Opening Position September 2005


NO news is good news. After what seemed like a relatively quiet period, in terms of world news and the global economy in general, the world was once again faced with terrorist attacks in London. Although this doesn't appear to be affecting the financial market for the long term, it was enough to give us a jolt and awaken us to the realization that anything can unexpectedly happen, anywhere. Another major event that took place recently is the revaluation of China's Renminbi. This one will, in all probability, have an effect on world trade and the financial markets.

The US bond market is already feeling the effects with yields moving higher. This in turn would affect the housing market since mortgage rates would move higher. It could also increase borrowing costs. Other effects, in terms of exports and imports, could stem from the revaluation but we won't know the effects until we see how the Renminbi performs. One market that will definitely see some changes is the currency market. That would be one to keep an eye on and we hope that our Forex Focus section (pg. 30) leads you in that direction.

AS you all know, to fully take advantage of the financial markets you always must have a good idea of the overall market. You have to know how various markets are performing and how sectors within those markets are performing. Based on that, you then select individual tradeables, which you then monitor on a regular basis. It's not easy to successfully do this, but after reading our interview with Harry Boxer starting on page 72, you may pick up some tips on position sizing and stop loss placements. It doesn't really have to be very difficult. A simple indicator such as the moving average is enough to help you make wise entry and exit decisions. You'll find this out in the article Shorting Moving Average Pullbacks by Steve Palmquist starting on page 42.

Given that changes can take place in the market rather quickly and unexpectedly it's always a good idea to carefully manage your trades, regardless of whether you own individual stocks, futures, options or mutual funds. We hope the articles in this issue help you do that.

Jayanthi Gopalakrishnan,
Editor


Originally published in the September 2005 issue of Technical Analysis of STOCKS & COMMODITIES magazine. All rights reserved. © Copyright 2005, Technical Analysis, Inc.



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