Is trading ‘value’ a viable short-term strategy?

Buying pullbacks within a trend.

Buying value.

Buying the dip.

 

All seem like decent, logical strategies.

But are they though?

 

In the long term, perhaps with a time horizon of months-years, buying the dip on an undervalued security may prove profitable.

 

But in the short term, something that’s collapsing is collapsing for a reason.

And unless you’re lucky with your entry,

Buying the dip ain’t a brilliant idea.

 

Better then, to go with the flow.

Euro: History repeats.

eurusd

2014-17 is essentially an exact repeat of 1995-98.

 

Suggests EURUSD heading towards parity and beyond.

At a time when everyone’s bullish on EUR, speculative interest at highs, everything’s rosy in Europe, tapering talk…

But the obvious is obviously wrong.

 

This is a massive contrarian call, but there’s 30%+ up for grabs here.

The asymmetry is real.

The juice is worth the squeeze.

This HTML5 Remote Desktop app might replace my laptop.

I use a remote server to automate my trading, so I don’t need to look at screens all day.

But I do need something to monitor the server if required.

That’s why I got an XPS 13 to monitor it on-the-go, if needed.

 

But now everything has changed.

I found Remote Spark, an HTML5 remote desktop client.

I can now login to my server from any device – iPad, phone, Chromebook…

 

Truly amazing.

XPS 13 is now redundant.

An iPad is all I need.

Massive move in gold coming.

xauusd

Annual momentum (price vs 3 year MA) shows a triangle formation – shown at the bottom.

A weekly close above this triangle (possibly happening now) will mean gold -0.15% begins a multi-year secular move to the upside.

Speculative interest is not overextended.

Momentum structures in DXY -0.06% also suggest that USD has begun a downtrend.

Get ready.

I had an epiphany today.

time-versus-money-weighted

I took a bit of a loss in my trading account today, a few thousand quid.

And it made me rethink my life a bit.

I’m actually glad I took the loss.

I’m glad I got greedy and over-traded and lost big.

 

It made me realise that I should just leave my trading to my robots.

Even if they make slightly less money than if I traded manually,

It would free up my time dramatically.

And since time is the most valuable asset we have,

That’s worth it.

 

It made me realise that time is more important than money.

That money doesn’t get happiness,

But rather, getting experiences and doing interesting things.

 

Which brings me to the robots.

They often trade more consistently than I do.

Because they follow my trading rules perfectly.

They don’t get greedy.

They don’t overtrade.

 

I worked out that I probably spend around 6 hours per day looking at charts.

If I just left it to my trading robots and alert systems, that would probably go down to 1 hour per day.

Which means I would save 5 hours every day.

 

If I did that for the next 3 years,

That would be 5 x 260 x 3 = 3900 hours.

Which is 160 days!

 

Ridiculous, I know.

I’m not sure what I’m going to do with all that free time 🙂

 

Image credit: blueleaf.com

Top trades for 2017

New Year Sand Beach New Year's Eve 2017

 

1. Long USD vs JPY, CAD, AUD, NZD, EUR

A structural dollar shortage, fiscal stimulus and a hawkish Fed should support the USD.

As US yields rise, long-term carry trades in AUD and NZD will begin to get squeezed.

A stronger USD will put pressure on commodities, especially crude oil as concerns about the OPEC cut may begin to surface. This will be bearish for the CAD and may force the BoC to cut rates.

A strong positive interest rate differential between the US and Japan means that a long USDJPY position should play a core part of our portfolio.

A short EURUSD position plays on the divergence between continued monetary easing and political uncertainty in Europe, versus a hawkish Fed and structural dollar illiquidity.

 

2. Short AUD versus USD, CAD, NZD

A weakening Australian economy, and risks of a stronger dollar strangling Chinese dollar-denominated debt, should continue to weaken the Aussie forcing the RBA to cut rates.

 

3. Short European equities (but long US equities on a significant retracement)

The FTSE needs to be shorted, as any appreciation in Sterling will result in massive bearish pressure.

The DAX looks overstretched near 11,500, and needs to be shorted as a play on rising European political tensions, risks of European bank defaults, and as a hedge on our short EURUSD position.

 

4. Long GBP vs EUR, AUD, JPY, (USD)

A neural BoE, rising inflation expectations, and strong economic performance should support Sterling against the weaker EUR, AUD and JPY.

A long GBP position against USD is the perfect way to hedge any long USD exposure.

Based on FX fundamentals and long term fair value, Sterling is significantly undervalued against all currencies.

 

 

5. Long gold vs USD

This is a hedge against long USD exposure, but more importantly, protects against a crisis created by dollar illiquidity.

Near 1,100, this is an excellent time to start building long positions – after most investors have been caught off-guard, squeezed and stopped out.