Equities Exhausted – USD Double Top

It’s been a tough grind here as of late, with such low volume trading leaving so many asset correlations stuck in the mud. Traders looking for the usual “signals” in one asset class with hopes of “putting it all together” have been pushed around and pulled back and forth – left struggling to “find an answer” within the continued “day-to-day chop”.

A tough market to navigate with Central Bankers hiding behind every corner, and with such low volume it would appear that on many days…..the market just seems to be sitting there – doing nothing.

Oil looks to be heading lower here and USD appears tired now sitting at its near term “double top” ( as seen via $dxy ).

Gold’s pullback appears to be resolving itself – sputtering out at a pretty solid area of support around 1292.00, while U.S Equities ( as well EU equities and Japan ) look weak, tired and exhausted.

Does anyone else expect that next weeks “U.S GDP report” will disappoint? And that perhaps markets are “finally considering” things aren’t nearly as rosy as the U.S Media continues to suggest?

It would have to have been “some kind of amazing quarter” ( the past 90 days only ) for the report to make up for the incredible ” -2.9 % loss in growth”  reported in the first quarter now wouldn’t it?

Stars would clearly align with USD moving lower, gold moving higher and “global equities” finally taking a break after the SP 500 has made it nearly 800 days straight without a meaningful correction.

Food for thought moving into next week. Perhaps you’ll want to take a peak at your computer / trade account a little more regularly.

Have a good weekend everyone. Enjoy the sun!

 

 

6 Responses

  1. Joe July 25, 2014 / 11:54 pm

    Kong, weren’t you bullish USD pairs except for USDJPY?
    If we’re finally going to have sustained risk off, USD pairs should crash like the EUR, no?

    • Forex Kong July 26, 2014 / 7:25 am

      Gotta be careful here with “blanketing USD pairs” as yes…I’ve been long USD but with select pairs.

      I’ve recently closed short NZD/USD as well long USD/CAD, still holding short AUD/USD.

      With The Euro trading “exactly opposite USD” we are currently “looking long the pair” but have yet to pull the trigger.

      I’ve been cautious around USD and have concentrated on JPY related pairs over the past few weeks.

      Short CAD/JPY was another winner as was short GBP/JPY.

      • Joe July 26, 2014 / 2:35 pm

        Can you share your thoughts on why you’re still short AUDUSD when it has been super resilient through risk-off, maybe its gathering energy to breakout above .9500? Tons of stops up there, and with China and Aussie economic data improving maybe it’s in a new bull market already.

        Thanks Kong.

        • Forex Kong July 26, 2014 / 2:47 pm

          Hey Joe. Great line of question.

          Despite what you may see in the usual headlines…I don’t see China data improving at all, and Australia faces considerable headwinds in a number of areas moving forward.

          I’ve remained short AUD with consideration that – when “everything goes” AUD will fall hard along with it. A jump to .95 or even .96 won’t change my feelings about that.

          Consider AUD/JPY the last time markets corrected / let alone what happens to this pair ( and most JPY related pairs )when risk really comes off.

          2007/2008 area? Wow.

          It’s too late in the business cycle for me to consider any “new rally in risk” that will affect AUD in any meaningful way. We’ve seen U.S equites continue higher as AUD has been flat for nearly 5 straight months.

          I have a hard time envisioning this as “consolidation” before a move higher…as the question begs…Why isn’t AUD near all time highs along side risk in general?

  2. Andyman71 July 27, 2014 / 3:59 pm

    I’d be insanely happy if things returned to fundamental normality. Bring back correlations that behave and bring back the days when an interest rate rise meant a stronger currency. Pfttt.

    • Forex Kong July 27, 2014 / 6:04 pm

      Yo Andy…..

      You’ve got to take stock in the fact that “you” recognize the current environment for what it is, and “hopefully” have adjusted your trading accordingly.

      Can you imagine the masses “checking their portfolios on occasion” assume all is well?

      You’ll get happy here soon – I’m sure of that.

Leave a Reply to Forex Kong Cancel reply