Author: Forex Kong

The Global Dow – Bear Market Begins

Forex Kong 20 Comments

It’s difficult for many to see what’s “going on globally” when all you’ve got day to day is “canned news” via the mainstream media. A casual glance at the T.V and it’s pretty easy to just assume “everything is up” – everything is moving along just fine.

The Global Dow – The Global Dow tracks leading companies from around the world in all industries. It covers both developed and emerging markets. In addition, it includes companies from emerging sectors, such as alternative energy. The components are equally weighted, which means that price movements of the larger stocks have no greater impact on index performance than those of the smaller stocks.

(GDOW) is a 150-stock index of corporations from around the world, created by Dow Jones & Company. Only blue-chip stocks are included in the index.

Lets take a look at the chart:

GDOW_Forex_Kong

GDOW_Forex_Kong

The Nikkei looks like a double top here around 17,125 after the massive “blast higher” brought on by The BOJ’s surprise announcement of even further “further” QE, now causing considerable political concerns in Japan.

I’ve considered this as a “last ditch effort” as opposed to a meaninful contributor to further fuel global appetite for risk, as we have all now clearly come to understand – QE does absolutely nothing to better an economy. It hasn’t worked in Japan – and it won’t work for The U.S either.

Nikkei_Forex_kong

Nikkei_Forex_kong

The current pattern playing out in U.S Equities ( commonly known as a “Megaphone”) has now reached its upper levels of resistance, and will likely be turned back here as of today, and if there is still “some semblance of reality in markets as we know them” – The U.S Dollar should now follow suit.

 

Canada Inks Deal With China – Bypassing U.S Dollar

Forex Kong 9 Comments

Canada and China have signed a reciprocal currency deal that’s expected to dramatically boost exports, and bypass the use of USD.
The hub will foster far easier trade between the Canadian dollar and the Chinese yuan, also known as the renminbi. It makes Canada the first country in the Americas to have a deal to trade in the renminbi.

Read the rest of the article here

And we all thought that Canada was just another “American patsy/ pawn” eh?

How’s it goin eh?

Bravo Canada – Bravo!

Here Is Your Ass – Thanks To The Fed

Forex Kong 20 Comments

Perhaps I’m a bit to “cryptic” at times – and I apologize for that, but I just can’t stand the standard technical analysis – spouting out endless waves that never complete, Fib retracements that continually get breached, and technical indicators that have been proven “useless” time and time again. Look at them sure….but “live by them”? – No.

The fundamentals “do” still matter however masked / disguised they’ve been ( via our good friends at The Central Banks ) and the longer term time frames / macro trading still trumps “slugging it out in the trenches” day after day – during these unprecedented times of indecision.

As per the prior couple posts  outlining the perceived “future movements in forex markets” – this “will” play out exactly as outlined.

I’m not placing any new trades here today….and likely “neither should you” but…..a quick recap:

JPY UP = Risk OFF

JPY UP = USD DOWN = U.S Equities DOWN

USD DOWN = EUR , GBP and CHF UP

RISK OFF = AUD, NZD, CAD DOWN

This is general ( yet invaluable ) information you can keep with you for the extent of your forex trading career, while keeping an open mind that “at times” a few of these may temporarily shift. These “times” are macro , MACRO MACRO, and are more so an indication of a “change in the investment environment” and not as much about the individual country / currency.

We will see this dynamic change WHEN INTEREST RATES BEGIN TO RISE, and we enter a time of monetary “contraction” as opposed to “expansion”.

The time is coming very soon, but until then – the “next trade” is either “more of the same” ( which by any analysis appears near impossible ) or the outline suggested above.

I say USD tanks and the majority of  “predominantly American investors/bulls” get their asses handed to them  by the very same banks / institutions that sold them the stock in the first place.

Japanese Tsunami – Big Waves On The Horizon

Forex Kong 11 Comments

The idea that “the entire planet” is racing into The U.S Dollar as well U.S Equities, in the face of “waning global appetite for risk” is ridiculous. Investors don’t “seek shelter” in Twitter or Facebook – you can guarantee that.

The European stock markets (The London $FTSE as well German $DAX ) have already rolled over, putting in a solid series of lower lows and lower highs – with the Canadian $TSX following suit.

It’s obvious only a few days later, that the BOJ announcement of “even more QE” has done absolutely nothing in a “global sense” as it’s effects can only be seen via the currency pair USD/JPY and the continued “buoyancy” of U.S Stocks.

Even The Nikkei itself has given back a full – 530 points overnight – taking a nice “chunk” out of the massive spike of the two days prior.

The BOJ’s move is looking more like a “preemptive strike” as opposed to something spurring global investors to “jump back on the risk train” – and it only makes sense really.

If Japan sees a Tsunami of cheaply borrowed Yen rolling in from The Pacific, wouldn’t it make sense to get the currency as low as they possibly can “prior”? Buying themselves a little more time and space before the economy is crushed like sushi roll underfoot?

Back in the day ( before the roll out of this massive QE campaign ) Japan would openly intervene directly in currency markets with hopes of keeping The Yen at bay, and time and time again the market would “slam it right back in their face” reversing the entire move – usually within the same 24 hour period.

Perhaps this time will be no different as Japan’s QE initiative will look like a “tiny water pistol” compared to the Tsunami ( unwinding of The Carry Trade ) gathering speed in the distance.

Small trades will come and go. Winners and losers alike, but “the big trades” come in “big waves” – and that’s where the money is at.

 

Waiting On Yen – Waiting On USD – Waiting Waiting…

Forex Kong 15 Comments

As contrarian as it may sound – you all know I’m looking for an intermediate “top” in USD –  leading to a much larger decline.

The immediate reaction ( obviously ) to the “official end to QE” resulted in a huge spike in USD, sending EUR/USD and GBP/USD lower as well USD/CHF higher.

Today’s “candle” in $DXY ( pin bar ) is now looking prime for reversal, as it will take very little price action tomorrow – to close under today’s low.

This would fall right in line with a bottoming in JPY, and our expectation of “risk aversion” to continue.

JPY_Futures_Forex_Kong

JPY_Futures_Forex_Kong

If you’ve had any doubts of my continued view of both JPY as well The Nikkei – I hope this “blatant example” can finally put them to rest.

The correlation  of “JPY down = risk on” and “JPY up = risk off” could not be more obvious as The SP 500 has done “the exact opposite” over the past week and a half.

Exactly.

I suggested some time ago that the currency pair USD/JPY  “is the market” as Yen is borrowed on the cheap , then converted to USD to buy stocks. This could not be more obvious in viewing the correlation over this last “massive V-shaped move” in both Yen as well The SP.

USD reversal “lower” ( any day now ) and JPY confirming reversal “higher” will put a stamp on the end of this upward correction – and the beginning of our next leg lower.

QE Offically Ends – Let's See What The Market's Got

Forex Kong 4 Comments

So this week marks the end of The Fed’s bond purchasing program, and the “official end of QE3”.

Can you imagine? No more “funny money” to keep things afloat?

Se acabo.Finito.The end.No more.Done.

If you can get your head wrapped around the numbers…..lets look back at the months where The Fed was injecting 85 Billion “newly printed artificial dollars” into the markets every month for a couple of years running.

Can you really fathom how much of a “boost in buying” that amounted to?

Consider an investment in stocks or bonds for the average “home investor” – I dunno…..maybe 5k? Then consider ( if my math is correct ) that you would have needed 17 million new investors “per month” at 5k each for “years running” to match the amount of investment put forth by The Fed.

A crude/silly breakdown obviously….but I’m sure you get the point.

These markets have been so grossly manipulated for so long, that the average observer has likely lost all sight of “how things should be” if just left alone.

Now ironically……you face “death by Ebola” ( boy….that’s not a distraction at all is it ? ) as The Fed withdrawals from markets, so you can’t possibly make the connection / consider that “that” has anything to do with stock prices falling now can you? Of course not! It’s not The Fed withdrawal. It’s Ebola!

Choke. Puke. Sputter. Heave.

You have now been “officially diverted”.

From the outside looking in its difficult to watch , as the media machine, Wall St. and the U.S Gov systematically divert your attention to “life threatening disease” while pulling the rug on QE / Kool-aid – scooping your investment accounts along the way.

I’ve been on and on about for months leading up to this so…..let’s just see what the markets got – when left to stand on its own two feet.

You’ll figure it out for yourself I’m sure.

My short position growing by the minute.

 

 

 

 

Ebola To Kill Stocks – Don't Forget Your Vaccine

Forex Kong 5 Comments

So “Ebola in New York” is now the reason why stocks are likely to turn lower, or at least…..this is what I’m hearing on CNN and CNBC.

I find it ironic that The CDC ( The Center For Disease Control ) has held an American issued “patent” on the virus since October 2009.

Could it be? A government agency invented and patented the Ebola virus many years ago?

Why would a government organization have “invented” this infectious disease and then claim a monopoly over its exploitation for commercial use? It is clear that the CDC plans to claim royalties on Ebola vaccines. This certainly increases the likelihood that the vaccines will become mandatory, thus increasing the profit potential for the patent holders.

The patent information:

Publication number CA2741523 A1
Publication type Application
Application number CA 2741523
PCT number PCT/US2009/062079
Publication date Apr 29, 2010
Filing date Oct 26, 2009
Priority date Oct 24, 2008
Also published as EP2350270A2, 4 More »
Inventors Jonathan S. Towner, Stuart T. Nichol, James A. Comer, Thomas G. Ksiazek, Pierre E. Rollin
Applicant Jonathan S. Towner, 5 More »
Export Citation BiBTeX, EndNote, RefMan
Classifications (21), Legal Events (1)
External Links: CIPO, Espacenet

Wow. What a business model. Create and deploy a deadly infectious disease, then issue mandatory vaccines for profit.

Apparently the vaccine has long since been developed as work on an the Ebola virus, sanctioned by the holder of the patent for the vaccine, has been ongoing since 2004 with clinical trials in 2006.

Interestingly I’d researched the subject some years ago, and found that for the longest time – the majority of people living in Liberia didn’t even believe the virus was “real” and had been outright refusing to be vaccinated. There is now a “massive marketing campaign in place” encouraging people to come forward and take the needle.

For the conspiracy theorists – what a story. Read the rest here: Mandatory Vaccinations Are Near

The facts are the facts.

Short Covering – A Powerful Market Dynamic

Forex Kong Got something to say?

I’m sure you’ve heard the phrase “short covering” many times, but as with many of these “industry terms” you may not know / understand “exactly what that means” – or how it may affect you.

Not to insult anyone’s intelligence ( as many of you may know ), but “short covering” is a simple principle wherein traders who have taken a “short position” ( meaning that they are betting that the market will move lower ) see the market start moving against them ( so the market continues higher ) and then need to “buy back” the shares they originally “sold short”.

In this instance – for a loss.

These aren’t what you would call “new buyers” by any means. These are trades / traders that where originally “bearish” but then had the market turn against them, and in turn are “forced” to buy back the shares at a higher price – or risk even further losses should the market continue even higher.

A “short covering  rally” occurs when a few “shorts” start covering ( buying back the shares they sold short ) which manifests as “more buying” in the markets, pressuring more shorts to cover their positions, snowballing into a massive spike in “short covering” as bearish market participants jump ship as to “get out” before the market moves any further against them.

In this case, the “short covering rally” ( which we are clearly seeing today ) is merely a case of timid / frightened bears with little conviction – quickly buying back their shares for fear of greater losses, thusly “propelling” prices higher as the massive amount of shares “sold short” are quickly bought back.

A snowball effect if you will, quickly reversed as the larger macro trend re asserts itself.

Don’t be fooled.

This is not “renewed interest in buying”.

 

 

 

 

 

 

Money Where My Mouth Is – I'm Short SP 500 At 1940

Forex Kong 7 Comments

I might be a little early but…….you know me. This is nothing new. I’m always early.

Fact of the matter is…….this “bounce” in risk has looked incredibly weak, and considering we’ve “supposedly” come so far so fast ( with The SP now retracing 61.8% of the recent fall ) now is as good a time as any to start staggering orders “short risk” once again.

Aside from the SP 500 short, I’ve now “begun” starter positions in several currency pairs including short AUD/JPY ( set for even greater profits than the last trade ) as well CHF/JPY and GBP/JPY with trades in several other pairs to follow.

Short and sweet here today as the outline / plan ( presented only a few short days ago ) is playing out as expected.

There’s not enough “upside potencial” at this point to really get concerned about “perfect entries short”. If it’s not today……then perhaps a couple more points tomorrow – who cares.

We are on the other side of the mountain, and we don’t want to miss the slide.

More trades, weekly reporting and daily real time commentary at the Members site: www.forexkong.net if you’re interested in making any money over the next few months.

Global Appetite For Risk – SP 500 To Fall Hard

Forex Kong Got something to say?

So the SP 500 ( and global appetite for risk in general ) has got a couple more points left, before she turns and makes the next “larger leg” lower, then even lower still. I hope you’re prepared for a couple of ugly months.

Here is what we are looking at for The SP 500 and “global appetite for risk” over the coming months:

SPX_Oct_21_Forex_Kong

SPX_Oct_21_Forex_Kong

I know you don’t want to hear it but…….unfortunately after the countless number of posts, the never-ending supply of supporting data, and finally the “exit of The Fed” – you’ve had ample warning. This market has no possible chance of holding up on its own, and its VERY LIKELY that come late January The Fed will make reference to “QE 5” or which ever “QE” we’re on to next.

Survival here is key, as there will be significant buying opportunities come February – pending that you’re not so deep underwater with current positions that perhaps you’ve got a little cash to deploy AT THE LOWS.

Let’s imagine that markets “scream back” after this correction leading into late January, and by April of next year you’re “almost break even”.

Lots of pain to endure in the meantime, let alone profits to be booked ( if you currently have any ).

This thing was built on pillars of sand – you knew that.

Now the waves are coming in.