Stock Market Close April 6th, 2020

Ok, so a bit of excitement as a couple of our expected trades came through for us.

We will deal with the other symbols first.

S&P 500: The S&P has closed above the blue EMA (21). Since it is in a downtrend (21 EMA below 55 EMA), we now need the price to close below the red EMA (8) to trigger a trade.

Oil: Still in a downtrend. The price, however, closed Friday over the 21, so we are watching like the sharp-eyed hawks we are for the price to cross back below the 8 EMA (red). As mentioned in the weekly Round UP, a shelf of support has formed at the $20 mark. If we get a sell trigger, instead of placing a trade under the candle that closed across the red EMA, I will use the shelf of support as my marker.

Bitcoin: Still in a downtrend, but the red EMA is crossing the blue (21).

Apple: Still in a downtrend. Today’s rise, however, closed above the 21 EMA (blue). We will watch this one as well for a short trade if the price crosses back below the 8 (red). The rising window, mentioned previously, is a level of support. Our short trade would be placed just under the lower ledge. More detail to come if that scenario plays out.

Gold: Last post I mentioned that we would place a trade in gold if it got above 1643. Since it did that we will, as we usually do, switch to a stock market symbol. In this case the UGL.

UGL

UGL is an ETF that we will use as a proxy for gold. Our capital rules allow us $10,000 in this trade (10% of the portfolio) and a risk of 2% to the portfolio maximum as determined by the placement of the protective stop-loss. We bought at $56.65 and acquired 170 shares (I rounded down a little). Our stop is just under support (this being typically the best place to station a protective stop) at $51.47. This is $5.18 per share of risk times 170 shares = $ 880.60. This is well below the 2% or $2,000 dictated by our risk rules. Our stop is a trailing stop. Not necessarily the best thing most of the time, but these are volatile times, hence the trailing stop.

Onto our EUR/USD currency pair. Let’s take a look at the chart of EUO.

USD/EUR

You can see from the chart above of the EUO, a proxy for our currency pair, that the price dipped below all the EMAs and then closed back above the red EMA (8). The blue EMA (21) was above the green EMA (55) giving us our uptrend and saying giddyup to placing a stop buy just above the candle that closed above the red EMA.

Our position, based on our risk rules is as follows: $10,000/$28.51 = 350 shares. Our protective stop is placed just below the shelf of support at $27.19. This represents $.1.32 X 350 shares = $462, well under our $2,000 maximum. Once again a trailing stop. Normally I like to leave a stop under support to allow a trade to breathe in the span between support and resistance if it needs to. The markets these days are so volatile, I would just as soon get out on a trailing stop and go back in if I have to.

TTFN,

Charles

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