Daily Alert – Friday 27th November 2020: A short week with multiple profit opportunities

Mark NugentDaily Alert, Nov 2020

Daily Alert – Friday 27th November 2020: A short week with multiple profit opportunities

The week started on the front foot with positive sentiment as the FDA made its first significant approval of a Covid-19 therapy (Regeneron’s antibody cocktail). I was tempted into S&P500 long and CADJPY long.

Sentiment continued to be positive throughout Tuesday before turning risk-off on Wednesday, driven by nothing in particular (maybe profit taking prior to the Thanksgiving holiday in the US). As the fundamental rationale for both of my trades looked like it was reversing, I closed half of each trade on Wednesday morning and then the remainder at the close as it was clear the risk-off sentiment was going to endure to what I expected would be the effective end to the week at the Wednesday close.

My S&P500 long made 1.55% and CADJPY long made 1.29%. Not stellar, and below my reward/risk target of 2.0, but a total of almost 3% by midweek is fantastic.

As expected, Thursday and Friday have been very quiet as the American’s do the turkey thing.

Elsewhere, Barnier flies back to the UK for Brexit talks scheduled to run through the weekend.

The weekly charts (as of 1600 GMT on Friday) show all three US equity indices likely to close at new all-time highs. Oil climbs to its 100-day moving average, around 7% up on the week. GOLD crashes down through support as per the sentiment and is taking another leg down today for no apparent reason. It’s heading for a 5% drop on the week.

On currencies, the JPY is up on the week and the commodity currencies are down, as we like it. However, on the daily charts the price action only really made sense on Monday and Tuesday, the rest of the week being less coherent. The GBP is up on the week despite dropping yesterday and today. There’s definitely an argument here to take a position on the Sunday night with a wide stop and hold it all week as we get what we expect on the weekly charts but the choppiness of the daily charts can knock us out even although our analysis is often correct.

20/20 hindsight says trade of the week was GOLD short and Japan225 long. There were good reasons for not taking GOLD short on Monday – poor technical position and equities being a better reflection of sentiment, plus GOLD’s performance is largely due to today’s inexplicable drop. Japan225 again looked unattractive from a technical point of view (very close to all-time highs).

Still, I made 3% in two days without the benefit of this hindsight. As they say, there are many ways to skin a cat.
You can get brief videos of my two trades in the VIP Club member’s area.

Have a great weekend and I’ll be back on Monday.

You can watch the video in the VIP Club members area HERE