Cerebro1's  Instablog

The Christmas season is here again, the season of gifts and celebration. One token of appreciation which I received was a fruit basket, filled with grapes, oranges, strawberries, pineapples, peaches, and of course, the kiwi.

While munching on a kiwi this morning I recognized that the NZDUSD, familiar to most as the "kiwi", was a bit too sweet. Kiwi is enjoying a wonderful 4th quarter rally and has verged into both a historical resistance zone and overbought territory, based on the RSI going over 70. Thus I checked what was my risk to reward of taking a short position on NZDUSD. I was willing to risk 70 bps for a 1.16% gain in NZDUSD, which to me was worth the risk. In the medium term NZDUSD has the potential to fall 5% from current levels, making the short trade much sweeter.

Please see chart below for the Daily NZDUSD.

(click to enlarge)

Disclosure: I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours.

Additional disclosure: I am currently short NZDUSD. I wrote this myself, and it expresses my own opinions. I am not receiving compensation for it. I have no business relationship with any company whose security is mentioned in this article. The views expressed in this article are my own and are not necessarily the views of any companies or organizations I am affiliated. I expressly disclaim all liability in respect to actions taken based on any or all of the information in this writing.

The FTSE100 or the equity market index for the UK has been in a range bound move for the past quarter. This range bound movement presents two types of opportunities.

• Buy at the Top of the Range
• Buy at the Bottom of the Range

The top of the range is near the 5,936.99 price area and the bottom is at 5,604.54. I took the opportunity to play some footsie with the FTSE. I stuck out my feet at the 5,918 price level and luckily enough it hit my initial target of a 0.20% move lower while initially risking 0.76%. My final price target is 1.36% lower. Hence I risked 0.76% for 1.36%.

From a broad view I think the fiscal cliff negotiations are one of the main sources of market volatility. It seems that traders are looking to buy on the rumor and sell on the news. Thus I'm expecting a dip over the next couple of weeks into January.

The Chart below shows my FTSE trade.

(click to enlarge)

Disclosure: I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours.

Additional disclosure: I am currently short FTSE100.I and UK100 CFDs. I wrote this myself, and it expresses my own opinions. I am not receiving compensation for it. I have no business relationship with any company whose security is mentioned in this article. The views expressed in this article are my own and are not necessarily the views of any companies or organizations I am affiliated. I expressly disclaim all liability in respect to actions taken based on any or all of the information in this writing.

This morning gold had a huge sell-off. It was over 1% in just a couple of minutes. That is not a good sign for financial markets. Something is up. These were the things that passed though my mind when it occurred.

• People are seriously worried about the fiscal cliff and going into cash
• People are taking gains on the little up move in gold since November
• Some Hedge Fund or large holder of Gold has a margin call and is liquidating their positions in the metal

The best thing to do right now if you are not short Gold is to wait for the dust to settle and make a decision whether you want to go long the metal or not. If you are short gold (I'm currently short XAUAUD) my best advice is to keep those stops tight because it looks like its going to be a bumpy ride. If you are long gold hats off to you! I wish you all the best and I pray that you have enough margin to stay afloat. Please see below the chart of my short position in XAUAUD.

(click to enlarge)

Disclosure: I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours.

Additional disclosure: I am currently short XAUAUD. I wrote this myself, and it expresses my own opinions. I am not receiving compensation for it. I have no business relationship with any company whose security is mentioned in this article. The views expressed in this article are my own and are not necessarily the views of any companies or organizations I am affiliated. I expressly disclaim all liability in respect to actions taken based on any or all of the information in this writing.