Lets face it – if you are some kind of “eternal optimist” you’re gonna seriously need to re adjust your thinking in coming months. If the “kool-aid” of global central bank easing, and charts filled with wonderful green candles all sloping to the sky has become your “norm” – then get ready for a good swift kick to the face.
Seriously….you’ve got to be kidding if you honestly think this is for real – and even more so a fool, if you’ve any ideas that it’s going to continue for much longer. The stock market has long and since become a complete and total sham ( as computers make up most of the daily activity – all being that most Americans have already been robbed of their savings) and the entire thing is more or less being held up with phony money coming out of Washington.
Please correct me if I am wrong. If you actually believe the numbers posted on CNBC – you need to have your head examined.
Looking ahead, and making plans for the future is a key element – defining a successful trader. You see you’ve got profits today – so (greedily) you hang on for tomorrow, only to see you are back at zero again. You buy when the T.V suggests all things are well – and you sell when they suggest the opposite. In other words….you continue to do exactly what they say….yet wonder why you keep getting rinsed.
Duh!
As far as a chart pattern goes – imagine 2013 looking more like a 5 year old sitting at the kitchen table with a set of crayons. At best we are looking at one big wonderful mess.Up one day and down the next….then up two days then down for 4. A bunch of lines / squiggles – near impossible for the untrained eye to navigate.
I continue to caution you – this is a top – not a bottom.
The Currency Wars Have Already Begun
While retail traders chase green candles and dream of easy money, the real game is happening in the currency markets. Central banks around the world are locked in a race to the bottom, each trying to devalue their currency faster than the next guy. The Fed prints dollars like confetti, the ECB cranks up the printing press, and Japan keeps the yen artificially weak. This isn’t monetary policy – it’s economic warfare, and if you’re not positioned correctly, you’re going to get steamrolled.
The USD has been living on borrowed time, propped up by nothing more than the “cleanest dirty shirt” principle. But here’s the kicker – every other major economy is playing the same debasement game. When everyone’s currency is trash, the one that stinks the least temporarily wins. Don’t mistake this musical chairs game for actual strength. The dollar’s reserve status is hanging by a thread, and smart money is already positioning for what comes next.
Risk-On Risk-Off: The New Market Religion
Forget fundamentals. Forget technical analysis in the traditional sense. Today’s forex market moves on one thing: risk sentiment, and it changes faster than a politician’s promises. One day EUR/USD rockets higher because some ECB official whispers about “measured accommodation,” the next day it crashes because someone in Brussels coughs the wrong way. This isn’t trading – it’s gambling with a rigged deck.
The correlation trades have become so obvious it’s painful. When stocks go up, commodity currencies like AUD and CAD follow blindly. When fear hits, everyone piles into JPY and CHF like sheep running from thunder. But here’s what the herd doesn’t realize – these correlations work until they don’t. And when they break, they break violently. The Swiss National Bank learned this lesson the hard way when they abandoned the EUR/CHF peg. Overnight, decades of “sure thing” trading strategies got obliterated.
The Volatility Drought Is Ending
For years, central bank intervention has suppressed natural market volatility. Every dip got bought, every spike got sold, and traders got lulled into thinking 20-pip ranges were normal. Wake up. That artificial calm is about to turn into a hurricane. When central banks lose control – and they will – the pendulum swings in the opposite direction with a vengeance.
Look at GBP/USD if you want a preview of coming attractions. Brexit was just the appetizer. Currency pairs that used to move 50 pips in a day started moving 500 pips. Carry trades that worked for years got destroyed in hours. This is your future across all major pairs. The machine-driven, low-volatility environment is ending, and most traders aren’t prepared for what replaces it.
Position Sizing Will Make or Break You
In the old days, you could afford to be wrong and live to fight another day. Those days are over. When volatility returns with a vengeance, overleveraged positions don’t just lose money – they get annihilated. The retail crowd still thinks in terms of risking 2% per trade in a world that’s about to start moving 5% in a session.
Smart money is already adapting. Position sizes are shrinking, stop losses are widening, and risk management is becoming the primary focus instead of an afterthought. While amateur traders are still chasing pips and calculating how many lots they need to get rich quick, professionals are building fortress balance sheets designed to survive the chaos ahead.
The End Game Approaches
This isn’t about being bearish for the sake of it. This is about recognizing that unsustainable trends eventually end, and when they do, the reversal is always more violent than anyone expects. Central banks have painted themselves into a corner with zero interest rates and endless money printing. They’ve distorted every market on earth, and the bill is coming due.
Currency markets will be ground zero for this reckoning. When confidence in fiat money finally cracks, when debt becomes impossible to service, when the printing press solutions stop working – that’s when you’ll see moves that make 2008 look like a warm-up act. Position accordingly, because hoping and praying isn’t a trading strategy.
This is a reasonable assumption, but what disturbs me is that so many took contrarian views recently. My guess is that the grind goes on for some 10% more.
10% more sounds great to me – and a possible stretch at that.
I see it as, the point where most retail investors will soon feel they will “miss an opportunity” as wall street hands off the bag here at the top. I plan to trade it as far as I can as well – but with extreme caution, smaller position sizes and my eyes wide open. Nothing has improved and the money supply continues to balloon.
Kong, I hear you loud and clear buddy! I trimmed my equitiy investments yesterday by 50% along with all bond shares “pimco” to zero.This my retirermrent fund “mutual funds” only.I was 82% invested and pushing this run up for all I could get but the risk/reward is over in my mind.I have been making good on my international investments and would like your taken those going forward considering a pullback on US stocks.Just how much effect will it be world wide in the next 6 to 12 months?
I realize what you do with your money but this is my largest account and would like your perspective on the emerging and international equity investments with the inevitable upcoming correction/crash on the US market.I have pm’s on the side also and a small risk account for the same.
Thanks, Ronnie
Take heed readers at Forex Kong – this is a gentleman that clearly CLEARLY has his ducks in a line!
If you’ve been buying at the right time with “red candles and blood in the steet” then YOU SHOULD BE TRIMMING HERE – at the stage of “retail euphoria”. Fantastic work Ronnie Byrd – inspirational!
Being on the ground in several emerging economies over the past 10 years (Colombia in particular) I can say without question – things are really starting to crank higher. Here in Mexico as well (Costa Rica and Nicaragua too) – tourism and retail development continues to go go go, with India and the rest of Asia just getting going. I too am very interested to see what effect the next “downturn in the U.S” has – in particular on Canada!
I’d love to know more of the specifics Ronnie – perhaps we can chat / mail privately. It sounds like you’re in a fantastic position, and really have this down.
Kong, Would love to chat anytime,shoot me you email and I will tell you exactly what I am working with so you have a better idea.
Ronnie
It’ll be the perfect newspaper headline this weekend if the Dow manages to close above 14,000. In addition to that, we’re getting record inflows into stocks (http://www.moneycontrol.com/news/wire-news/investors-pour-record-3655-billion-into-us-stock-fundsjanuary_814306.html). Looks like the top’s just about in!
In general, how do you see 2013 ending Kong? Are you thinking a simple 10% correction here and new highs or sideways trading into year end or is this the beginning of an actual crash? Regardless of how your prediction turns out, just remember that even the brightest minds and most successful traders will likely be wrong about 2013, it’s literally a 50/50 shot on what happens this year, though I still think longer-term we may be screwed. And regardless of if you’re right or wrong about the end of 2013, I’m sure you’ll make tons of money either way just trading the events as they unfold this year.
Although typically bearish, I’m a almost swept up in the europhia myself (which I use as my own contrarian indicator! lol). Just for fun, I say Dow 12,000 by year end.
Again my apologies guys as I just can’t get too deep into anything being in transit. I get home late tomorrow and plan to get back at it here full time as usual.
2013 could very easily grind sideways with considerable volatility as central bankers continue to fight hard against the likely flow of negativity surrounding the global economy continues. This in itself is gonna be rocky at best with such strong and conflicting forces pulling and pushing hard in opposite directions.
Perhaps Dow trades in Avery wide and choppy range between these highs and 12’000 grinding the hell out of all involved with no real clear path or trend. That’s what I am preparing for.
I am going to tighten it up a little, we could very well see the first correction in the March/May timeframe, not too far off. This should be observerd as a normal correction or profit taking by the media & general participants. This will most likely be smart money leaving the sector before the masses head for the exit door. Thus we will continue to see smart-money slowly liquidate these funds further during a July/August period managing this rehearsed game plan.
At such time, I would suspect that the majority of the large hands will have safely exited the pre-parabolic move, leaving only those driven emotionally by greed while living in the euphoric hypnotic state.
At this intersecting point of time we should have by now reached mid to late fall of 2013 and an exhausted, overly funded equities markets literally held up by the puppet masters & of course the average retail inventor.
The final act to this perpetual pump & dump Ponzi Scheme, ultimately has the retail investor riding the final waves to slaughter house.
Thus the repeated actions & approaches, baffling all as a different outcome is expected.
And so the insanity continues….
Cheers Schmed,
I hope that with Kong’s guidance we can trade the short and medium term trends in the identified forthcoming dangerous market conditions profitably.
Thanks rolo. I will continue to work my short term strategies here coupled with those longer term fundamentals with plans to catch the turns as they present themselves.
So far this week…I see I’ve missed some reasonable further move in Jpy crosses but can’t complain as I’ve been travelling and not able to focus on my work. Back at it here tomorrow.
Hey Kong, what’s your take on Deniis Hartman’s prediction that the yen goes to 150?
Bob I hope u got my email response…as I learn the ropes on this new iPad.
Otherwise…..this guy seems like a media snake to me…as I only see him pop up on occasion right around the time markets are set to turn. If I’m not mistaken he is usually suggesting to do the opposite of what I’d be doing at the time…but has it right on this fundamentally.
The level 150 – I can’t really comment on…but I will be looking long usd/jpy all year….so…..bring it on Dennis!
He is Alive….. How was Van…. good to visit homeland?
I meant Dennis Gartman.