U.S Dollar Strength – A Nightmare For U.S Businesses

I’m pleased to see that the mainstream media is finally catching up – with these headlines “now” spattered across the news at Google. Are you finally coming to understand the effects of a strong U.S Dollar? Or are you just thrilled that you can power your generator an extra day or two on the cheap?



As we’ve discussed here earlier – a stronger U.S Dollar is The Fed’s worst nightmare ( as debts payable in USD skyrocket out of control ) and is killing U.S Exports.

The “less than expected GDP” print here this morning isn’t even the half of it, as these numbers are goosed along with “all” U.S Data in a sad attempt to mask what’s really going on. The near term “sideways trading” in USD has done little to excite traders, as with the current gong show playing in The E.U / Greece.

USD has “appeared” to be the “best of the worst” with all paper currencies essentially losing value at breakneck speed.

With commodities stretched about as low as one can imagine, and USD now stretched about as far as “America can bear” it’s really only a matter of time ( a short time ) before the elastic band snaps back in “epic fashion”.

You won’t get out in time. You’ll hang on until you are swimming in a sea of red, looking for a lifeline unless you keep your eyes peeled and have the courage to “sell” when everyone else on the planet is buying.


Nothingness Becomes Somethingness – Patience Required

I remember a time (not too long ago)  when I would return home from my morning walk along the beach – excited to see how the markets where behaving.

Ahh the good ol days, when I’d get back to the house eager to pull up my charts and see the profits. Seeing the market moving “exactly as I anticipated” and revel in the knowledge that “I’ve got this thing figured out”.


When things have traded sideways for this long…those days are now few and far between.

I’ve weathered the storm countless times throughout my career, and have endured extended periods of “nothingness” before but…..this time……this time has been nothing but a cruel exercise in both “patience” and “self-discipline”.

Frankly….I can’t remember the last time I came back to the computer and saw anything of interest. Just day after day of the same “up and down” intraday shakeouts. The same flatlined “nothingness”. The same ol day-to-day “grind” as price action essentially grinds to a halt.

It’s dull. It’s boring. It sucks the life out of hopeful traders looking to “catch a trend” when all they continue to see day after day…..is the same ol thing.


At least for those of us who’ve “seen this all before” one can take solace in the fact that these extended periods of “nothingness” are almost always followed by periods of “somethingness” ( however short ) and that perseverance, patience and self-discipline always pays off in the end.

We can’t make the market move any faster,

We just plan to be on the right side of it when it does.


USD/JPY – A Disturbance In The Force

Finally! Something of significance!

If you take a look at two pairs such as GBP/JPY as well GBP/USD as a “control” – you’ll see that over the past few days of general GBP strength “both pairs” have been moving higher essentially ruling out any real movement in either JPY or USD.

Zooming in closer and taking a look at each of these pairs on much smaller time frames ( take the 15 minute for example ) you’ll blatantly see the “post Fed minutes” move has GBP/USD pushing higher and GBP/JPY falling off a small cliff.

THIS IS WHAT WE WANT TO SEE! ( Yoda may not ).



Suggestion that both USD as well JPY are finally moving “regardless of the currency they are pitted against”.

Obviously the same thing can be seen just taking a look at USD/JPY as  a pair unto itself but….in this case ( looking wider at many pairs ) we see clear suggestion that USD and JPY are moving ( in opposite directions) to  a much larger degree.

The Nikkei has also taken quite a “fast dip” here post Fed minutes so it’s pretty fair to say that markets aren’t particularly pleased with “something”.

Any bets on where The SP 500 and The Canadian TSX are likely headed next?

US Dollar Rinse Job – Now Complete

The U.S Dollar as well as U.S equities have failed to breach the highs from Fridays “Sell Risk” post.

Equity markets look to be rolling over here “again” at the 2040-2060 level, while USD takes out the last of the smaller traders.

One can assume that things are now “hanging in the balance” with respect to an outcome with the current “Greece situation” but in all….I really don’t think it matters.

The markets move on much larger time frames, and whatever is to become of Greece ( all will turn out fine in my view ) will just be another silly headline geared to moving the masses.

Greece is not leaving the EU Zone. It will continue to “hang in there” as well continue to keep you up at night – if you let it.

Countdown till the “real action” starts, as we are flat as a pancake “yet again”.



The Week Ahead – For Traders And Morons Alike

Chinese Manufacturing PMI came in Saturday with a miss at 49.8 – again signalling that the world’s “economic power house” is now in contraction, so I wouldn’t be expecting a big “up day” tomorrow morning.

One needs to “completely ignore” the current slew of media headlines as every Central Bank / manipulated media outlet on the planet is on “full alert” to do whatever they possibly can to assure the general investment community that “all is well – there is nothing to worry about at all”. Right.

European stocks have had their “booster shot” due to the QE announcement from The ECB, but have now been rejected at the previous highs.



As totally frustrating as the last few weeks ( if not months ) of trading has been, we’ve now seen the injection of another “trillion” in proposed asset purchases and still…..even still – markets can’t move any higher. Tops are long, tops are drawn out, tops are a pain in the ass but……now with The ECB “done” – seriously…….what’s left from the CB’s to push this thing any higher? Zip.

EUR / USD finally showing solid signs of bottoming / finding a low.



Interesting to note The CRB Commodities Index, as one could entertain the scenario that money comes out of ridiculously bloated / bullshit pumped up stocks, and flows into commodities.



The U.S Dollar rampage should conclude here pronto – as it’s exhausted to say the least. Two “doji candles in a row” signalling obvious “indecision” and with commodities looking to bottom out we understand the correlation. A weaker US Dollar ( finally ) = rising commodity costs.



The SP 500 along side “risk in general” has been weak for some time now…but still hasn’t “kicked off” on any kind of lasting downtrend. The whipsaws / sideways trading has been a pain, but all with conclude here shortly.

Even if The SP “does” get a bounce to around 2040 area…it doesn’t make a hair of difference medium term. The next leg down will bring tears to your eyes, fear to your wife and a fat hole in your account should you decide to stay the course.



The Canadian TSX as well as virtually all equities indexes globally are about to take the pain as The Nikkei ( suggested to reverse a few days ago ) has also hit overhead resistance and now looks to dump.

Currency wise little has changed really – as the general theme of long JPY vs the commodity currencies as well short USD vs E.U currencies still stands.


Two Days Left For Bulls – Still Trying To Ride

The weather here this time of year is absolutely beautiful, with the sun shining and the cool breeze blowing in off the Caribbean sea.

A retired German couple has moved in across the way, with the Mrs. out tending to her flower pots by day, and the gentleman blessing us with the sweet sounds of his accordion / squeeze box music by night. Happy days indeed for those not concerned with the daily comings and goings of the U.S stock market.

A bounce here to around the 2040 Level in SP 500 should give the few remaining bulls ( or at least those that still have a couple bucks left ) a chance to hit the exits before the next leg lower wipes out the lows at 1970 – then heads substantially lower.

Finally marking the near term highs in USD, Gold will hold up ( perhaps a few dollars lower ) before making its next leg higher as safety is “oh so quietly” sought.

The Japanese Yen has long since made its medium term low, and has been consistently gaining strength for weeks now, as commodity currencies continue to get absolutely smashed. AUD/JPY ( remember my most profitable trade idea moving into 2015 ?) as well NZD/JPY and CAD/JPY now down over 1000 pips from their highs.

The sideways action in equities is almost complete, and it should only be a couple more days until we see reversal “again” – this time being the last before the established “downtrend in risk” continues thru February / March.

I’m not trading much these days and as boring as it may appear, sticking with the same medium term plan of “short USD” and “long JPY” ( via everything “other than USD/JPY in itself ) continues to make the most sense.

“Buy and hold” for anyone with “bullish intent” will soon prove to be a misstep.



Baked In The Cake – ECB Plans A Joke

So I guess you expected that markets would just “rip for the sky” on news of The ECB finally pulling the trigger eh? Wrong.

SP 500 and “risk in general” rejected at the suggested area around 2050 as……this has been priced in for ages. Draghi taking his turn “pissing into the wind” for the final attempt – as market fundamentals begin to steam roll Central Bank efforts.

We all know QE doesn’t work…and if you ask me…..if looks like “the market” is starting to get it as well.

The Canadian Stock Exchange $TSX has also bounced to the downward sloping trend line , where I expect it to be rejected and begin the next leg “considerably lower”.

And just a quick note to “any and all of you readers” still convinced that The Central Banks have your back………………..

Just keep your head buried in the sand while they print you into poverty.

You’ll figure it out eventually..

ECB QE Plan – It’s Already Priced In

Who “doesn’t” think The ECB will disappoint markets with Thursday’s announcement of its “proposed” plans to initiate full-blown QE?

Draghi is well-known for his “silver tongue” – but it takes money to buy whiskey.

In order for Draghi to satisfy the “massive expectations” of Wall St. and the global investment community at large – he better have a lot of it. I’m thinking that anything less than “1 Trillion Dollars” ( which still won’t be enough to even make a dint ) will be seen as a disappointment, as markets have already priced this in.

The Germans are still very resistant to the idea, assuming they will inevitably be left holding the bag in supporting “the rest of Europe” with their own economic output, and as I’ve come to understand it – there are still several legal hurdles to be overcome before just ” cranking up the presses”.

It would not surprise me in the least to hear “suggestion” of QE to be rolled out later this year, or perhaps some “paltry amount” bullshit program aimed to temporarily shake the wolves off their backs – either way….it will do nothing to stave off the current economic spiral Europe finds itself in.

QE from The ECB will do absolutely nothing to change the trajectory of a further weakening European economy, a further weakening U.S economy, a further weakening Japanese economy – and the list goes on.

Short of a very near term bounce ( which we’re seeing now ) I expect another series of “long red candles” coming – “post ECB meeting” Thursday.



Banking Profits – Long Yen Vs Commods

I’m starting off the new year with a bang, banking just over 900 pips total in short trades via AUD/JPY, NZD/JPY as well CAD/JPY.

These pairs have fallen fast ‘n furious with the recent move towards “risk aversion” and there is never a better time to take money off the table than “when there is money on the table”!.

We’ve discussed the correlation of a stronger Yen and weaker Commodity currencies here time and time again – so these pairs ( being a no brainer ) provide the biggest bang for yer buck in “straight up” pitting the weakest against the strongest.

I will be planning to re enter these pairs in coming days, as they “may” take a reasonable bounce before continuing on their way down.