Current financial crisis is often blamed on globalization, as a root of all evil. Good jobs are exported, or outsourced, to countries where labor is much cheaper. Some in the West, countries which lost most jobs, see it as exploitation of local population in countries like China and India. Inhabitants of those countries largely disagree , having seen their income, and standard of living, increase since the free trade started in earnest couple of decades ago. After being “pro” free trade, America is turning towards protectionism. At this point it is largely a grass root movement, one that has gained some political clout. In fact, it had enough support to attempt to include “Buy US” provisions into bailout legislation. Ultimately they didn’t pass. I’m all for free trade and some unwelcome consequences which go with it. However, should we outsource production of goods to countries which clearly demonstrated failure to properly produce them within their own borders? Case in point. Upon failure of the “Buy US” provision, the last remaining producer of condoms in USA is loosing contract and the manufacturing process is outsourced to… China. Now, do we have evidence that Chinese producers mastered the the intricacies of condoms? That’s debatable. After all it is the most populated country, and it is still growing at rapid pace. Clearly, the condoms are not top notch. Now, Chinese officials claim progress, citing that India’s population is growing much faster. Valid point, one shouldn’t use condoms made in India also, they seem to be of even lower standard. Personally, I think that Chinese have as much business making condoms, as we have teaching others fiscal prudence and the art of balancing the budget- none! In situations like this, isn’t protectionism excusable?
I didn’t trade a lot, besides no trade was featured yesterday, but I want to show something here.  I receive large number of emails from people who ask me what system I use and so on. The trades featured here, while they have some underlying structure, don’t really fall under any system. They are mostly discretionary. It doesn’t mean they are guess work or gut feeling, but they can’t be very easily explained. Here is an example.

After the post yesterday, before computers were shut down, I went long GBP-CHF, for a number of reasons. After severe sell off price formed possible reversal pattern during the time of day at which activity usually slows down, or reverses. 4H chart(not shown) suggested possible reaction at a FIB level, but most intangible was the way price acted. There was a recognizable acceleration in price change after which it ”snapped” sharply within this hourly doji, something that can be noticed only if watched live. So, plenty of reasons, but not really molded into any set of rules- discretionary. So was the exit. Price almost touched 50% retracement of the preceding down move, as well as bounced around 100SMA for couple of hours and the gain was decent, so I pulled a plug. Hope it makes sense and demonstrates the what I mean by discretionary.
There will be no posts for a few days, I’ll be away on a trip, until Monday evening. I might refresh the blog Sunday morning, before markets open, if i feel like it, but in principle next post will be on Tuesday. Wish everybody many pips.

Mike K.