Don't go on Holidays until you're a Billionaire

July will be a bad month for my trading. I've started the year pretty well, long on the rise, short on the falls, but since I returned from a vacation in early June, I've been struggling to make serious money out of the markets and it looks like I've lost the right timing... My wife won't like the lesson : Never go on holidays if you're on a winning streak... or alternatively and you won't like the lesson : don't go on holidays until you're a billionaire.

I was short the stock markets this month : wrong. If you remember (if not, just scroll down) the rationale for the position was further to the debate between "austerity" and "growth", I've been thinking that the wave of austerity in Europe and Obama struggling to impose more support to US Economy is reminiscent of the mistakes done in the past before the Great Depression and I believe they can lead us back to a profound recession. I still stick to this argument but my timing for a short position was definitely wrong as this can spend months (or even years) before we know the impact of such policies. Knowing that nothing is more difficult (and more funny I've to confess) than trying to pick a reversal, the loss here was limited to 2-ATR. The Sheriff I underestimated and I forgot in my argument was the FED (how could I miss IT) : Sheriff Ben is still able to ease, he still veils, the finger on the QE trigger even if Sheriff Obama runs a bit out of ammunition (politically). Another thing I overestimated and that harmed my short is the negative impact a strong dollar during the 2Q would have on the earnings of the American companies, minimal apparently...

On the other hand, I've been a bull on the EURUSD. This call was not that bad, since I developed the view it has reached a couple of time 1.30 from 1.26 and is fighting around as I write but unfortunately, despite a growing conviction that the EUR would strengthen, I' ve stayed aside and not traded the pair yet. The thing is I was expecting the results of the European stress tests on Friday to be considered by the market as "too easy and not stressed enough" to enter a long on the dip. What happened is the EUR slumped on Friday BEFORE the results as the tests were said to examine the banks' trading books only (while most of the exposures lie in the banking books) and then, after the results were announced the reaction was muted, to finally jump back to 1.30. In other words : I just missed the target window.

As I write, we are testing important technical resistance levels on those two markets : the 200-SMA and the 50% retracement level of the S&P 500 and the 1.30 mark on the EURUSD, and those resistances can see several fake out before they break (if they break...). So for now, I'm still staying aside, waiting again for the right moment to enter the EURUSD as we are close to one of my favourite set-up : "buy the overbought" (or "sell the oversold" works well too) : the EURUSD is on the verge of the overbought now and the set-up is about to be triggered so Patience, Patience...
 

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FYI As this post is published: SPX 1116 // SX5E 2764 // NKY 9496 // DAX : 6206 // EURUSD 1.2980 // USDJPY 87.65 // XAUUSD : 1168