I’d have to say this is the first time in my entire trading career where I’ve seen both the US Dollar and US equities rise together – for such an extended period of time. The USD has been up up up some 25 days and running now – while stocks continue to grind higher as well. Something is obviously up.
The USD as well as the JPY are (under most conditions) recognized as “safe haven” currencies (as absolutely bizarre as that sounds) and as risk presses on and stocks move higher – these are normally sold. When risk comes off – flows head back for the ol USD as it is still the world’s reserve currency.
So are the big boys already building positions in USD in preparation for a larger correction/world event/news flash?
Looking at the calendar – I had planned to be in 100% cash as of the middle of March with expectations of such an event, and here we are….. only two days away. Obviously I can’t say for sure – but it would make a lot more sense to me that stocks would correct here as opposed to the Dollar. After this many days moving higher – we’ve got to see a little “zig” in that “zag” at some point.
So….with several open positions (small positions thankfully) I will likely plan to watch closely over coming days and even throw on a couple stops (which I normally / rarely use) in order to keep my self insulated from any “global disaster”.
Short of that…..perhaps things keep chugging along a while longer , and indeed the USD does finally make a turn down – and stocks continue there “blow off top”.
Trade safe here people. Market direction IS uncertain.
Kong,
I am reposting my latest ideas from Gary’s chat site. Gary has cycles skills, but his leadership skills need some work. I think with some thoughtful insight, we can move forward. First post is a little bit of a pep talk, but please, bear with me:
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zkotpen says:
March 13, 2013 at 11:13 pm
James Rangel:
I truly appreciate your insight into miners. Gary was leading us down one particular path late last year. You pointed out a different path. I examined it, albeit without much technical expertise or trading experience. It looked sound, so I took it.
If I may, however, I would like to give you some CONSTRUCTIVE criticism. I truly believe you would be a superstar if you took a more objective approach, more neutral, instead of optimistic and favoring metals and miners.
A lot of people are applauding your optimism, but that applause doesn’t guarantee capital preservation, or profits.
I would prefer to see you apply your keen analysis, without any hope or preference for one particular outcome versus another.
Abstract your own preferences and bias from the picture, and where do you see markets headed?
If you can answer that question, I see only one additional manageable hurdle that you will be able to top with ease, if you want to.
After going long miners in November, then long metals in December, I am literally at the point where I need to turn water into wine, lead into gold.
I believe all of us here who have taken similar positions, with similar negative results, can better place our optimism in our own ability to come together, to focus on the markets (instead of getting distracted by irrelevant visceral ranting), communicate, and come up with viable viewpoints on markets (not the various players in the drama) and discuss possible solutions.
The linchpin in that discussion, however, is necessarily to drop the preferences and biases.
To reiterate in the clearest possible terms: None of us is outperforming the simple SPY on our own, nor can we. Our optimism needs to shift from cheering for one particular team, such as precious metals, to realizing that if we focus on what’s relevant and communicate, then WE can become the winning team.
Zkotpen!
Wow….a lot to look over here – I will get through it during the rest of the day.
The group at SMT has completely lost credibility and focus. I agree with you on all points – and see it more as a “newsletter sale” than an actual trader/investor service. I never agreed with the trade strategies…… and a good thing too.
Let me get into the rest of your post – and hopefully others will too. Oh and Zkot – the blog does not allow for the posting of external links so readers here will have to “cut and paste” the bloomberg links into their browsers.
Next post includes some of my thoughts on the Yen action, and the Nikkei action going on while you were sleeping in the Western Hemisphere, & also looking forward to the overnight of Thursday into Friday. I would really appreciate if we could have some thoughtful discussion on where things might be going as Japan’s upper chamber votes on the new BoJ leadership in the upcoming overnight, plus next week, as, presumably, the new leadership takes over, and then going forward until the BoJ meeting on April 3-4.
The Wisdom Tree Hedged Japan ETF is DXJ, designed to maximize return in Japanese investments in the environment of a falling Yen. Would REALLY love to know your thoughts on the matter. With some careful planning and discussion, I think we can ALL make some decent profits in the near term!!
Post to follow…
Cheers ~ zkot
Zkotpen.
Regardless of the longer term “new and excessive easing” likely to take hold in Japan – I would still caution that the Nikkei has come really far, really fast and is extremely, EXTREMELY overbought – as the Yen is completely oversold (the inverse and usual corelation that plays out in markets/currencies). This being said, I “assume” that the largest run/fast money has already been had, as per my short JPY trades of the last few months. As nothing moves in a straight line – I would caution that a correction is needed.
Perhaps we can quickly touch on your time frame basis for trades. Looking long term (like multiple months) I imagine that indeed the Nikkei and Yen have indeed reversed course and we will most certainly see higher stock prices and a weaker Yen. Looking at it over the next few weeks on the other hand – very likely that Nikkei corrects downward – as the JPY takes a counter trend rally to the upside.
I try my best to “buy in the red” and “sell when things are green” so it really depends on your time frame. Are you looking to “actively trade” or are you considering a solid “investment” to be held?
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zkotpen says:
March 13, 2013 at 11:58 pm
The latest from Asia on Bloomberg.com:
Hamada Endorses Yen at 100 Even After Instructions to Stay Quiet.
The title pretty much says it all.
bloomberg.com/news/2013-03-14/hamada-endorses-yen-at-100-even-after-instructions-to-stay-quiet.html
Japan’s Lower House Approves Kuroda for BOJ Governor.
According to the article, all three BoJ executive nominees are likely to be confirmed, but until Japan’s upper house votes tomorrow, uncertainty remains.
bloomberg.com/news/2013-03-14/japan-s-lower-house-approves-kuroda-for-bank-of-japan-governor.html
Nikkei 225 Pares Gain as Yen Strengthens Before BOJ Vote.
“Investors are holding onto hopes that once Kuroda takes office next week, he may start bold monetary easing even before the next policy meeting in April,” said Koji Toda, chief fund manager at Resona Bank Ltd. in Tokyo, which oversees about 15 trillion yen ($156 billion). “Stocks sensitive to the bank’s policy are going strong, especially real estate shares.”
bloomberg.com/news/2013-03-14/japan-stocks-gain-on-u-s-retail-sales-before-boj-vote.html
Yen Advances on Abe Adviser Comments, Bets Decline Was Excessive.
To top off all the Yen and BoJ news, Abe’s advisor, Hamada, backs off his earlier statements… in what appears to me as a more politically correct or calculated statement. Reading all four articles, it seems realistic that the so-called “Yenny” (1 Yen = 1 Penny) could become a reality by the first week of April, but further BoJ easing beyond that is not to be discussed, at least not publicly, at least not at this moment. Have a look:
bloomberg.com/news/2013-03-13/dollar-is-near-3-month-high-versus-euro-on-u-s-recovery-signs.html
Other news from the Far East:
Australian Dollar Rises After Bigger-Than-Estimated Job Growth.
Title pretty much says it all.
bloomberg.com/news/2013-03-13/n-z-dollar-trades-near-2013-low-as-rbnz-says-rate-cut-possible.html
Emerging-Market Stocks Drop as China Index Falls 10% From Peak.
So much uncertainty in China and other Emerging Markets. Where do you think investors are putting their money these days? China/Emerging markets? Comatose European Stocks? Precious metals and miners? Call me nutty, but I’m guessing those funds are heading straight to the S&P 500 and/or the Nikkei!
bloomberg.com/news/2013-03-14/emerging-market-stocks-drop-as-china-index-falls-10-from-peak.html
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zkotpen says:
March 14, 2013 at 1:23 am
We can count on DXJ (WisdomTree Japan Hedged Equity Fund) gapping up when the market opens today, Thursday.
The big question is: What will happen in the overnight, when Japan’s upper house votes to confirm (or not) the new BoJ governors? And from there, next week, when they would presumably take their seats and get to work? And from there, to the BoJ meeting April 3-4?
The Nikkei has just closed at its highest level since Sep, 2008, and DXJ is the play on the Nikkei in a declining Yen environment. For sectors and indices, so far this year the big winners are IBB, SPY and DXJ, with the IBB and DXJ doubling the pace of the SPY.
Thanks for the tweet on GBP Kong – I was about to go short GBP/CAD but I will wait further developments in view of GBP strength today.
Ya……keep an eye on it – I see strength across the board so……regardless of an individual pair – if GBP is getting bought well – it´s getting bought!