The weather here this time of year is absolutely beautiful, with the sun shining and the cool breeze blowing in off the Caribbean sea.
A retired German couple has moved in across the way, with the Mrs. out tending to her flower pots by day, and the gentleman blessing us with the sweet sounds of his accordion / squeeze box music by night. Happy days indeed for those not concerned with the daily comings and goings of the U.S stock market.
A bounce here to around the 2040 Level in SP 500 should give the few remaining bulls ( or at least those that still have a couple bucks left ) a chance to hit the exits before the next leg lower wipes out the lows at 1970 – then heads substantially lower.
Finally marking the near term highs in USD, Gold will hold up ( perhaps a few dollars lower ) before making its next leg higher as safety is “oh so quietly” sought.
The Japanese Yen has long since made its medium term low, and has been consistently gaining strength for weeks now, as commodity currencies continue to get absolutely smashed. AUD/JPY ( remember my most profitable trade idea moving into 2015 ?) as well NZD/JPY and CAD/JPY now down over 1000 pips from their highs.
The sideways action in equities is almost complete, and it should only be a couple more days until we see reversal “again” – this time being the last before the established “downtrend in risk” continues thru February / March.
I’m not trading much these days and as boring as it may appear, sticking with the same medium term plan of “short USD” and “long JPY” ( via everything “other than USD/JPY in itself ) continues to make the most sense.
“Buy and hold” for anyone with “bullish intent” will soon prove to be a misstep.
So I guess you expected that markets would just “rip for the sky” on news of The ECB finally pulling the trigger eh? Wrong.
SP 500 and “risk in general” rejected at the suggested area around 2050 as……this has been priced in for ages. Draghi taking his turn “pissing into the wind” for the final attempt – as market fundamentals begin to steam roll Central Bank efforts.
We all know QE doesn’t work…and if you ask me…..if looks like “the market” is starting to get it as well.
The Canadian Stock Exchange $TSX has also bounced to the downward sloping trend line , where I expect it to be rejected and begin the next leg “considerably lower”.
And just a quick note to “any and all of you readers” still convinced that The Central Banks have your back………………..
Just keep your head buried in the sand while they print you into poverty.
You’ll figure it out eventually..
Who “doesn’t” think The ECB will disappoint markets with Thursday’s announcement of its “proposed” plans to initiate full-blown QE?
Draghi is well-known for his “silver tongue” – but it takes money to buy whiskey.
In order for Draghi to satisfy the “massive expectations” of Wall St. and the global investment community at large – he better have a lot of it. I’m thinking that anything less than “1 Trillion Dollars” ( which still won’t be enough to even make a dint ) will be seen as a disappointment, as markets have already priced this in.
The Germans are still very resistant to the idea, assuming they will inevitably be left holding the bag in supporting “the rest of Europe” with their own economic output, and as I’ve come to understand it – there are still several legal hurdles to be overcome before just ” cranking up the presses”.
It would not surprise me in the least to hear “suggestion” of QE to be rolled out later this year, or perhaps some “paltry amount” bullshit program aimed to temporarily shake the wolves off their backs – either way….it will do nothing to stave off the current economic spiral Europe finds itself in.
QE from The ECB will do absolutely nothing to change the trajectory of a further weakening European economy, a further weakening U.S economy, a further weakening Japanese economy – and the list goes on.
Short of a very near term bounce ( which we’re seeing now ) I expect another series of “long red candles” coming – “post ECB meeting” Thursday.
I’m starting off the new year with a bang, banking just over 900 pips total in short trades via AUD/JPY, NZD/JPY as well CAD/JPY.
These pairs have fallen fast ‘n furious with the recent move towards “risk aversion” and there is never a better time to take money off the table than “when there is money on the table”!.
We’ve discussed the correlation of a stronger Yen and weaker Commodity currencies here time and time again – so these pairs ( being a no brainer ) provide the biggest bang for yer buck in “straight up” pitting the weakest against the strongest.
I will be planning to re enter these pairs in coming days, as they “may” take a reasonable bounce before continuing on their way down.
Short of the obvious / continued and “awesome” moves higher in JPY ( and much lower moves in the commodity pairs vs JPY ) the currency market seems to have “stalled”.
We’ve long since come to understand the move towards risk aversion would bring strength to JPY and weakness to the commods, but had recently factored / considered that “USD as well” would make its move lower as equities sold off.
The cross winds of “unwinding The U.S Carry trade” continue to keep USD elevated, as all those U.S Dollars borrowed on the cheap – continue to flood back.
Good luck to intra day traders as suggested some time ago as…..100 + pip swings and incredible volatility in the equity markets make this 100% impossible.
Gold and Silver are most certainly finding a footing ( alongside JPY ) as “the safety trade” looks to gain further ground.
Incredibly ( as it’s always been my assumption that U.S Equities are “the last to fall” ) The U.S Dollar has traded sideways along with EUR/USD, GBP/USD a good 5 days now so…perhaps in this instance we’ll see USD bringing up the rear.
Patience is needed as always……even when you find yourself on the right side of the trade.
I continue to hold long JPY vs AUD, NZD and CAD, with starter entries short USD vs EUR, GBP and MXN – also looking to USD/CHF and even a stab at USD/CAD once we see some further confirmation.
The continued fall in oil, and continued move towards “risk aversion” is reeking havoc on The Canadian Stock Exchanges.
The “TSX” – The Toronto Stock Exchange looks something like this:
Safety can still be found in gold and silver related names as these companies will benefit from the “further move towards risk aversion” with the metals and miners “finally making their move”, but short of that – Canada along with several other “commodity related” countries is gonna get wacked along side risk in general.
As we now enter U.S earnings season, I imagine the vast number of companies “missing” and/or providing sizable reduced earnings forecasts will contribute even further, coupled with the fact that Central Banks are now pretty much out of the picture.
Perhaps we’ll finally see what these markets will do – when left to survive on their own.
Wait….that’s funny – markets left to survive on their own?? That amounts to a whole lot of arrows on charts…..pointing down.
If any of you have ever wondered “How the hell does this guy keep facing these treacherous markets day after every day? – What on Earth could keep this guy going?”.
If it isn’t “painfully obvious” now, I present to you – Mrs. Kong.
Up until just recently Mrs. Kong has been quietly “hording away” a small stash of U.S Dollars, tucking them away here and there with idea in mind that “some day” – they may be of some use to us.
Well…..with a keen eye for forex, ( and financial markets in general ) I’m very pleased to see that Mrs. Kong has now “gathered her stash” and is off to the bank to exchange them for her native currency.
People here in Mexico have a slightly different perception of money / exchange, and a tremendous respect for every penny earned. If there’s a chance that perhaps another couple of dollars might be squeezed out of the many hard hours worked well……that’s money in your pocket.
I don’t mess with Mrs. Kong when it comes to money, as she runs a tight ship so……when she says sell let me tell you…..
Way to go babe! Look at all those pesos!
On a serious note….seriously….The Mexican peso looks “golden here” vs The U.S Dollar. That means “short USD/MXN”.
252K “new jobs” added “this month” ( primarily bus boys, servers and part-time workers ) with 294K new additions to the unemployment lines “this week”.
I marvel at the math…and the American vision that “things are improving”.
252k new jobs added this month…..with aprox 1.2 million “new additions” to the unemployment roll. Please…..help me understand how this can possibly be seen as anything other than “horrific”.
Seriously….someone with some “shred of sanity” I implore you….explain this to us.
252k “new” jobs paying close to ( if not under ) minimum wage, while 1.2 million people jump on the “unemployment benefits wagon” this month alone.
Now that’s what I call economic growth.
That’s what I call “recovery”.
Let’s see how things look near days end as USD and the “currency world in general” just isn’t buying it.
Holding steady….and waiting for the “swing high” in USD.
Watching oil here – now exhibiting some “bottoming characteristics”. Still very early ( as thus far only the 1 minute, 5 minute and 15 minute charts have reversed ) but…….
What do we know about “the price of oil” and the “value of USD”?
Oil is priced in U.S Dollars right? A low in the price of oil could very well mark the high in USD no?
Both Gold and Silver ( including the miners ) look to have found some support these past days, regardless of USD poking a touch higher.
Looking at oil related currencies such as The Canadian Dollar as well The Mexican Peso we can also see USD weakness.
A flood of money coming into commodities in general would clearly suggest USD topping out “medium term”.
The SP 500 has now retraced a full 50% of the recent plunge ( now at 2035 ) so even a touch higher at 2051 would provide for a low risk entry – short.
Earnings season is gonna “suck” as there is not a U.S based multi-national company on the planet that can “honestly” report that they’ve increased bottom line profits in the face of the rising dollar, let alone the number of energy related companies that just got their asses kicked by falling oil.
Readers / visitors from Singapore have now overtaken the total number of visitors to Forex Kong from all North American countries combined.
A recent study has found that the number of households with investable assets of US$1 million (S$1.26 million) or more rose 14 per cent to 188,000 last year. That means 17.1 per cent of households – or one in six – are millionaires ( this data may be a full year old ).
That’s like sitting down for dinner at your local McDonald’s and knowing that there is “at least one millionaire” sitting at the 4 or 5 tables surrounding you – although I don’t imagine many of them are “actually sitting at McDonald’s”.
Some other interesting facts about Singapore:
- Singapore is the fourth-largest foreign currency trading center in the world, according to the Bank for International Settlements.
- Singapore is the fourth-strongest financial market in the world. The World Economic Forum praised the country for its high degree of financial stability, bank efficiency, and commercial access to capital.
- Singapore could overtake Switzerland as the world’s largest offshore wealth hub by 2020, according to WealthInsight, a London-based research firm.
- There are more than 500 players in the asset management industry in Singapore, with total assets under management of more than S$1.4 trillion.
Obviously something must be going right for these “astute investors” and I’m very pleased to see their numbers growing.
Perhaps a couple of them may have managed to “push through the my sarcasm and disdain” – and taken precaution to protect their profits / exit the markets some months ago – I dunno but……I’ll be hard pressed to hear of any “American Bulls” that have survived January thus far. Impossible.
I expect a “slight bounce” here, providing a last chance opportunity to re-evaluate your current holdings before the real fun begins. As per charts/banter going back some weeks. Global risk has clearly topped.
I’ve seen plenty of waterfalls in my days ( those of Costa Rica the finest ) but have visions of “this one” topping all.
A shout out to Singapore and good luck to all!