Hey you only live once right, and in nailing the Nikkei a couple of weeks ago….we might as well just go for broke here. I’ve got absolutely nothing to lose anyway.
The Top Is In!
Peaking on Friday, and now continuing on its way lower U.S Equities will now “finally” roll on over.
With the momo names in tech “quietly leading the way” over the past few weeks, and the Bank Index $BKX flopping around, we’ve now seen what we might call ” final capitulation” in the U.S Dollar to top things off.
A strong U.S Dollar bounce on “repatriation” will only be fueled “more so” by the selling of equities “also priced in USD”.
The money has to go somewhere right? So when you sell something priced in U.S Dollars that money then goes back into your trade account / bank account and BOOM! USD cash position moves higher and higher.
The coming move in USD should put considerable pressure on commodity prices as “they too” shall fall.
And U.S Bonds? Would you seriously want to own a U.S Bond?
Not me.
We continue to frame trades with a “risk off mentality” including long USD positions as well “waiting in the wings” for several long JPY positions as well.
The members area now in full swing at www.forexkong.net
IWM (small caps) just closed below 200 day MA for first time since 2012. It sure feels like the rest of the market is soon to follow. So…
Thanks for the guidance over the last few months Kong. You’ve really helped me position well for this (okay… I just moved to cash… but still).
Next I will work on profiting on the downside, as you’ve encouraged.
Thanks again for helping me “see the light”… seriously!
Way to go Jworthy.
It’s a long hard road ma man…..
We’ve got several “years” ahead where thing will likley be just as difficult so….
I’m pleased you may have put a couple new tricks up your sleeve!
Shouldn’t you know better Kong… if there is weakness and major selloff in risk assets bonds will get bid even harder than they have been all year. USD… maybe, maybe not. When was the last time USD was bid on safety? And you are long USD… which pair? No one wants USD, even the EUR is considered more safe during global risk off. For whatever reason the old safe haven status of USD has been put on hold… in part due to all the carry trading unwind?
Hey Joe….great stuff. Fantastic as this is what makes a market right? There has to be people on both sides of a trade.
So…as the biggest USD bear on the planet “in a broad sense” of course I don’t view it as a “safe haven”, nor do I JPY for that matter – but that’s not the point.
By way of the simple “mechanics of markets” you can’t have “global risk off” and not see both of these rise, as they are “funding currencies” yes. A person doesn’t liquidate their country home project priced in USD, then quickly convert that cash into Australian Dollars now do they?
A U.S corporation using cheap / free USD deciding to close their mining project in Colombia doesn’t sell off the equipment and land then take the cash and convert to Mexican pesos?
As the most widely used and accepted currency planet wide, regardless of our “feelings about it” – USD will most certainly take huge inflows when asset purchases wind down.
The currency won’t “rise on a flight to safety”…it will rise on repatriation as USD used abroad, is brought back “under the pillows” of investors that used the cheap money while times where good.
The EUR ( with multiple countries sharing a single currency and no “standard” monetary policy ) will never be considered a safe havenin the same sense.