Weekly Review and OpenBook Roundup

(eToro Blog) For most of last week, the focus had been on the U.S. Federal Reserve and what Big Ben and the Fed might do to resurrect the U.S. economy and provide a much-needed boost to the U.S. labor market. Analysts and market watchers were divided on their expectations, though nearly everyone expected that that the only thing the Fed wouldn’t do is nothing. At a minimum, it was thought that the Fed might extend the period of ultra-low rates beyond the expected conclusion in 2013; others expected another round of stimulus though to at an amount below either of the previous two rounds. The minority view was that the Fed would follow in the footsteps of the European Central Bank which announced the week before a plan of open-ended asset purchases.

In the end, the Fed surprised with the sheer breadth of its plan, which encompassed expectations at both ends; not only would the central bank extend the low-rate period through 2015 but it announced monthly asset purchases of $40 billion with no end date. The Fed assured that, provided inflation remained manageable, they would continue with the monthly purchases of U.S. mortgage-backed securities until there was a marked improvement in both the economy and the jobs situation.

Wall Street rallied on the news on Thursday, with the major indices all striking multi-year highs. The momentum continued into Friday with the DJ30, SPX500 and the NASDAQ ultimately posting weekly gains of between 1.5% and 2.3%. The tech-heavy index hasn’t been this high in nearly 12-years, while the DJ30 and the SPX500 are both at a near 5-year high.

The Fed news had the opposite effect on the U.S. Dollar, which fell broadly and has since been under pressure; the EUR/USD pair was last trading at $1.3121, a 4-month high. The softness in the U.S. Dollar helped push commodities higher, with gold striking a 7-month peak before easing back to $1.772.70 and NYMEX-traded crude oil hitting above $100 a barrel on Friday.

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This week, we look at OpenBook guru lyco013 from France who currently has 819 copiers and 4,364 followers. The trader is among the top 10 on OpenBook’s 6-month ranking board with a max drawdown of 8.6%, average exposure of 29.3% and profitable weeks ratio of 66.7%. As seen from the guru’s Profit and Loss page, his realized equity for the last month was 17.8%, the last quarter was 28.6%, last six-months was 54.8% and for the last 12-months was 93.7%.

Over the past 6-months, the trader had executed 97 trades, with 100% of them resulting in a profit. His portfolio primarily consists of currency pairs, with the AUD/USD pair having the highest allocation of 27.9% which earned 3% over the period; the GBP/USD and the EUR/USD pairs also have high allocations at 26.8% and 25.7%, with gains of 1.5% and 2.6%, respectively. The 9.2% allocation in gold has also returned 2.5%, while a 0.3% allocation in Microsoft earned 0.6% over the period. Only a 1.7% stake in the GBP/JPY pair resulted in a loss, but that doesn’t take into account an open position in the pair which currently is showing a 29.38% gain.

The trader views himself as a fundamentalist trader primarily and cautions potential copiers that as such he occasionally holds a trade open for several months; a review of his five open trades shows this to be true, with open positions in gold, EUR/USD, GBP/JPY and GBP/USD, some of which are nearly a year old. Aside from the aforementioned long position in GBP/JPY, the trader has a long gold position open which is not far off breakeven; that long gold has a TP of $1,948 which analysts believe is achievable given the dollar’s weakness.

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