June 18-22 2007 USD Long Term Strength

The USD strengthening continues this week with no major news releases and nothing aiding the Yen to stop the dollar bull trend. Cross Yen pairs also followed the Yen decline and I've made several Long trades on CAD/JPY pullbacks. The trades are there and the trend intact even when my 1st trade on Monday was near the top.

Bottom line is 4,5, and 6 pair basket sets have performed wonderfully, all profitable with 10%+ gains on margin. Examing the Euro pairs, we're currently in position on the following. Caution though since this entire month has been a sustained rally across most markets, this includes equity markets, despite some triple digit losing days. These pairs need to be evaluated on a market downturn in carry's. On a weekly basis, we'll be opening the same position size with both the Euro zone pairs and over several months of different market conditions, we'll forward test and note the performance, weighing the strength and weaknesses of each collection.

• GBP/CHF
• EUR/GBP
• EUR/CHF
• EUR/AUD

June 10-15 Bull Trend Continuation

This week the USD has continued its gain against 3 pairs I'm watching.

• USD/JPY - Bullish stable, fairly strong
  
• GBP/USD - Bearish weak, upside move yesterday failed.
  
• EUR/USD - Bearish weak, not as weak as Pound but moving in same direction.

Like 2 weeks ago, the trend has continued to move USD positive with the Yen at near 4 year highs. This weeks news were all favorable to the dollar, moderately weak PPI and long 10 year treasuries gaining to push the USD even further.

As for system portfolios and baskets, we've been profitable this weak and should finish tomorrow with good gains. The small drawdown from last weeks collection was all returned. From this weeks performance, particularly the Yen, we know now that last weak was just a minor correction. We'll have to see if a major correction for the Yen and Yen pairs is in stored since we're in extremely high levels.

The British pound has made attemtps to turn bullish, but the pause in rate hikes last week put an end to any follow through. We're stuck at the 1.970 levels and not going bullish till after 1.9770 or 1.9890 is taken out with momentum. Still holding a long positin from last week. We'll keep this position till the trend turns bullish. It appears that 1.9630 is the temporary major support, at this point we're definitely in a range.

June 3-8 2007 Yen Correction

As expected most of our trades took a correction earlier in the week with the Yen moving closely with the Equity markets. The markets took a good beating this week with only Friday having a triple digit day on the positive side. It was a good preview of how some of the basket collections would perform had a full scale unwind occured. When the Yen strengthens even the pairs which we wouldn't think would be affected, moved against us significantly.

The 6 pair basket at 3% risk went as low as -105 on the negative side, or approximately -3% equity drawdown using a test accoun. This is still not all that bad. Some of these pairs had 3 positions averaged in. A full scale drop like that of Feb 2007 this 3% could have probably been 10% realistically. By friday we saw a swing to the positive side, with the Pound lagging behind the other pairs. Next week I expect the trend to continue and even if the Yen stalls at the 122.00 level, our 4 and 6 pairs will profit from the positions we scaled in at lower prices.

So to summarize:

• 4Bonz Basket at 3% per trade was the top performer. It was the quickest to recover from the downturn, and during the yen strengthening, the drawdown was satisfactory, with proper money management.
• The JCMac 6 pair at 1.5% equity limit was also satisfactory, nearly hitting -3% drawdown for the week, but coming back to -1%. Much more affected by Yen strengthening, so this has to be scaled properly, and a good idea might be to hedge against pairs on the drop.
  

This is an interesting experiment that must be watched and tested. These collections will perform flawlessly in a strong market, weak Yen environment. We can test our risk tollerence when there are weeks when it corrects and prepare for a full scale unwind should it occur. Interesting how the Dow and Yen correlated this week, it doesn't seem to be coincidental.