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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