Month: July 2014

You can see it nearly everywhere you look. Divergence.

Divergence in strength, divergence in price and volume – you name it ……divergence is everywhere.

Perhaps even “you yourself” –  have been “diverted” ( no kidding eh? -I bet you think things are on the “up and up”! )

A false sense of reality perhaps? A “looking away” if you will?

Lets look:

EEM_Emerging_Markets_July_2014

This is distribution. This is bearish “beyond” bearish but of course….no no….that can’t be! CNBC says it’s all gonna be fine!

I point this crap out for your own learning. You can alway look for “divergence” when price moves upward yet “volume” moves down.

It’s bearish as all get out

You know….to be honest – writing’s not really my thing.

On occasion ( well…..actually – these days more often than not ) it pains me to sit here and debate / contemplate the current state of affairs.

These days, one could equally argue that “we are headed to hell in a hand basket” or the complete and total opposite – that everything is just “coming up roses”.

Could anything “really happen” in a single day….or week….or month for that matter, to truly “tip the scales”?

Short of an alien invasion ( coming soon by the way….and brought to you by the American media ) or perhaps declaration of nuclear war – I think not.

Not exactly “exciting times” sitting here watching paint dry on a market gone stale, with “sunshine and tequilla” only a few steps away.

Now…….you throw me a puzzle, or perhaps an equation….maybe “in depth discussion of the future of electrogravitics” well hey! Now we’re talking! Now we’ve got something “interesting” on our hands!

It’s the math that intrigues me.

As does the math of forex, technical analysis and the study of markets.

When you consider in your charts – that “millions of human beings” make decisions every single minute of every single day “planet wide” as to “buy or sell” a given asset at a given time….at a given price etc….

You’ve essentially got a window to humanity right there in front of you. Ticking and flashing with every single “buy order” or “sell order” you’ve got the combined data of millions of human beings making decisions every single second of the day. Amazing. Absolutely amazing.

Each to their own.

You’re outside throwing frizbees with your dog.

I’m “in here” toiling over humanity’s decisions to buy or sell…..eating a hot plate full of numbers.

Oddly……I’ll take the math any day.

We’ve all got a thesis ( or at least I hope you do ) as to how we see things moving in the future. Some base it on their knowledge of fundamentals, others purely from a technical perspective and then fewer still – those who attempt to take both disciplines into account, to formulate a picture of things to come.

When you consider that trade volume in U.S Equities has dwindled some 50% since 2008, and of the 50% remaining some “70% of that” is merely HFT ( high frequency trade algo’s ) trading back and forth amongst themselves, you’ve really got to ask yourself if looking to The SP 500 for future direction really makes any sense at all.

This isn’t your father’s market.

In the US, the wealthiest one percent captured 95 % of the “post-financial crisis growth” since 2009 – while the bottom 90 % became poorer.

Wealth_Ditribution

The top the top 1 % of Americans own 40 percent of U.S. wealth, while the bottom 80% own just 7 percent of America’s wealth. This market has absolutely nothing to do with “mom n pop” anymore  – as The Fed and Wall St. are essentially the only buyers / sellers.

It’s a sad state of affairs really.

I tend to look to markets “outside” the immediate influence of such factors to formulate a “more reasonable view” of reality, our current place in things, and likely moves in the future.

I look to Japan.

The Nikkei led world markets down in 2007 by a full 6 months, and it’s my belief that this time will be no different. It’s been a full 6 months now since The Nikkei topped back in late December 2013, lining up well with the expected correction coming in the U.S.

The Japanese economy is completely hooped and The BOJ has now suggested they will stop devaluing Yen until at least early 2015 “if not” later. I’ve marked some “general” elliot type / wave type numbers ( for those of you who follow that stuff ) providing a broad stroke of where we’re headed next.

Nikkei_Weekly_Forex_KongNikkei_Weekly_Forex_Kong

For further in depth analysis of The Nikkei, it’s correlation to The SP 500 as well currencies and gold – please join us our members area at: www.forexkong.net

You’ll have to forgive my cynicism / scepticism but……

I find an “overnight” ramp / early morning “pop” in Nikkei / SP 500 a tad suspect considering it’s “officially” the first day of the second half, and The Fed’s POMO is set to be reduced throughout July.

That means….no POMO ( permanent open market operations ) on Friday’s leaving the grand total for July around 19 BILLION Dollars. You do get that right? The Fed literally pumps 1 Billion Dollars “per trading day” into U.S markets – and that’s considered a “reduction”!

That is some serious “July 4th Weekend” pump right there now isn’t it?

Commodity related currencies “kicking my ass” as everything under the sun moves from the “low end of the range” to the “high end of the range” within hours.

Short of the “draw down” in a couple of trades / pairs I hate to say it but….I do like the action here as……..where most are looking at this as a “new high” in U.S Equities the reality of things have it that- it’s really still just a “lower high” in Japan.

The Nikkei ( as frustrating as it is ) still trading “lower” despite the blatant pump job here overnight. I don’t expect it to go any further than this…..still in range all be it….no fun here as of this morning.

Take it for what it is here today…..