G’day Traders,

This morning I got up really early and attended a breakfast for business people held by Church. Yesterday, I had a great session with my business coach. Besides being an extremely valuable opportunity to take time out and looking at improving things, it also provided a different perspective, which is invaluable.

Since I have been doing the coaching not only has my business improved, but I also feel much more confident and have allowed myself to focus on what is truly important for me to add value and let very talented people do their jobs.

A different perspective is invaluable and I think our success has a lot to do at looking at different ideas and ways in which we can help our clients. Sometimes this means we move pretty fast in the hope that it will have long term benefits and we have to assess things as we move along.

How does all this relate to trading? Well having a long term perspective is important and yesterday (although it may not have appeared that way) I thought too much short term. I focused on the data that had come out and not the data that was coming and my long term view. In my mind I was still bearish I just switched and thought the stock market wouldn’t do too much. Remember I said if the S&P breaks 1100 I highly doubt it will return to that level? Well have a look at the highs for the past few days… just below 1100. Even with that positive news it couldn’t break above it and last night the market confirmed that the path of least resistance is down.

I have also spoken a lot, especially on Twitter, about the high unemployment rate and how this would hold the US stock market (and therefore developed markets) back from a recovery. This is really the critical thing and it just isn’t happening. Those of you who have read my stuff for a while may remember when the US stimulus package was being discussed and I said “if they are going to do it they had better over do it”. You see everyone wants to spend as little as possible, but they don’t realise that if you don’t make sure you get it right the recovery won’t be sustained.

China and Australia both did more than enough – a very smart move, although it must be said that these two countries had the money to do it. The US and many other countries tried to do just enough and now their recoveries are running out of steam. Therefore, you have very bad employment conditions that just aren’t getting better. You may get manufacturing back on its feet but then there is no follow through from the consumer because on the street everyone is unemployed.

Yesterday’s US jobless claims actually went up! So more people are losing their jobs. This has problems written all over it when the stock market has growth priced in and all the figures say there isn’t going to be too much of that.

Today in my weekly I am going to continue this discussion on looking at the long term. It’s one thing that the great traders do and something I work on all the time.

On the long term I also wanted to say a big thanks to all the people that devote their time to helping other traders, especially in remote areas. These people are positive and devote their time even when short term they may be having a hard time. We call them Buddy Group leaders and the vast majority do a fantastic job.

If you attend a Buddy Group it’s important that it’s positive and keeps you on track on your journey. I must say that one of the dangers with Buddy Groups is that they can (and have in the past) taken clients off the path and this has proven very dangerous. If this is the case with you then you need to take the steps to get on track and do what is right for the long term benefit of your trading. I take this extremely seriously and it is why I am a bit unsettled about having buddy groups.

But what do I want long term? Well I want successful traders and I believe that long term good Buddy Groups help achieve that. So I am trying to work out ways of better supporting Buddy Group leaders so that they can continue to do a great job. We are always going to have them so I am trying to work out how I can help them give the best possible information etc.

If you are leading a Buddy Group I want to say a big thank you for all the work you are doing. I really want to acknowledge you for what you do. But I also need to find ways to specifically make you better traders because then there will be a flow on. You should be hearing from Mikaela over the next week (assuming we know about you) about one of the things that may make a positive difference to you. I am not going to promise you dramatic action and change on this. I want to do little things that make a difference to you because, from what I am hearing, you are doing a great service to other traders and just a little bit extra would make a big difference.

The US S&P500 -1.69, European top 500 -1.36 and UK -1.73%. In early trade Asian markets are down with Nikkei over 1.4% down, and ASX almost down 1%.

ETFs – I am sticking to what I said yesterday here. I actually hope that other traders read the ETF section because this is where I give my long term view and that is that equity markets are on a very shaky down, with risk to the downside and I believe markets will accelerate to the downside in September and October.

Options – Another good night leading up to expiry – up one day and down the next. On the downside (where I see risk), be cautious if you have bullish option strategies as the market is just above support, which we don’t want to break before expiry. Expiry is tonight though so we should be fine.

If you use Trade For You then you must check all your positions today and make sure that you are not in any trades where the stock is through the sold strike. If you are please contact customer service ASAP.

Tomorrow is critical – All option traders must check that they have no unwanted stock positions. This market could break down (or even up) and if you have a stock position you want to dump it fast. You will need to double check everything tomorrow and if there is something you are unsure of contact Customer Service Monday, first thing!

Today’s Top Tip

Attention Forex traders: Do you have Foreign or US currency sitting in your IB Trading Account under Market Value?

Here’s a video to help you convert the Foreign Currency back to your base currency…

http://www.lifestyletrader.com/media/clearing-forex-currencies/

Information for Beginners – Do not make the mistake of thinking short term and making reactive decisions. Follow your strategy and think long term. This will help you make smart decisions that lead to profit.

Information for Intermediate - Treasuries jumped last night as equities fell. This confirms fear is increasing amongst the smart money and they are on the sidelines. Volumes are pretty low and there is a heavy amount of trading – this is not long term stuff. This means we could easily see a very fast move to the downside and awesome trends. Just stick to the rules.

Information for Advanced – If the market breaks down tonight it will strengthen my fears that stocks are in big trouble and that I need to be making money on the big moves. Under such conditions we often get fast trends where big money can be made, but where we need to be extra cautious of risk.

Scott Goold

Head of Lifestyle R&D

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Trader Term of the Day – Contrary Opinion

The theory that one can profit from doing the opposite to the majority of traders. For example, if a large majority of traders are bullish, it implies that most market participants who believe prices are going higher are already long, and hence the path of least resistance is down. An analogous line of reasoning would apply when most traders are bearish.