Bio: I’m a 27 yr old italian guy with a degree in Economics. Working in a bank (and for work, in many markets), I immediately started to love trading. I began with equities, trading italian names and AAPL, as i am a mac addicted. Due to my macroeconomic background, i understood that a big crisis was coming, but i did’t had capitals and knowledge to “ride” it shorting. So i tried covered warrants, options and finally… futures, which are now my main trading instruments. I gained something during 2008, but my inexperience and the obvious mistakes of a beginners, i went through the first phase of a trader life: Losses. Being very bearish about the state of the economy, obviously the spring rally gave me many slaps. Now i’m trying to study better technical analysis, elliott wave theory (i read prechter’s first book and i loved it) and money management. I hope this blog will help me to reflect on my trades, on my studies, and maybe to receive comments (and help, and hints) from people who loves Ms. Market too.


Posts by mdm:

    Eurusd update

    Written by mdm
    July 14th, 2010 at 3:12 pm

    following this post, i want to give an update on my eurusd count.

    Well, the ending diagonal count worked so far, missing my target of 1,2492 for about 30 ticks… but after a 200 tick move.
    i have to be honest, i profited by this move being but went stopped out on my last portion of position (i added during flags formation you can see in the picture). It is always a matter of greed (and fear) :)

    What i really wasn’t expecting was a new high, so i went stopped out when I shorted the 61.8% retracement of the move from 1.2725 to 1.2522. Not only that move looked impulsive, but I was assuming ending diagonal could be a “terminal” pattern, and the larger euro downtrend will have to resume after the breakdown. But i was wrong.

    So I came back to analyze the graph today, and i saw that 1.2522, the last low, was almost exactly the 38.2 retracement of a possible W3, if the ending diagonal was simply w5 of W3 of what i called a C wave (see previous post). What i see today is a complete impulsive pattern to the upside, that could have topped at 1.2779.

    Following a complete impulsive pattern, i expect at least a 50-61.8% retracement of the impulse in a zigzag or other corrective pattern. So i entered short around 1.275, with stop above today’s high, looking for a target between 1.2622-1.2652… but i’ll adjust it looking how next waves develop. I don’t exlcude larger euro downtrend has resumed but… i’ll be cautious :)

    have a nice trading
    mdm

    Markets | No Comments

    Tomorrow could be a reversal day

    Written by mdm
    July 8th, 2010 at 7:59 pm

    I’m starting from the recent (inverse) correlation between equity and the dollar. Well, even if it seems to have lost strenght, you can see how the last rally in equity was anticipated by a strong rally of euro against dollar. So i’m going to make an elliott count of EurUsd from the jun6th low. this is the graph:

    so, i identified this as an ABC correction, as you can see the detailed labeling. Then, we can go to analyze wave C of this correction, and we know that wave C are impulsive.

    ok, so i think we are in wave 5 of C, so we can try to spot an impending reverse. This wave 5 is assuming the shape of an ending diagonal. Why i think this is an ending diagonal? Because 1) they are usually at the end of a move, in wave 5 position 2) inside ending diagonals, wave i is longer than wave iii and 3) waves in ending diagonals overlap and sometimes wave i assumes the shape of a three.

    i assume point 1) is correct in my count (hey, this is my assumption! :) ); for point 2) wave i is actually 175 pips and wave iii between 110 and 150 pips (it depends where we assume that wave iii ends; for point 3) you can clearly see it in the graph.
    Ending diagonal usually ends with a throw-over, a fake break of the upper trendline. it seems it made it today, but i think it’s not enough and i assume it will throw-over tomorrow morning for these reasons:
    - wave C equals wave A near 1,2750.
    - wave v of 5 of C is too short (less than 100 pips)
    - equity seems to be in wave v of an impulsive move, so if the correlation holds, we’ll see them move up together and then suddenly drop. Why suddenly? beacuse when the lower trendline of an ending diagonal is broken, prices tend to move quickly toward the beginning of the diagonal, and in this case this point is at 1,2492.

    Then i take a look at the recent rally in equities and it seems that S&P500 can be counted this way:

    so what i’m sayng is that early tomorrow both ES and euroFx could move up, with Es towards 1080 (area where wave 5 would be equal wave 1) and eurofx toward 1,2730-1,2750, for what this area represents as i explained before. Then, a sudden move down of eurofx and the start of a reversal for ES.
    (if you look at the graphs, you can see that however every “condition” is satisfied and both counts could be complete, so prices could go down immediately. but i don’t think this is the case)

    Ok, this could be my fervid imagination, and it seems too perfect to be true and working. But i’ll trade this plan (and old say: paln your trade, trade your plan) and if it works, i’ll can tell i called it before, and for you only :D

    have a nice trading day tomorrow
    mdm

    Currency, Elliott Wave | Comments (8)

    Next catalyst?

    Written by mdm
    November 26th, 2009 at 6:21 am

    Hi there!

    I know today is Thanksgiving so all American people are in holiday.. so here’s a European post for you!

    I am a sort of permabear about the state of the economy, and I have to thank Mortie if I learned to trade both way (Ben, you can use this in “what users say about”:)). During this rally, the idea that we have not seen the end of this crisis and that a new climax will come soon, never abandoned me. But during last months i really asked myself which could be the new catalyst, as Lehman’s collapse represented in 2008: i think that without a “traumatic” event this asset bubble won’t explode and we won’t see nothing more than a correction, in markets.

    Well, yesterday’s news was that Dubai is seeking debit standstill. I think that this can evolve, and could be really dangerous. Dubai is not an East European country (that are still in trouble..), and is not a US  state that could – in last instance – receive bailout funds from the administration. Dubai is a rich country with its main role is to export capital. During the last few years, the Arab world and Emirates increased their participation in many many global companies (the first that comes to me is Barclays, where Qatar has at least 7%).

    What if these capitals are leveraged and should be removed from the system?

    I know, for now only Dubai has showed some problem and there are many states and Emirates that maybe are not in troubles. But I’m not declaring the end of the world.. I’m just pointing that some news seems not so relevant.. but it can evolve!

    Wish you a nice Thanksgiving day.. today is a nice trading day for us Europeans!

    mdm

    Commentary | Comment (1)

    The Emp..loyment strikes back

    Written by mdm
    November 6th, 2009 at 8:22 am

    Today we have really interesting data releases at 8.30 am, the (un)employment series: what if to a choppy night will follow a morning earthquake? Unemployment is again under Fed’s lenses, because it’s one reason for reteirated pledge of slow recovery, threath to growth and keeping low interest rates. It seems job’s losses should be slowing, so i think that a disappointing releases could push markets to the ground.

    Be careful in trading when will Change in Nonfarm payrolls is released: today they are expected at -175k against a previous -263k. Similarly, consensus on Change in Manufacturing payrolls sees a better release at -42k against -51k.

    Then, take a look at Unemployment Rate: analyst’s estimates say 9.9%, but what market reaction will be, if the psicological 10% level will be taken? Or they already discount a bad surprise?

    The Labor Department will release even Average Hourly Earnings (exp. +0.1 monthly basis) and Average Weekly Hours (from 33 to 33.1), but i think the eyes will be only for datas i mentioned before.

    Just to close the week, at 10am Wholesale inventories: expctations say -1% from -1.3%. But i should be honest: i think that inventories can be read in every way the reader wants (hey, less inventories: they are selling, so this is bullish! Or: hey, less inventories: they are not making orders, so this is bearish! And viceversa).

    Have a nice trading day!
    mdm

    Breadth | No Comments

    Today is a Fed day!

    Written by mdm
    November 4th, 2009 at 4:47 am

    At 2.15 pm Fomc will release his rate decision and statement. Consensus doesn’t expect any change in Fed funds rate, but even no change in rate outlook (market discounts rate hikes during 2010, with an increase of 1% by the end of next year). BennieB. should inform us that their liquidity injection is reviving growth without requiring rates hikes and without raising inflation expectations.

    So, be aware that any unexpected news or change in statement formula “economic conditions are likely to warrant exceptionally low levels of the federal funds rate for an extended period” could significantly move markets. Same way, financial stocks may be influenced by any change in policy or intervention through “emergency” funds like TALF.

    Another interesting data today is ADP employment change, at 8.15 am, expected at -198k versus a prior -254k. This should be a nice appetizer for next days’ employment data.

    I give no significance to ISM Non Manufacturing, scheduled at 10 am.

    have a nice trading day

    mdm

    Breadth | Comment (1)

    Today’s data: factory orders

    Written by mdm
    November 3rd, 2009 at 5:00 am

    Just one medium importance release scheduled for today, and this is Factory Orders at 10 am. Consensus is for an advance of 0.8%, against a previous -0.8%. Usually, unless it brings a huge surprise, this is not a big market mover, so i expect small volatility.

    today will be released Vehicle Sales too, but my source doesn’t tell me at what time.

    Just a little hint for tomorrow Fomc meeting: if formula “rates exceptionally low for extended period” will be removed from the statement, watch for an important move of the dollar and, subsequently, oil and stocks.

    have a nice day!

    mdm

    Economic Statistics | Comments (2)

    This week’s economic releases

    Written by mdm
    November 2nd, 2009 at 5:29 am

    Hi there! Ben gave me the opportunity to bring some contribute to this community, and i thought i can start with a brief commentary of economic releases. Thanks to my work (i’m employed in an italian bank’s treasury), i follow every day releases in real time, and i think this can bring something useful.

    So, i’m going to make a brief recap of what we have in agenda this week. this is my first post so i won’t use graphs or tables, that i hope i’ll add in the future.

    This week is obviusly “dominated” by FOMC meeting wednesday, and it will deserve a separated comment. But i give strong importance to the fact that we’ll see all employment indicator, starting from wednesday with ADP employment change, to continue with thursday’s traditional Jobless claims data and Nonfarm productivity. The better will come friday, with Change in non farm & manufacturing payrolls and Unemployment rate, expected to be released at a breath of distance from 10%, at 9.9%.

    Today’s detail

    Unusually, the week starts with important releases.

    At 10 am (please confirm me the Us time is correct, i’m in Europe :) ) we have ISM Manufacturing Index (where ISM is for Institute for Supply Management), expected at 53 vs a previous 52.6. I think that today’s market mover is Pending Home Sales, due to disappointing release of New Home Sales last week. Pending Sales for september, on monthly basis, are expected in line with previous even if last months was shown and advance of 6.4%. At the same time is scheduled Construction spending too, expected in decline at -0.2% MoM.

    I’d like to receive some feedback and especially to know if this commentary is useful for your trading. you can find me here or in Mortie’s post comments :)

    have a nice trading week

    mdm

    Economic Statistics | Comments (5)