I look back on last night’s post and frankly……bust a gut. A touch “brash” fair enough – but……when there’s nothing else to say….well – there’s nothing else to say. Obviously the foresight gained through study of currency markets ( opening Sunday afternoon) held true, and I live to blog another day “sans” consumption of crow. A massive upturn across markets, as Uncle Ben’s QE money finds its mark. How’d I know? – Common – I told you a couple of days ago!
Regardless…some interesting observations here “blog wise” – as traffic literally falls off the map, with huge gains abound, green candles everywhere, happy smiley investors, and tranquil “bliss” scattered ‘cross the net like tortilla’s in a hurricane. Apparently…..Kong no longer needed.
Tranquillo amigos. I booked my profits today at the NYSE close.
We go higher from here sure ….but “I” go higher with 4% more gas in the tank than this morning so……take it for what it’s worth…most guys are lucky to bank that….yearly.
Don’t be an ass if you see profits in this environment – take em. We’ve seen some fear here in recent days – with everyone scrambling for info…..scrambling for some ” sense of it all” – and now with one big “up day” you think you’ve got this thing solved?
Please……..is that greed talking?
The Real Game Just Started – Don’t Get Fooled by Green Candles
Look, I get it. You see USD/JPY ripping through 145, EUR/USD finding some legs above 1.0650, and suddenly everyone’s a genius again. But here’s the thing nobody’s talking about while they’re popping champagne corks – this QE-fueled rally is creating the exact conditions for the next major currency disruption. You think the Bank of Japan is just going to sit there and watch the yen get obliterated? Think again.
The carry trade mechanics are lighting up like a Christmas tree right now. Every hedge fund manager and their grandmother is borrowing cheap yen to pile into risk assets, pushing USD/JPY higher and feeding this whole circus. But remember what happened in 2008 when these trades unwound? It wasn’t pretty. The yen rocketed higher as everyone scrambled to pay back their loans, and risk assets got crushed. We’re setting up the same powder keg, just with bigger numbers.
Central Bank Chess – Every Move Matters
Uncle Ben’s money printing party is having exactly the effect you’d expect on the dollar index. DXY is getting hammered as liquidity floods into everything that isn’t nailed down. But here’s where it gets interesting – the European Central Bank is watching this whole show with growing concern. They can’t let the euro get too strong or their export economy dies, but they also can’t match Fed printing without destroying what’s left of their credibility.
Watch GBP/USD closely here. The pound’s always been the wild card in these scenarios, and with Brexit uncertainty still lurking in the background, sterling could either rocket higher on risk appetite or get absolutely demolished if this whole thing falls apart. Cable above 1.25 starts getting dangerous for the Bank of England’s comfort zone.
The Commodity Currency Tell
AUD/USD and NZD/USD are absolutely screaming right now, and that’s your canary in the coal mine. When the commodity currencies start running this hard, it means one of two things – either we’re in for a sustained global growth boom, or we’re watching the final blow-off top before everything comes crashing down. Given the fundamentals underlying this rally, I know which way I’m leaning.
The Aussie breaking above 0.67 against the greenback is significant, but it’s also happening on the back of Chinese stimulus hopes and iron ore demand that may or may not materialize. The Reserve Bank of Australia is stuck between a rock and a hard place – they need a weaker currency for competitiveness, but they can’t fight the QE tide without destroying their domestic economy.
Risk Management in Fantasy Land
Here’s what separates the professionals from the weekend warriors – we know this party doesn’t last forever. Every pip you’re making right now comes with an expiration date, and that date is probably sooner than you think. The smart money isn’t just riding this wave higher; they’re positioning for the inevitable reversal.
USD/CHF is telling a story nobody wants to hear. The Swiss franc is supposed to be weakening in this environment, but it’s holding surprisingly firm. That’s institutional money hedging their bets, preparing for the moment when safe havens become relevant again. When fear creeps back into the market – and it will – that flight to quality is going to be violent.
The Next Phase Setup
So where does this leave us? Simple. We’re in the eye of the storm, and the weather’s about to change. This QE rally is buying time, not solving problems. The currency markets are pricing in perfection right now – perfect policy execution, perfect economic recovery, perfect coordination between central banks. When has that ever worked out?
The next major move is going to catch 90% of traders completely off guard. They’ll be too busy counting their unrealized gains to see the setup developing. But not us. We bank our profits, we stay nimble, and we prepare for the reality that easy money creates hard landings. The forex market doesn’t give participation trophies, and this rally is setting up some very expensive lessons for those who forget that fundamental truth.
KONG, Good job bro’, I love to hear you had a good day and the GOOD sense to fill your wallet.I have come to the conclusion in this market that one is crazy to pass up a profit.Man I know you are busy but I need some advise on a vertical call I took,I admit I should of probably practiced this but I just learn better playing for real,anyway I can’t find material on exiting properly so if you have time or not I appreciate your post anyway.
Hi Ronnie….sorry for the late response but….for whatever reason I only saw / viewed your commment now.
If you want to outline the details of your trade – I will most certainly have a look… and offer whatever insight I can.
KONG, I bought 65 QQQ calls and sold Equal amount 71 calls,I have not closed out one of these.My question is can I sell the 65 calls before expiration at a profit sub 71,and if I do how do I get free of the 71?I understand holding the 65 to expiration regardless of where the 71 calls end and just execute and take profit,is nthere a better way to play this? thanks for your time Kong, Ronnie
Ronnie…..
More importantly – what month / how much time do you have?
Off the top of my head – a “bull call spread” is not a novice strategy – and as I’ve recommended here previously – when dealing with options, best to keep things simple – very simple!
Luckily in this case….it looks like your timing is such that – you should do ok….but I assume (on your trading platform) that a sale of the 65’s will result in termination / of the entire position?
Best advice I could give you Ronnie – would be to exit the entire position as soon as you are even close to “in the green” and just get back to basics. The premiums you (in theory) will have saved in off setting the near term buy with the longer term sell – isnt really worth it in my view.
If you think the price is goin up – then get yourself some longer dated calls and call it a day no?
Hey-Kong…. did our hear that CAD & AUS are being looked at by the IMF as a reserve currency…. great for Canada!!
Yeah I am Canadian….
20 pip jump in the dxy index…. let the games begin…
All the reason why I often take profits after NY session – I will take the 20 or 30…or 50 for that matter and just look to reload.
Hey Kong – I am holding SLV shares and Dec/Jan SLV Calls…. basically looking on the side here and just waiting. I will take some currency positions here and there taking 2% to keep the mojo going. I’ll drop the Dec calls sometime in early-mid Dec unless I am sparked to change direction. The SLV shares looking to book profits sometime in the next 45 days. All green across the board except for my NUGT Dec calls – this one got smacked really hard – I am ok with that… should be ok to take some green away by December.
Your perspective above is based off a short-term day trade correct?
All my SLV positions moved up above 6k. today.. not a bad day at all….
Its like this….once I’ve entered (and have more or less “proven” Im on the right side of the trade) I will often book profits and then drop down a time frame or two ( or three) – and re enter in the original direction – at levels of support / resistance.
Its not for everyone – as it does require a bit more “technical trading” but……in theory if you’ve already got the “macro trend” right – any small mistake on re entry is quickly corrected as the trend keeps on rolling – all be it with 2 things achieved – more cash in my account, and keeping things nimble.
Got it thanks – I’ll just stick with my squeexe play for now with currency… it’s been working very well… until I gain more experience in this sector I am not going to mess around…
Just took EUR/JPY… I know you don’t like this with risk on but this is just a quick scalp…
I want to share it with you but you never connected via email…. let me know… cheers schmed
I love long EUR/JPY and am also planning to trade the hell out of it.
I suggested dumping long EUR/AUD – as AUD will be bought more aggressivley than EUR in times of “risk on”.
JPY will be sold like mad – u see? JPY is a safe haven – and AUD is a ” risk related” currency – they behave polar opposite vs EUR.
Ive deleted emails etc – as there are many – can we try again?…of course I want to see/ understand your entry etc…
I know we have the Fed bizz tomorrow…. we know that an addtional 85bill per month will be spent on bonds. Looks like to market has already priced this in….. Why then do I feel like this is a bounce ” dead cat bounce” collecting the last few just to dump again….
Long CAD/JPY thats it for now
Kong, yes I was exploring a bit recklessly.They are jan.13 exp.and I feel good on the long leg in that time frame,I just was not sure on closing the short leg.So what you are saying is when I sell the 65 hopefully at profit it will end the 71 leg? It is hard to ask this kind if ? on SMT w/o the wolves chewing on a leg,I really appreciate your time and admire your use of currencies and knowledge of/Wow what a great advantage and feeling it must give you!!!
There you go – you can’t be “reckless” with options…they will bite you in the ass before you’ve even blinked.
This is a tough one…I don’t really want to give you the wrong advce but….I’d ditch the long call sells” immediately (even if small loss) and hang on to the near term calls as I expect further upside here in coming days. Maybe you make a buck…maybe you break even but….lesson learned.
Thoughts?
kong – here is the email address… [email protected] cheers
Kong, Yes I agree with that strategy and many thanks for your time plus I appreciate your way of not telling me “Don’t do That”. Message received my friend.
Good luck man.