So we await the Q4 results for Avg Monthly Income Reports

We have seen the the CPI for year 2007, a whopping 4.2%, and all lights are flashing red.

But how are we going to create a solid fundamental view on the prevalent economical climate of our nation? I'd suggest you take look at the Q4 results of the average monthly income report.

Currently, as it stands the avg monthly income of a Singaporean is at $3,481 a drop from Q2 $3,578. That said, we could argue that the drop could be a mere seasonal adjustment due to the fact that 2006 displayed similar trend in data (with less volatility though), see below,

Q2 2006 -3,297
Q3 2006 -3,256 (-1.24%)
Q4 2006 -3,961 (21.65%) CPI For 2006 = 1%

Q1 2007 -3,903
Q2 2007 -3,578
Q3 2007 -3,481 (-2.71%)
Q4 2007 -????? (???????) CPI For 2007 = 4.2%

Granted, Q4 Data for monthly income must be bullish to complement the inflationary CPI Data. Next issue would be, how bullish should the data be? I will assume that we should see at least an equal increase in percentage compared to 2006 Q4 data.

Anything less would mean the pockets of the average Singaporean will hurt for 2008 and it would mean an early signal that the economy has thus reached a peakish momentum. Please note that i mentioned economy, not the markets, i'm expecting this will slowly work it way into the market in q3 or q4 of 2008.

Thus a bullish q1-2 of 2008 will prove a classic divergence with the statical data and investors should be advised to excercise prudence.

best regards
jest

Will The Buying Dry Up?

We have seen that practically almost everything is going bull. 2007 has been a memorable year indeed, a year where our market and major currencies reaches unprecedented heignts. The strengtening of Singapore currency has encouraged our Singaporeans to travel more and we are likely seeing the good 'ol 90s replayed.

The emergence of China as the new up and coming economical behemoth, has caused the face of economics to take a huge restructuring, no longer can we depend on US statistics as the main indicator to guage the world's financial health. As money keeps sprouting froom every roots of developed asian nation and it seems like good times are here to stay... but is it really here?

While our nation has increased our surplus, we have to note the current scheme of renumeration for our citizens, has it been helping us to face the current inflation? Feedbacks were stall holders are facing high prices, forced to raise the price of their food but barely making much profit.

Lets not forget the US housing frenzy has driven the world's Housing market to go into a massive bull run (BS run that is where now we question the AAA collaterals) until some one opened a can of worms.

Credit and Life

So how did we suddenly become so rich? Have we ever wondered where did all this bursting liquidity in the current economical climate really came from? US has shown huge cracks in their credit setup, Euro is leaking fresh blood, how many more bad news can we chew up before the credit beast starts knocking on our doors?

Ask yourself, are you still under credit? House, Car, entertainment, bills, taxes, we are paying for almost every item we desire here and bargain hunt is a long foregone conclusion. Almost every average Singaporeans owns a car (with a 10 year loan on $1 installment), sounds good eh.

Ignorance is bliss but before we know it, when all the liquidity starts drying up and defaults start knocking on the doors, will the harsh reality surface? debt is evil.

Financial Bang

As stated, the financial markets of 2007 ended with a bang with no lack of scare and drama. Investors expect a spillover to carry on to 2008 drivng the markets further and higher, while this can be true, we can expect a strong fundamental divergence to surface in 2008, while price rises higher, prepare to face lesser potential buyers. As prices accelerates beyond any comprehension, citizens will start to feel the pain of buying.

Will we ever see the tipping point?

Buyers expect prices of houses to go higher, which may be true, but, ask ourselves this question, can the general population with the median income scheme, afford to pay such high prices? What have the goverment done to aid this? We are indeed resting in a very strong psychological and physical barrier.

So, who is the smarter one? The buyer or seller?

Mantra...

September was definitely worth remembering, it was a good month. While i did not make much of the market as compared to some guys, what i can be proud of is having Zero losing trades.

Anyway, i'm getting impatient here.

The USD's not showing any signs of retracing and the build up to Oct interest rates statement could mean more oppurtunities. I just need to knock some sense into my head.....NEVER GO AGAINST THE TREND JEST!... Now don't even think of shorting the GBP.

But the Aussie, geez! Aren't you tmepted to short it??? Never play with fire...NEVER....arghhh the devil! Never! Patience please buy the retracement. Patience...

Shopping! Here's the list...

Yes. I'm intending to satisfy my craving...my lust...for books.

You gotta love Amazon, look at the sheer amount of books they have. Anyway for those who are interested to have a sneak peek at my wish list...

1. Inside the House of Money: Top Hedge Fund Traders on Profiting in the Global Markets - Steven Drobny
   
2. The Alchemy of Finance (Wiley Investment Classics) - George Soros (thanks to Kancheong for reccomending)
   
3. Pring on Price Patterns : The Definitive Guide to Price Pattern Analysis and Intrepretation - Martin J. Pring (thanks to Mike for reccomending)
   
4. Peter L. Bernstein Classics Boxed Set : Capital Ideas, Against the Gods, The Power of Gold - Peter L. Bernstein
   
5. Mobs, Messiahs, and Markets: Surviving the Public Spectacle in Finance and Politics (Agora Series) - William Bonner
   
6. The Age of Turbulence: Adventures in a New World - Alan Greenspan
   
7. Inflation Targeting: Lessons from the International Experience - Ben S. Bernanke
   
8. Trader Vic--Methods of a Wall Street Master - Victor Sperandeo

I still have a line waiting in the saved list but i guess this should be enough to keep me busy for the net 6months or so.

FX Trades and more ramblings on the Dollar Index

I have just cleared two trades with a gain 180pips:

SHORT AUDJPY @ 100.12, bought back @ 98.75 for 137pips
SHORT GBPUSD @ 2.0205, bought back @ 2.0152 for 53 pips

The performance as below,
SEP
Realised Loss : -0pips
Realised gains: +704pips

YTD
Realised Loss : -295pips
Realised gains: +709pips

On the Dollar Index

I'm not trying to play against the trend but as we look further into the Index, the weekly and the daily is suggesting that we are likely to see a bottoming formation in the near term.
The momentum in weekly Macd is showing signs of weakening, RSI 14 at mark 30 proved to be a strong support zone for the index.

On the daily, the candles showed signs of weak downward movements, as if its not willing to move down anymore, well it could be consolidating, we'll just have to see from here. Technical indicators like the MACD and RSI are already showing diverging signals.

Why is it safer to go long on the dollar now? One, you can set close stops. I personally believe so because the dollar has never been so attractive, and no other dollar pair, other than the Euro has managed to cap a new high against dollar even as dollar keeps making a new low...esp the GBP, its proving to be very very vulnerable as of late. I have made a note to myself to keep the GBP shorts on dollar rallys until the credit fears in Britain eases.

Chart Focus : DBS

For pakbosee,

I have attached the requested study in a picture below. Please read with discretion.

Chart Focus : Observations on Correlations

Will the Dollar Index ever retrace? It seems like almost every other currency has been treating the USD like a worthless piece of paper except for one....the GBPUSD. So here's the plan, i'm expecting a retracement to occur on the selling real soon, and most likely the worst hit will be GBPUSD. Considering its weakness and what not. So when it comes, i'll remind myself...short the Cable, just hope we don't break the circuits.

Chart Focus - Mini Dow

Dow is approaching reistance areas, 14000 - 14100 should be closely watched. Expect to see some selling done at these price level. For patterns, we are likely looking at a possible double top or a range breakout indicating dow making new highs. At the current price level and considering the fundamentals i'm very tempted to play down the bullish sentiments.

Chart Focus - GBPUSD...

Is there something wrong with Cable? In the last trade, i placed my stops so far that i literally relieved myself off a potential 250pips profit (settled for a mere 106pips), the selling was voracious and happened in a such short time. I'm considering the possibility of going long again, we're likely looking at the cheap zone.

Mourinho Leaves Chelsea...

We could see it coming, now what Mr Roman? Guus Hiddink? I think Chelsea just lost themselves a very valuable asset.

Mourinho Leaves Chelsea by `Mutual Consent' After Three Years By Grant Clark Sept. 20 (Bloomberg) --

Chelsea coach Jose Mourinho has left the English soccer team, ending a three-year reign marked by domestic trophies and disputes with owner Roman Abramovich. ``Chelsea and Jose Mourinho have agreed to part company by mutual consent,'' Chelsea said in a statement on its Web site. Mourinho, 44, sent text messages to senior players, including captain John Terry, informing them of his departure yesterday, less than 24 hours after a 1-1 home draw with Rosenborg in the Champions League, the Times reported.

Chelsea spokesman Simon Greenberg couldn't be reached for comment. The Portuguese coach led Chelsea to the Premiership title in his first two seasons and came close to
leaving last season after clashing with Russian billionaire Abramovich over player recruitment and the team's style of play. Chelsea has struggled in the new campaign and is fifth in the Premier League following a defeat to Aston Villa and draws with Liverpool and Blackburn...

Full Report, click here.

Dollar Demise, Trade Updates...

Did Ben Just did the US a favor by cutting the rates by 0.5 points? The rate cut pretty much sealed the long term fundamental fate of the USD. It looks like we are likely to see an extended dollar devaluation.

So heres the plan, sell dollar rallies. I'm pretty convinced that we are likely to see a further prostitution of the Dollar.

Dollar Near Record Low Versus Euro Before Bernanke's Testimony

By Stanley White and David McIntyre
Sept. 20 (Bloomberg) --
The dollar traded within a half- cent of its record low versus the euro before
Federal Reserve Chairman Ben S. Bernanke's congressional testimony on the
mortgage market and economic growth.

Traders are betting the central
bank may reduce borrowing costs further this year as the worst housing slump in
16 years threatens economic growth. The first U.S. interest-rate cut since June
2003 on Sept. 18 has pushed the dollar to a 15-year low against an index of six
major currencies.

``We're going to see a continuation of U.S. dollar
weakness against the euro,'' said Greg Gibbs, a currency strategist at ABN Amro
Holding NV in Sydney. ``Bernanke will talk about the housing market and how that
could flow through to the rest of the economy. The possibility of more U.S. rate
cuts is completely open.''

The dollar traded at $1.3975 per euro at 9:18
a.m. in Tokyo from $1.3957 late in New York yesterday. It reached a record low
of $1.3988 on Sept. 18 after the Fed's rate decision and will finish the year
around $1.42 per euro, Gibbs forecast. The U.S. currency was at 115.97 yen from
116.10 yen yesterday.

The U.S. currency has lost 5.7 percent this year
versus the euro as traders bet the Fed would cut interest rates while the U.S.
economy slowed. The European Central Bank's benchmark interest rate is 4
percent...

Full Report, click here.

Anyway, an update for my trades,

I collected some points from playing some Geppie longs and Cable. Here's the latest pip count.

SEP
Realised Loss : -0pips
Realised gains: +514pips

YTD
Realised Loss : -295pips
Realised gains: +519pips

I'm back, changes in trading approach...

I've been on a hiatus for quite sometime, have not actually stayed away from the markets for the concerned period that i was away. I was hit quite badly in april due to a market correction, paper traded all they way till early july and went at it again, well i have not been doing that well to say the least but i feel that i am starting to get back on track.

I have also decided to change my trading approach, i'll be trading on a longet term basis. My strategy to approach the market is to trade on price swings. I'm also looking to integrate some futures trading into my trade journal.

i'll sum up my performance;

AUG
Realised Loss : -295pips
Realised gains: +5pips

SEP
Realised Loss : -0pips
Realised gains: +29pips

YTD
Realised Loss : -295pips
Realised gains: +34pips

I'm currently Long on EURUSD since 1.3618, a stop has been established at 1.3698 which guarantees me 80pips.

Using R Multiples...

What is R?
R is simply the dollar risk per trade. It’s nothing but a reward-to-risk ratio. I first heard it called “R” in Van Tharp’s book “Trade Your Way to Financial Freedom”. In another of his books, “Financial Freedom Through Electronic Day Trading”, Dr. Tharp reveals the great secret of trading:

The golden rule of trading is to keep losses at a level of 1 R as often as possible and to make profits that are high-R multiples.

You often hear (read) that traders should only look for trades with a reward/risk ratio of at least 2 or 3 to 1. Expressing your results in terms of how many times your risk allows you to easily see how well your trades measure up to such a standard. So when I look at my results in terms of multiples of R I can easily tell how good or bad the trades were. I like to think of R-Multiples as telling you the efficiency of your system.

So how do I calculate R-multiple?
Simple,

Assuming your equity is $10,000
Risk averse per trade is 2%
So Risk in dollars is $200
For every $200 i lose = -1R loss

More on 'R' multiples explained by clicking here.