Daily Alert – Friday 21st May 2021: Volatility delivers great trading week

Mark NugentDaily Alert, May 2021

Daily Alert – Friday 21st May 2021: Volatility delivers great trading week

Equities have had a roller-coaster week. Monday through Wednesday saw prices fall, only to roar back yesterday and today despite the hawkish Fed minutes on Wednesday night. The technical analysts among us will have seen the beautiful pin bars on Wednesday that signalled the reversal and move back up. As mentioned on Wednesday, I traded Japan225 long on Tuesday, exiting the same day for +1.95 percent. Wednesday’s pin bar tempted me into a second Japan225 and a new S&P500 long, both of which are in the money. I will exit both before tonight’s close. Equities will likely end the week flat with a nice bullish pin bar on the weekly chart. Set up nicely for a rise next week?

WTI (oil) fell predictably on the positive news flow emanating from the Iran nuclear talks in Vienna. Iranian President Rouhani said yesterday that the “main agreement” had been reached and all major sanctions will be lifted, including oil. This addition to the supply-side is what is driving the prices down. I am bullish on oil, so I do not trade it down, I wait for it to reverse. My pending order last night has been triggered and pricing is moving up into the close.

GOLD is rising on the weakening USD and inflation fears and currently sits at a level not seen since the first week in January.

My main predictions on currencies (EUR and GBP up, USD down) have come to pass on the weekly chart but I have not been tempted into the market. Consistent movement in one direction for two or more days is rare and I am simply not comfortable trading that level of choppiness despite the weekly moves being as per prediction. Maybe I should just open a position on the Sunday night and leave it all week.

Hindsight trade of the week was GOLD long. I hesitate to trade GOLD as retail traders (and actual physical GOLD buyers) have an unpredictable influence on pricing. However, as I write I look back over my 2020 record and I see 8 GOLD trades that provided 16% of total annual return. Maybe time to get back in? But I do trade the elements that move GOLD, (USD price, inflation and bond yields, via their effect on other asset classes). So maybe not. Sorry, I am thinking on paper. Which is a great idea by the way.

I will close my three open trades tonight and will have brief videos of each for you on Monday along with your trading plan for Week 21. Have a great weekend.

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