FINANCIALS
The December Treasury Bonds and December Treasury Notes rallied sharply higher from their lows following a Sunday night selloff after receiving the news of the government seizure of the assets of Fannie Mae and Freddie Mac. This initial reaction to the down side looked like longs who had established flight-to-quality positions decided to sell out of their positions in hopes that the bailout will have solved the credit crisis. By the end of the day, however, it looked as if either traders doubted the potential success of the Treasury’s action or that the markets were coming back to the reality that the economy is still in bad shape and headed toward a recession.

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ENERGIES
October Crude Oil remains under pressure due to the strength in the Dollar, lower demand and the lack of any geopolitical events. The continuing weakness in this market also reflects the growing perception that the global economic weakness will send the U.S. economy into a recession. Although there may be certain geopolitical news which triggers short-covering rallies, the trend is down, and the safest trade looks like the short side. Any substantial weakness in the Dollar may also trigger short-covering.

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The U.S. Dollar rallied against all Forex majors except the AUD USD and the NZD USD on Monday as the U.S. government announced a takeover of the beleaguered Fannie Mae and Freddie Mac. This action boosted confidence that the U.S. economy will weather the subprime mortgage crisis. Despite rumors on Friday indicating that some type of bailout action by the U.S. government was going to take place over the weekend, the Forex markets reacted late Sunday night as if the news was unexpected with shorts covering massively oversold positions in the EUR USD and the GBP USD. By the time the markets opened in New York, these two pairs were down to last week’s lows indicating that the bailout was gathering support from the global community. Major Forex traders became convinced that the U.S. government was determined to fix the credit crunch problem.

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You will find as you learn how to trade that it’s not enough to be told something, then read about it, then experience it in the market. Taken cumulatively that is still just one impression. In order to have a method, or a trading tool truly hardwired into your head takes many, many impressions, or ideally many months or even years of demo trading. It’s not enough to say you believe in a method, or in yourself, you have to subconsciously know it, and that takes repetition, which takes time.

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