What A Diference A Month Makes In The US Dollar, Natural Gas Outlook & Stock Picks

"Back in October the economic buzzwords had become “money printing” and “debt monetization”. Of course, at the time, the Fed was initiating their policy of QE2 and you’d have been hard pressed to find someone in this country (and around the world for that matter) who wasn’t entirely convinced that the USA was about to send the dollar into some sort of death spiral. QE2 was about to set off a round of inflation that would make Zimbabwe look like a cakewalk. And then something odd happened – the dollar rallied as QE2 set sail and hasn’t looked back since."

in The Prag Cap

The dollar rally has been quite impressive lately. I am a bit surprised that stocks have not corrected further then they did, at least for the time being. Of course, if the dollar keeps rallying all risk assets (stocks and commodities) will find an air pocket sooner or later.

On my trading, I am mostly daytrading and short term swing trading for raids that last from half a day to 3 or 4 trading sessions. I have been using the Aggregate Profile on the S&P 500 and some other proprietary indicators to trade my own account.

I am risking a lot less then I did 1 or 2 years ago, but my Sharpe Ratio has skyrocketed and my equity curve looks much more like a straight line then a wild rollercoaster (I used to have 30-40 percent drawdowns a few times in a year, as I always going for the home run or the doubling of the account on a couple of trades). This more conservative style is working for me now and I have to say that since Enzo was born, I feel the need to play safer and not bet the ranch on single trades.

A trader is like a virus in many ways, as it is always mutating and adapting to his and also to market circumstances. If you have been trading for a few years, you know what I mean.

On other topic, I have been following Natural Gas Futures with particular interest. After a strong run, the "Little Demon" (as me and Brian - my programmer - have nicknamed it) has found resistance and completely reversed course. Check the chart below:

I think this is the type of action that confuses everybody. After a big run up from 3850 to 4500, the Little Demon has corrected all the way down to 4200, with a big one day sell-off. As I have said before, if you like quick action, this is the futures contract for you. We have "Fast and Furious" action every week on NG Futures and United States Natural Gas Fund, LP (NYSE:UNG).

My view is that the cream is off the market now, and a retest of the lows may be in the cards, but things change fast in the Natural Gas complex, so I will keep an eye on it.

I am also watching some stocks, and John Deere (DE) is acting like it wants to go higher. It held nicely yesterday and it trading right at the 50 day moving average. Another stock that seems to have found support is Titanium Metals (TIE). Its not in a strong technical condition, but it was a high flyer a few months back and it may be getting ready for another upmove.

Anyway, me and my subscribers played yesterday`s late rally via eMini S&P Futures (or SPDR S&P 500 ETF (NYSE:SPY)) and also via John Deere (DE) and Titanium Metals (TIE). It was a very good run for us.

I haven`t shared any music lately, so I will introduce you to Beach House. One of my favorites Alternative Rock bands:

Related: United States Natural Gas Fund, LP (NYSE:UNG), Deere & Company (NYSE:DE), Titanium Metals Corporation (NYSE:TIE)

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