CurrencyShares Euro ETF (FXE)

Update 3/26/2018: FXE pushed above the prior high, on March 8, breaking the chance of a downtrend, for now at least. I exited for a loss, with a debit of $1.20 and shares at $119.80.

Shares rose by 1.1% over 26 days, or a +15% annual rate. The options position produced a -37.5% loss for a -526% annual rate.

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I have entered a short vertical spread on FXE, which tracks the EUR/USD exchange rate, using options that trade for the last time 42 days hence, on April 20. The premium is a $0.75 credit and the stock at the time of entry was priced at $118.55.

I made the decision to enter the trade in my account based on a downtrend signal from the Fisher Transform metric and an Elliott wave count that suggests a 5th wave down at the Minuette degree within a decline of larger degree.

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3/9 – 3:10 p.m. New York time

i entered one position, a bear play on FXE, and exited none.

And I close the week with a recommended read, “The Role of Luck in Life Success Is Far Greater Than We Realized“, from Scientific American, and a question, to what extent do the research findings described therein apply to trading?

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3/8 – 11:35 a.m. New York time

IWM remains uptrending on the Fisher Transform metric but remains in a counter-trend correction of a downtrend by my, bearish, Elliott wave count.

GLD is declining for the second day. The Fisher continues with an uptrend signal on the daily chart, although it switched to downtrending on the 3-hour chart, which typically leads the daily. The Elliott wave count remains bearish.

Neither position requires action at this point.

By Tim Bovee, Portland, Oregon, March 8, 2018

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3/7 – 10:55 a.m. New York time

I have no new positions and no exits in sight for today,

My position in IWM has moved higher, slightly exceeding the high of Feb. 27, which in Elliott wave terms I had counted as the beginning of the 3rd wave down at the Minuette degree, which is the level at which I trade. With today’s higher high, I’am switching my count to a continuation of the 2nd wave, and internally perhaps the final push to the upside within the 2nd. Once that push is complete, then the 3rd wave to the downside iwll begin.

GLD has begin a decline as it continues its 3rd wave to the downside.

Bottom line: Neither of these requires an action now, and appears unlikely to require action the rest of the day.

By Tim Bovee, Portland, Oregon, March 7, 2018

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3/6 – 3:15 p.m. New York time

I entered no new positions and exited none.

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3/5 – 3:05 p.m. New York time

One trade today, exiting my bear position on FXE.

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Arguably, economic life is a brightly blazing unemployment rate, surrounded by a collection of economic planetoids of little significance in comparison.

Which is odd, because the employment situation report, out Friday at 8:30 a.m. New York time, is like all such reports a trailing indicator, whose aggregate numbers say much about the past but little about the future, and stand far beyond the ability of presidents or CEOs to influence. And yet, it is the jobs report that grabs the headlines and by which the successes and failures of politicians and nations are measured.

As always, the job report gets a sneak preview from the private sector, the ADP employment report on Wednesday at 8:15 a.m.

Also out on Wednesday, international trade at 8:30 a.m., providing fresh figures against which President Trump’s recent tariffs announcement can be measured.

In Fedworld:

The Federal Reserve Beige Book, which provides a narrative of economic conditions in each of the Fed’s regions, will be published on Wednesday at 2 p.m.

Fed Vice Chairman Randal Quarles speaks about foreign bank regulation at the Institute of International Bankers Washington Conference on Monday at 1:15 p.m.

Fed Gov. Lael Brainard will present an economic and monetary policy outlook at the Money Marketeers Forum in New York on Tuesday at 7 p.m.

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2/2 – 3:15 p.m. New York time

I have entered no new positions today and exited none.

My FXE bearish position remains problematic, as noted in this morning’s post. The Fisher Transform metric shows it uptrending, and the Elliott wave count shows it in a downtrend.

Having said that, there are some ambiguities about the wave count, so as I try to puzzle out the situation, I am falling back on plain vanilla resistance.

The decline through Thursday began on Feb. 15 from a high of 120.38 on FXE. The rapid decline paused on Feb. 21.

The four-day sideways pattern had a high of 118.87. Today’s counter-trend correction to the upside showed a high of 118.65. So that very low level resistance remains intact.

My present wave count considered the present rise to be a counter-trend correction at the Subminuette degree, with the Feb. 15 high representing the the beginning of a Minuette degree 3rd wave.

A rise above 118.65 near-term resistance would decrease my  confidence in the wave count but would leave it intact. A rise above the 120.38 resistance level of Feb. 15 would lead me to conclude that the wave count is incorrect and that the Subminuette 2nd wave is not complete.

As always with Elliott, time will tell.

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3/1 – 3:10 p.m. New York time

I entered no positions today and exited none.

I studied TLT as a potential play but have decided to wait because of ambiguities in the Elliott wave count. The chart is in a 3rd wave down at the level I trade, and I am unable to tell whether that wave is complete. The wave has been underway since mid-January, so it seems most sensible to wait for the 4th wave correction to run its course and then enter on the 5th wave down.

I also look at earnings plays. We are between earnings seasons, of course, so there aren’t many candidates. I have picked out a handful of possibilities that I shall look at on Friday with the goal of identifying some prospects.

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iShares Russell 2000 ETF (IWM)

Update 4/2/2018: Big caps, small caps — whatever the size of the underlying company, shares continued the broad decline that began in late January. A Monday session added another downward dip to the charts, and I exited IWM for a $0.60 debit, or 63.2% of maximum potential profit, with shares at $148.89.

IWM’s shares declined by 2.5% over my 33-day holding period, or a -27% annual rate. The options position produced a 171.7% return for a +1,899% annual rate.

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.I have entered a short vertical spread on IWM, using options that trade for the last time 51 days hence, on April 20. The premium is a $1.63 credit and the stock at the time of entry was priced at $152.65.

I made the decision to enter the trade in my account based on a Fisher Transform switch to a downtrending signal within the context of a bearish Elliott wave count.

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