Occasionally I’ll turn on the “CNBC T.V” widget within my Think Or Swim Trading Platform.
I get a chance to “see what you see” there in the U.S - the wonderful rants n raves of the “oh so knowledgeable” and not at all “bias” staff of CNBC. This morning I was thrilled to hear of the massive recovery in housing in the U.S, with some “million plus new homes on the build” and the question came to mind……..
How can there be a housing recovery in the U.S when the price of lumber has absolutely tanked since March?
I am no economist ( by any means ) and do hope that perhaps one my valued readers can help me understand.
Seriously? – Can some one a little closer to the source explain this? – Or just better to go with the opinions / bullshit that the local media keeps throwing you?
The most reasonable explanation for the continued U.S dollar strength ( making a fool of good ol Kong here ) is two-fold in my view.
1. The massive amounts of liquidity provided by the Bank of Japan is most certainly spilling out - and into U.S equities. In order to make those equity purchases – your foreign currencies need to be exchanged for US dollars ( through which ever institutions / brokerages these stock purchases are made) so as “hot money” looks to take advantage of the continued pumping of U.S equities by the FED and his “banksters”, USD goes along for the ride.
I have been considering a time when both USD and U.S equities would fall together ( and had assumed that time was now ), and now am even more certain of this market dynamic – as we clearly see the two continue to rise together.
How far it can go now is anyone’s guess as the upward break in USD coupled with the complete detachment of U.S stock prices from reality – have both blown right past/through any prior levels I had in mind. Chart patterns and lines of support and resistance have absolutely zero value in a market as rigged as this.
2.The Fed’s continued manipulation of the Gold and Silver markets ( in order to drive prices lower, and mask the massive dilution / devaluation of US dollars via 85 billion in printing per month) and artificially low-interest rates (providing “savers and retired folk” zero on their money) coupled with the massive bond purchasing program has achieved its goal in essentially “snuffing out” any other viable investment opportunity – other than the U.S stock market.
If the Fed was to stop buying U.S government debt or allow the price of Gold to accurately reflect the massive devaluation of the dollar – the entire thing would collapse within days.
Check out this chart of U.S Macro Data ( at it’s worst in 8 months ) compared to the S&P 500.
The higher this parabolic rise goes – the faster / harder it will fall, giving the Fed exactly what it wants……justification to print even more money.
One seriously needs to question – whose interests does the Fed truly serve?
Certainly not those of the American people.
If you’ve ever logged in to an actual forex trading platform you’ll have noticed right away – a number of wonderful options for “entering your order”.
You’ve got trailing stops, market orders, limit orders….then of course the “one cancels other order” – and the ever so complicated ”if then? one cancels other order” – just to name a few. Each “order option” complete with its own little drop down menu’s providing you with “predetermined stop values” as well “predetermined take profit values” such as -25 pips, -50 pips etc……
Have you lost your mind?
The vast majority of Forex brokers act as “trading desks” – and in that small amount of time between you “placing” your order , and waiting anxiously to ” get filled” - your brokerage has placed the exact “opposite order” on their own behalf – trading straight against you, and more or less banking on the fact that you are dead wrong.
The “predetermined stop values” and “take profit areas” are seen across the entire platform – and targeted daily!
Ever wonder why no matter how hard you try to trade the smaller time frames / short-term action – you wind up getting cleaned out? Duh! – You are showing your broker ( who is actively trading against you ) exactly the level to hit your stop!
Add this little nugget to the list, throw in the current volatility and complete “gong show” we call the market – and once again take heed.
Do not try to trade this!
Over the years it’s been suggested on several occasions, that perhaps I should write a book.
Not to say that my story is anything special ( by any means ) but fair to say “unique” – as I’ve wondered this planet some 15 years now with little to no sense of “home” and with few connections to anything……or anyone. Some call it lonely – I call it normal, as for the majority of my adult life – this is all I’ve known.
I used to stay at the same hotel whenever I’d get back to visit my family, and the girls at the front desk always had a chuckle. Knowing me as they did – I’d been filed under “N for Nomad”. I had a laugh too.
Reasons for this behavior run the gambit. I have my own theories as do I assume - those who know me. It’s not important. Without question I’m as regular a person as any on Earth, questioning at times – ” what am I doing?” and “why am I the way I am?”
Up until most recently I’ve had little interest in “writing it all down”. From confrontations with machine gun packing Rastas in the West Indies…to long dark drives into “deep dark places” of Colombia…to the “helplessness” of being trapped in an elevator in Romania. Problem being – I’ve never had a “plot” and for the life of me can’t come up with a decent ending.
Don’t get me wrong – there are some really good times as well.
They just don’t make for very interesting stories.
A pivotal day in “the life of Kong” as a number of factors come into play. Of particular significance “00.01″ the irony, the drama – and further development of a story that just might have a plot……….and an ending!
I watch a lot of UFC (mixed martial arts) and often identify with the discipline required.
As a boy I gave wrestling a shot, as well judo – and spent time in a “relatively serious” boxing environment before the ripe ol age of thirteen. I remember it all…….every minute - like it was yesterday.
In particular a story from the boxing ring.
A new kid there in the garage – fast, eager and more than just a little cocky. It didn’t take long until he as well, had done his time and was ready for a real opportunity in the ring. We squared off , came together at the center, touched gloves and BANG!…….before I’d even taken a step back – the kid wound up and clocked me with everything he had.
It was the first time I’d truly “seen stars” and the rage that surged through in those seconds after – was again………something I will never forget, and despite every ounce of myself screaming to “ annihilate this lil sh#$t” – I remained calm. I boxed.
3 rounds later – I lost that fight…………but in retrospect – I gained far more.
I learned how to take a punch. I learned that “life’s not fair”. I learned that things will likely be a lot tougher than you expect – and that you can’t win all the time.
Needless to say – that kid didn’t last very long. He danced around a couple more sessions, but in the end couldn’t handle the crunches and circuit training, gave up and went home crying to his mother.
Boxing like trading – you really do need to learn………how to take a punch.
I want so badly to get short USD/CAD for another leg down in the pair – and am watching the price of oil here this morning, as CAD will often correlate.
Regardless of the near term squiggles and “apparent strength” in USD, my eye on the price of oil suggests it’s going higher. Pulling a daily chart of “/CL” Light Sweet Oil Futures – I see our friend “the hammer” made an appearance on Friday suggesting that buyers had stepped in and that downside pressure would subside.
Short and sweet here this morning – but CAD looks strong against several other currencies. Should we see the price of oil move higher “getting long CAD” looks like a very good trade.
Otherwise – we still sit patiently awaiting moves in USD – Question being – Is the recent strength a sign of something new – or merely a “pop” before USD continues lower?
We will get our answer by close tomorrow.
The last two days “rocket ship” strength in the USD , and in turn further weakening of the Japanese Yen pretty much blew my trade plans out of the water – as I had been positioning for the complete opposite. The currency markets are extremely volatile right now – to the point to where I “should” likely take my own advice and step aside.
We all know I’m not gonna do that.
We will wait and see if indeed the USD has any follow through here – or turns back down and continues on its way. In light of this I wanted to show you something interesting. Not as much the USD value vs any number of other currencies – but USD with respect to its actual “purchasing power” in real world scenarios.
I’ve “borrowed” this lovely graphic from friends at Zerohedge, and hope no one will mind:
Decline OF USD Purchasing Power
Inflation is nothing new I know, but it does go to show how “endless money printing” really affects those living within it, as opposed to just looking at USD vs another currency. Fact is, with every Central Bank on the planet doing it’s best to keep up with the devaluation of the USD its difficult to really see it day-to-day.
In not living in the U.S and getting almost unimaginable “bang for my buck” here in Mexico, I can’t say that I know what it feels like either - but imagine that a young struggling new family ( with likely one person out of work ) must be feeling the pinch.
And so the printing continues……. with likely larger QE 5 coming soon.
If a day like today ( regardless of being bullish or bearish) scared the bejesus out of you – you are trading too large!
Volatility is the foe you don’t really know – until he’s got you so deep in a peruvian neck tie (please google it) that you’re seeing stars! In order to “trade another day” you need to take heed of current market conditions and take volatility very, very seriously. Not unlike ultimate fighting – one wrong move and you are truly – hooooooooped!
There is no “explanation”……no cute little “technical analysis” to put your mind at rest, no “CNBC commentary” to make it all go away – THE MARKETS ARE DESIGNED TO TAKE YOUR EVERY PENNY!
Days like today are a drop in the bucket ( in comparison to the -1000 Dow days we’ve seen in the past – remember? ) as the Fed’s printing scheme nears closer and closer to the cliff, you can only look forward to further assaults on your account ( let alone your “psychological being”) as the fleecing process gathers steam.
I’m a friend….and I’m a guy you can trust.
Seriously…….did you really think you could trade this?
Please………bide your time and find something else to do for now. Sitting across the table from guys with 85 billion dollar chip stacks ( and some pretty mean lookin buddies waiting outside) is no place for someone lookin to “have a little fun”.
The sun is comin out, and the fish are biting. If you’re stressed about today – you are trading “far beyond your means”.
You will be liquidated.
We’ve skated around the issue long enough and I’m about ready to get this done. I’m throwin ‘ em down – my gloves are off! Common big boy! – Let’s do this!
They say “don’t fight the Fed! Kong – Don’t fight the Fed!” – well……..this guy can shoot fine, and he’s pretty good with the puck – but can he fight? Can “Big Ben” fight?
I’m cruisin the neutral zone lookin to find out fast, as that good ol Canadian “fightin spirit” comes alive. I’ve had it with this guy. It’s “Go Time”!
He he he…..seriously though – I do find it fitting that hockey is the only team sport on the planet (that I’m aware of) where you are given complete and total reign to “beat the living daylights” out of your opponent while the crowd cheers you on. If it ever happened in American football or soccer, tennis or water polo – you’d be suspended for life.
In any case….to put the “naysayers” to rest – and to alleviate the current bordem on my end – let’s look at it this way.
For every single point higher we see the SP / Dow move higher – I will add “two points” to any number of “bearish currency plays” for as long as it possibly takes – to call this guy out and beat the living daylights out of him.
This has gone past the point of ”antagonizing” – and my patience has worn thin.
I imagine we’ll dance a little longer and that’s fine – but we’ve all got our limits. I’m not lookin for any more of these “assist plays” and I’m already a top scorer so……..it’s time to see what choo got.
2% on the day and likely the week – as I’m on the bench here this eve.
Markets got a bit of a surprise overnight as the Reserve Bank of Australia again slashed its key interest rate by yet another 25 basis points. That brings it to a record low of 2.75% – and the absolute lowest I can imagine it going for some time.
The Aussie (AUD) got absolutely pounded across the board overnight – losing ground to practically ever single currency on the planet. With troubling data coming out of China (Australia’s biggest trading partner) “fundamentally speaking” this can’t be seen as very good news. The AUD was only a short time ago yielding 4.75% and has taken a 200 point haircut over the past 18 months .
Short term we can see the selling pressure in AUD is obvious, and will likely provide some trade opportunities on the long side – however, I would be very cautious and not rush into anything there. Looking longer term I see this as yet another sign that the Global Economy is no doubt retracting – and that even the “best of the best” ( as Australia is generally seen to have a solid economy) are making moves in preparation.
I see the USD rolling over again here this morning as suggested and will watch closely – although commodity currencies such as AUD and NZD have also been selling off so once again – a very difficult fundamental background.