Trade Alert! – Tech Signals Short

Trade Alert For Monday November 11, 2013

I want to thank Gary and the group at Dumb Money Tracker for the consistant flow of new users / followers here at Forex Kong! Hopefully some of you still maintain a small chance of “seeing the light” or possibly even making some money with some sound trade suggestions!

Thanks guys!

The Kongdicator has “finally” issued a formal signal on the Nazdaq that would have entry approx 4 hours from now so…..Monday will certainly do.

The entry signal is “short” people, so to be clear – I will consider “selling” not “buying”. This is fantastic news really, as this “melt up” has been a long and drawn out affair, and has kept alot of people “out of the trade”.

I will be looking for significant strength in JPY as well as we “should” likely see “risk” sell – along with tech stocks. When risk sells off money floods back into Yen as we’ve discussed here a million times over.

There are plenty of ways for stock traders to take advantage of this also….and perhaps over the weekend “we can all chip in” and post / comment to put some creative ideas on the table.

I generally don’t enter markets on Sunday night / Monday morning so…take my advice…let this play out through the day Monday and have a look at the close.

Getting ahead on this and doing some solid research over the weekend could be a very valuable exercise for many of you, as you already know…

“I’m very often early…and rarely ever late.”

Breaking Down the Short Signal: What Smart Money Sees Coming

The Kongdicator’s Technical Foundation

Let me spell this out clearly for those wondering what drives this short signal on the Nasdaq. The Kongdicator isn’t some mystical black box – it’s built on divergence patterns between price action and underlying market internals that most retail traders completely ignore. What we’re seeing right now is a classic setup where the index continues grinding higher while breadth deteriorates, volume patterns shift, and smart money positioning tells a completely different story than what appears on your basic candlestick charts.

The four-hour delay I mentioned isn’t arbitrary timing – it’s based on specific momentum oscillator crossovers that need to complete their cycle before the signal becomes actionable. This is why I consistently stress patience over premature entries. The melt-up phase we’ve endured has trapped countless traders who kept shorting too early, getting stopped out repeatedly while the market continued its relentless climb. The difference between profitable traders and account blowers often comes down to waiting for these precise technical confluences rather than gambling on gut feelings.

JPY Strength: The Risk-Off Playbook

When I talk about significant JPY strength accompanying this move, I’m referring to the fundamental flow dynamics that drive currency markets during risk transitions. The Japanese Yen serves as the ultimate safe haven currency, not because Japan’s economy is particularly strong, but because of the massive carry trade unwind that occurs when risk appetite disappears. Billions of dollars borrowed in low-yielding Yen get frantically converted back when traders rush for the exits on risk assets.

Watch these pairs specifically: USD/JPY should break below key support levels as dollar strength gives way to Yen buying. EUR/JPY typically shows even more dramatic moves during these episodes since European assets often get hit harder than U.S. markets during global risk-off periods. GBP/JPY can be absolutely vicious on the downside when this dynamic kicks in. These aren’t small, scalping opportunities – we’re talking about potentially significant trending moves that can run for weeks once they establish momentum.

Stock Market Correlations and Cross-Asset Opportunities

The beauty of understanding these cross-asset relationships is that you can profit from multiple angles simultaneously. While the primary signal targets Nasdaq weakness, smart traders will be positioning across related markets that tend to move in harmony. Technology stocks don’t exist in isolation – they’re interconnected with currency flows, bond yields, and commodity prices in ways that create cascading opportunities.

Consider the relationship between falling tech stocks and rising bond prices. When equity risk premiums increase, money flows into government bonds, pushing yields lower. This yield compression often strengthens currencies like the Swiss Franc and Japanese Yen while pressuring higher-yielding currencies like the Australian and New Zealand dollars. AUD/JPY and NZD/JPY crosses become excellent vehicles for capturing this broader risk-off theme with potentially explosive downside moves.

Gold often catches a bid during these transitions as well, though the relationship isn’t as reliable as the Yen dynamics. The key is recognizing that modern markets are deeply interconnected systems where a significant move in one asset class creates ripple effects across multiple markets.

Timing and Execution Strategy

My emphasis on waiting until Monday’s close before taking action isn’t conservative hand-holding – it’s strategic positioning based on decades of watching how these setups develop. Markets have a tendency to fake out early participants with false moves that reverse quickly, especially around significant technical levels. The traders who survive and thrive are those who let the market prove its intention before committing capital.

Sunday night and Monday morning sessions are notorious for thin liquidity and erratic price action that doesn’t represent genuine market sentiment. Professional money managers aren’t making major allocation decisions at 3 AM on a Sunday. Wait for legitimate market participation before drawing conclusions about directional bias.

When this move does materialize, expect it to have legs. These aren’t day-trading setups that fizzle out after a few hours. Risk-off moves in equity markets, particularly when accompanied by Yen strength, tend to develop significant momentum as overleveraged positions get unwound and risk parity strategies adjust their allocations. Position sizing becomes crucial – this could be the type of trend that funds trading accounts rather than just providing quick profits.