The euro being unable to find support still has me rolling through piles of currency charts to find something that resembles the current setup -- anything other than the yen, of course. My initial thesis was to pull charts of the U.S. dollar pre- and post-QE as a nice roadmap for Euro. I'll save you some time and just tell you it doesn't. The chart comparison, which isn't worth the post (again, me saving everyone time) offers no potential similarities. The euro is so far oversold compared to anything we witnessed with the dollar that I'm sure some type of log scale would have to be created or another ratio applied. That feels like too much of a stretch or curve for me. This weekend, I'll be back to studying the euro chart alone and looking at past periods of extreme bearishness and short-term oversold readings doing their best to see single digits.
I have been trying to buy strength. Williams-Sonoma (WSM) is a name I've owned more often than not over the past five years, and it is back into the owned category again today. The stock broke out from resistance yesterday, but I wanted to wait overnight for confirmation the stock would have a better chance of holding. My bigger concern than WSM itself was a reversal of the huge gains on the S&P 500 from yesterday into today. While we did see some profit taking this morning, it was nothing beyond my expectations and WSM held serve when equities were lower.
My stop is $75 on a swing trade, but if the market starts to rollover, then I would hesitate to stop at $78 and look to buy on a bounce from $75 or a push back above $79. While that may feel like I'm giving away a dollar, it absolutely makes sense to me in a risk-reward format. I would also keep an eye peeled on the Relative Strength Index. Note how the RSI touched the 50 area, but did not break, each time the stock tested support. If you would like to avoid chasing, then I would watch for that same setup again. The RSI has been a pretty good tell recently for WSM. Those types of tells will wane over time then make a re-appearance in the future, so I use them as much as I can while they are "in season."
I expect the action to quiet down a little this afternoon. It's been a very volatile start to the year and I get the feeling some traders would just like to take a quiet afternoon to collect their thoughts. I know several who have already checked out for the day -- folks who love the market and love to trade. Granted, my sample size is small, but I've seen a few other folks echo the sentiment as well.