Well as I said last time, things will come back to life all of a sudden.  It now seems like they already have, which is wonderful news.

Aside from bringing the shorter-term S&P business back to providing much better and more frequent opportunities than we have seen for many months, there is another factor we need to be aware of right now.

I also mentioned a few weeks ago that I felt we were close to significant inflection points across a whole range of markets.  I still stand by that view and believe we have now seen longer-term tops and bottoms put in across a wide range of markets; commodities, currencies, equities, energies, metals.  A quick look at the daily charts will give you good feel for which markets are showing new directions and which are still just slopping around.  The only market group that I am less convinced about are bonds, where I don’t really have any good insight at present.

I think many markets are in the process of starting new longer-term trends.  In fact I have no less than 17 markets on my watch list for next week, for possible early entries into new trends.  That is a lot of markets.  Of course they won’t all set up suitable low risk, high probability entries which we look for.  But with or without us on board I am looking for new trends to develop.  Some markets such as the Dollar and the Euro are already well ahead of the rest having established new trends some weeks ago.

If I am correct (!) this provides one of those relatively rare opportunities to think longer-term.  I don’t mean holding onto individual positions for longer necessarily, but changing perspective slightly to take advantage of a relatively unique situation.  These opportunities only show up every couple of years or so, but here is how I believe we should capitalise on them when we are able to.

• Trade absolutely as normal – use the same entry setups, trade management and exits as you always do.
• However where you are able to, keep a small piece on, rather than exiting the whole trade each time.  Tuck these small positions away with a breakeven, or close to breakeven stop.
• Forget about them!  Don’t fiddle around or micro-manage.  Think in terms of weeks, not hours or days.  If you get some runners you will need to handle contract rollovers and in the future you can tighten up and start trailing stops.
• As the new trends progress and new trades setup – repeat the process, leave another tiny piece on.  Keep repeating for as long as new opportunities present themselves.
• When adding to an existing position use a breakeven stop based upon the average entry price of both (or all) small positions.  This gives the market plenty of room to work, but without risking any of your own capital.
• Aside from any necessary rollovers, give these speculative trades a few months (yes months!) to work and see what happens.  Some will work and some will not.  If you catch major moves on just 2 or 3 markets that could be a heck of a big bonus this summer.  If you don’t get lucky the cost should be minimal, if anything at all.

I’ll leave you to play with the concept and see if your own trading style and approach can adopt a little add-on of this nature to take advantage of this particular situation.

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