Why Markets Are Moving Lower

As much as the Fed would have you think otherwise ( as the current chatter of “QE tapering” leads headlines) markets are “selling off” for exactly the reasons that a market “should” sell off. We’ve been over this on several occasions as the SP 500 looks set to reverse at more or less the exact spot we’d looked at some weeks ago.

SP 500 Upper Level Resistance

What I find particularly amusing about this – is how the media and Fed are doing all they can to suggest the reason for this weakness is the Fed’s recent “whisper” that it may taper it’s QE programs, when in reality nothing could be further from the truth!

The market moves lower on poor guidance and “so so” earnings, weak global growth projections – and all the other “normal reasons” that markets move.

The Fed wants you to believe this “downturn” is due to the potential withdraw of stimulus – so you will applaud more stimulus! The Fed/media  is “aligning itself” with the current weakness as to look like ” the hero” when time comes for the announcement of FURTHER STIMULUS.

As the summer correction runs its course – markets will be “begging” for answers, begging for understanding as to “why it can’t go up forever! “why! why Ben why!?”

It can’t go up forever because at some point….some point – the fundamentals will indeed catch up with the QE freight train.

I remain short USD and long JPY against nearly everthing under then sun – as a “currency salad” I look to enjoy this summer. I may however put the bowl down at a moments notice as Central Bankers have been known to spoil the odd picnic.





6 Responses

  1. Superpositron (@superpositron) June 5, 2013 / 6:20 am

    Sometimes the market moves on sentiment, sometimes on fundamentals, sometimes on technicals. Sometimes it will correct on good news or bad news just because it needs to correct. Your long YEN trade looks interesting. I think the Nikkei will revisit its highs by the end of the year and break the 20 year old downward trend line. But i wont bet the house on it.

    Kong for El Presidente.

    • Forex Kong June 5, 2013 / 8:08 am

      Thanks Sup!

      Lots of non believers out there…me – I stick to fundies as well the short term system which continues to perform well.

      Im a gorilla , not a bull / bear.

      Nikkei over the long term….tough to say here and now but..I still see it vulnerable to further correction. So far so good!

  2. Grazy June 6, 2013 / 1:58 am

    It was a revelation to me when I understood that the Fed can only react to market moves just like everybody else. They may be behind the wheel but they can only see through the back window. I’m curious if you have any thoughts on future Euro moves. Lets say USD/JPY falls to 80. Would EUR/USD move higher to 1.40 or even 1.45? It seem wild that the Euro would fall to 1.20 on fears of a breakup of the Eurozone only to rebound based on the dollar falling faster.

    • Forex Kong June 7, 2013 / 11:23 am

      I seriously can’t imagine “break up of the EU zone” ever so…….otherwise……with considerable USD weakness we would have to expect the opposite in EUR.

      I am looking at considerableand continued USD weakness over the summer months.

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