentially accurate? A strong dollar makes US goods more expensive- so a strong dollar negatively affects US exporters- as their products are getting more expensive- to purchase- requiring more Yen, Rubles, Euros. For US based businesses with global exposure- their products manufactured and sold outside of the US markets would be based on the cheaper currency of that country of mfg, so the weaker currency value relative to the dollar would reduce the profitibility of those goods sold. Is that accurate? DXJ - reportedly the hedged ETF - a weaker Yen prompting a market rise for the benefit of japanese based exporters. Imported goods are more expensive for consumers to purchase-requiring more Yen . Hedj- Wisdom Tree " he greatest challenge with Europe may not be its equity markets, but the euro itself. At WisdomTree, we believe the many global brands headquartered in Europe are still attractive investment opportunities. HEDJ offers you a way to access their growth potential, while hedging exposure to the euro." DXGE- German/Euro hedge Wisdom Tree -"You drive their cars, access their healthcare products, and—whether you realize it or not—use their electronics. But are you investing in German companies? Germany is not only the engine of European Growth, it has also been a resilient force throughout the eurozone crisis. And, it's export based economy looks well positioned to benefit from a broader recovery. WisdomTree Germany Hedged Equity Fund (DXGE) offers you a way to capitalize on the growth potential of these tremendous exporters while hedging out the effects of the euro—and potentially boosting your returns." Thanks again for your informative input- Plenty to learn about- Europe is up over 1% - so I will assume both HEDJ & DXGE will be higher today. I will look at both DXGE- and HEDJ -DXGE made 3 pullbacks recently, while HEDJ has been trying to move up- Perhaps this is all on Greece's new accords being worked out? I would be more inclined to trust in Germany for growth than the wider European countries.
Draghi is speaking 9am premarket-I think a lot will depend on how the market interprets his words- I do have a buy-stop DXGE $30.05 -lmt $30.22 with a $29.35 stop on entry- US markets looking poised to move higher 4:30 PM- I failed to post my intended purchase-filled on DXGE $30.08 I did not get to hear the outcome of Draghi's speech this am. I had several other orders - Hack, XBI that opened above my limit . Today's rally looks muted relative to the % of gains made at closing.
Learning to trade in a wider world environment certainly comes with a steep learning curve-particularly for those of us that may not be all that current - slow to adapt- limited on time.....experience, knowledge . I know I could come up with dozens of reasons .........or excuses for my lack of comprehension & grasp of those things that are just a step outside of my customary limited & narrow comfort zone- That will not change rapidly in my situation- unless my employer chooses to give me my walking papers unexpectedly - Today I added DXGE- This is a Hedged investment in Germany that hedges out the Euro - as i understand it- The entire concept of "hedging" against a specific currency and making an investment in that economy is certainly new to me. I still do not grasp the entire concept-It would seem to be a sophisticated approach but i think i like the concept as i understand it. Whether i understand the underlying concepts accurately and it's various implications is perhaps immaterial- that knowledge can perhaps be acquired over an extended period of time - For present purposes- the basic chart will suffice as a reference point . For those of us that tend to trade within the US markets- These charts may prove informational that there is indeed profitibility if one expands their horizons.... Additionally, if one looks at other hedged trades against SPY:
a QUESTION: does anyone reading this thread have any experience with the Annuity products offered by JD Mellburg? I think i responded to an add seen on CNBC to gain further information on their products- In my initial contact with them this week, The salesperson covered a lot of territory- principal guaranteed- to not decline- 10% signing bonus- Annual return gain based on a % of market performance with no downside of the principal. . Sounds very stable- Again, this is me looking to expand my understanding of what is offered in the market- This type of product has limited upside but also limited downside- and would perhaps be best considered as a core portion of a larger portfolio- representing a "safe' and stable return. Any thoughts or comments would be appreciated.
Thurs 6.4.15- JUNE is historically a very weak month for the markets- I took a week of vacation this week- and we had a lot of rain- Had to work too hard this week! The goal was to put in footings for a sun room addition and also footings for a small "Safe Room" - a very small reinforced concrete block room - Steel door & frame- just large enough to squeeze the family & dogs into in the event of the rare- but occaisional tornado that does occur here in NC - nothing compared to what occurs in the mid west states- Should such an event ever occur, The sun room will be gone- but ideally the storm shelter & the family inside would remain intact. An unexpected event- may never occur- but one should plan for the unexpected -"Black Swan" event in life, and in trading, and financial planning. Since we are self performing this project, it will take an inordinate amount of available post work time- but the end result will be worth the efforts- I intend to also follow through with this journal thread for the remainder of this year -as time allows .... This is a totally different type of challenge that getting a bigger hammer will not resolve-! DXGE broke down lower today- It's close to my stop-loss- It was interesting that today- 6:30 am I made a pot of coffee and went to turn on CNBC- only to find that CNBC is no longer available unless i rent a digital decoder device for every tv in the house- So, I see on the internet tonight that the markets all gave up close to -1% -just under- Not a great follow up to yesterday. PJP is breaking lower- DUG- I was filled on my buy-stop order Nice to see the fill closed higher. Adjusted all stops-
Today PJP stopped out for a gain, while XSD stopped out for a loss- XBI moved higher- making a new high and my limit order to add additional shares (5) was never reached. Additionally, HACK also has moved higher- and Why should it not- When on the news tonight is an additional release that the US Gov't has had millions of accounts hacked.- It also failed to allow me to make a slightly higher reentry- instead moving higher on good momentum. The reverse of this is the decline in DXGE and the pullback in DUG- I'm trying to work with a bit wider stop-losses- but that exceeds my comfort zone- Between the gains and the losses, the trading account has ended the week lower fractionally. It has not been a major focus....this week- And- It was perhaps providentially inspired- As I usually do, this Thursday I got up 6 am, pot of coffee, turn on CNBC and found that TWC - has shut off service to a large number of channels unless we rent digital adapters- and 3 of the 4 adapters we have do not seem to work properly- And, as vacation week has come to it's end, the really important conclusion for the week is that today (self, wife, and brother) we poured the footings today for the "safe room" ,and the Sun Room" got a couple of hundred concrete block to put in this weekend-just to get started...a bit more additionally to go that will keep weekends busy for an extended period. So, on the home front, things feel very productive- substantial progress seen; and not quite so materially on the trading front. Keeping it all in perspective- We do what we do to maintain a quality of life for ourselves and our families. Ultimately, it's important to not lose sight of what really counts in our lives. Sharing coffee with the wife in the mornings in the new "sun room" I would list as the #1 most appreciated and mutual goal that we both have- That is a tangible benefit that we both can appreciate.- The satisfaction of accomplishing a goal we both mutually desire ....... for our mutual benefit- I think this is very important - The "WE" part. I'm interjecting this more personal -relevance in our larger relationships- because - whether we realize it or not- The time we spend in pursuing trading success often will come at a cost -that we may overlook- Time separated or aside from wife, children, family- in the final hour - will only be a reflection of our personal desire to achieve a level of success- that we choose to define only on a financial scale- It can be justified any way one chooses- but since trading is ultimately a very solitary endeavor-do we take the time to consider how this interaction is viewed by others ? I have ended this week with a project with a shared experience with my wife and we both feel a sense of "We got it done" together- with a lot of combined effort. When I mention that I missed the reentry on Hack- she could care less. Or that my XBI positions gained 4%- HMMMM. Something else to work on- down the road- How about you? Got balance?