Good Afternoon,

A rare weekend post from me. Sorry I didn't get this to you sooner, but I feel it is important.

Fundamentally, "QE to infinity and beyond" is in play. The economic calendar is pretty quiet this week - monitor Empire Fed on Monday and Thursday's claims and obviously any central bank/monetary policy chatter.

Technically the SPX is overbought, but it has been that way for a long time. So throw away the technicals there. Technically, I feel oil and the supply'/demand relationship is pricy at 100/bbl given how bad real fundamental data is (see job creation in the US and Europe). I mentioned that with patience, I felt that oil would get to 100 and that it may be a place to see some inter-market trading relationships.

Let's look at the long term USO chart first:

Past performance is not indicative of future results

Now a shot of USO on Friday as it trended down the entire day after the initial pop higher:

Past performance is not indicative of future results

And now, the USD/CAD, which unlike other pairs, trended up all day:

Past performance is not indicative of future results

Throw in a DOUBLE FALL LINE TRADE and you have a nice "inter-market relationship". I will be looking for support to form in the low .9600 area as I am still overall bullish equities and thus the "drag higher" in oil as higher equity prices "show more demand". But overall, this area feels like a better shorting area for the commodity and thus a long play in the USD. 

Another reason to be bullish is the quiet economic calendar. When no news is released, we tend to trend higher in equities. Yes, we are "extremely overbought", but until sellers come in, be careful going against the Fed (like you don't know this already).

Speaking of long the USD, not against the EUR. The EUR/USD has moved from 1.2000 to 1.3160. Not bad for a region of the world where they too are/will be printing money for years to come. The EUR is just as likely to go back to the 1.4500 level as it is to "go out of business" as so many had feared.

Happy Trading and Be Environmentally Cool

Coach Brian

Forex trading is one of the riskiest forms of investment available in the financial markets and suitable for sophisticated individuals and institutions. The possibility exists that you could sustain a substantial loss of funds and therefore you should not invest money that you cannot afford to lose.