Author: Forex Kong

Because You're Mine – I Walk The Line

Forex Kong 1 Comment

Another day……another “year stripped from your life” with respect to the amount of stress / tension / anxiety and general frustration you “harbor and absorb” as a trader. I imagine investors as well – feeling a bit of a pinch as “indecision” continues to rule supreme.

Monday’s are no time for decision-making anyway, and should just as quickly be stricken from your future trading plans. Don’t look to trade “jack shit” on Monday. Period.

1876. Fudge.

A bit of a mouthful but..for the number of times I’ve seen it appear as a significant level in SP 500 , I will now consider it for the name of my future pet, be it of this planet or another – human, canine or other.

This seriously can’t go on much longer as nothing moves in a straight line ( however flat ) forever.

The endless debate. Up or down – tiring to say the least.

My take? As wacky as it may be?

Time and price intersect when the “time” and “price” are right ( a topic for another day ).

I think we’ve got our price so…..now we’ve just got to let “time” do it’s thing – and all will be clear.

Check out “risk in general” as seen over the past 4 months via JPY / The Japanese Yen futures.

 

JPY_Trading_Range_Forex_Kong

JPY_Trading_Range_Forex_Kong

The Fed’s got it that “tightening” is now the path forward ( if you actually believe that ) so….this current talk of The European Central Bank “now” looking at QE?? As well the Bank of Japan looking at “further QE”??

Something doesn’t quite fit if you’ve any idea how this all fits together…

The Central Banks need “coordinated effort” to keep these balls in the air so…we’ve got to see this resolve shortly as the message is unclear.

Is the punchbowl getting refilled? Or is the party finally over?

I can assure you ……another couple of points in the SP is “no indication”.

Ugly “two day candle formations” across the board as clearly…both bulls and bears take another hit. “Time” can grind your mind and your account to pieces….and they’ve got all the time in the world. Stay safe. Make no big decisions, protect profits and at least “imagine” how you might consider making money in a bear market.

 

 

Conviction Market Call – Where To Next?

Forex Kong 3 Comments

Speculation as to “where markets are going next” is running rampid across the various forex, stock trading, news outlets and financial blogs these days, with a pretty equal split between both the bulls and the bears.

And for good reason as….It’s an absolute meat grinder out there.

This being said “caution” is likely the best suggestion anyone can make while markets continue to “sit on the fence” but you know…..you’ve really got to “go with something” as lack of conviction won’t really do much for you either.

Reducing position size or going to a cash position is never the wrong thing to do, so there’s always that….but again – we’re looking to “make some money here” so if it’s a bit of “hard work that’s required” well then?….We’re gonna do it!

I’m going to simplify and keep this short.

The largest QE program on the planet ( coming out of Japan )  is currently doing “nothing” to elevate Japanese stocks as the Nikkei “will” continue to fall here. This is significant in that…if the QE money isn’t doing it anymore ( as well consider the QE money in the U.S now evaporating monthly ) what on Earth would it take to continue pushing higher?

Nikkei_May_04_Forex_Kong

Nikkei_May_04_Forex_Kong

I believe that the “near term” wind has certainly come out of the sails, as U.S “momo names” have also taken their “first leg down”, with Twitter cut in half ( from 75.00 – 37.50 ) and Yelp soon to follow.

The analysis / theory is simple…..just follow the money.

Who’s printing the most money? Where’s that money going?

Do you seriously think the “world at large” is rushing to the “supposed safety” of U.S Bonds for anything more than a short-term trade?

I don’t….wait – I do…..no…..wait ( U.S Bonds are gonna top out here pronto ).

These things take time yes. It’s a grind yes, but there are many excellent trades setting up for those who are patient, and for those willing to do a little work.

I remain short the Australian Dollar ( risk currency ) as well am keeping a very watchful eye on all JPY pairs as these “will” move fast and hard with further weakness coming in Japanese stocks.

I continue to look for a stronger US Dollar on the “repatriation trade” and see us at a significant turning point here. Should USD fall lower it will only mean the trade has been “put off” a touch longer as much further weakness in USD will have some larger “ripple effects” with our friends across the pond.

I don’t believe the U.S can allow USD ( if they can really help it remains to be seen ) to fall much further without risking a serious, serious knock to whatever credibility it still has left.

Lots of great stuff on tap this week, so good luck everyone!

 

 

 

 

I Lied To The Bank – Hello Internet

Forex Kong 13 Comments

So I lied to the bank.

At the time I was just a starving musician, living in an illegal basement suite, moonlighting as a “commercial painter” with a group of misfits I’d met at the bar. Clinging to ladders by day, and my dreams by night – I “painted and played” enough to keep myself in “beers and macaroni” ’til the day I first caught wind of some thing they called “The Internet”.

Hello Internet.

I’d been involved with computers from a relatively early age. Deemed a “gifted child” somewhere around the age of nine, I was fortunate enough to of had a particular school teacher take an interest in me. Living in a remote area, far, far from anything….incredibly – I was given the opportunity to learn. And so I did.

It took me about 15 minutes to whip up that “skeleton business plan” I presented to the Royal Bank of Canada, outlining intentions of starting a “commercial paint company of my own”, and leaving my employer in the dust.

Loan granted, I walked directly across the street and blew the entire $3200.00 on a brand new PC computer.

Hello Internet.

Six weeks later the loan was repaid in full. Three months later I was spear fishing off the tiny Islands of St Kitts, Nevis – hosting “lobster boils” at my beach side condo.

Good bye Canada.

Hello Internet.

And so it begins……

A Chart – For Those Evaluating Risk

Forex Kong 3 Comments

I’ve made light of it before as it’s a handy thing for “non forex traders” to also consider keeping in mind.

The currency pair AUD/JPY has long ago been directly associated with the “risk on” trade, as traders simply borrow ( sell ) Yen ( as the base lending rate in Japan is practically 0% ), then invest (buy) the same money in a higher yielding currency such as AUD ( base interest rate currently paying 2.5% )

It’s essentially free money, and rests pretty much as “the backbone” for most major banks – as far as  forex strategy is concerned.

When this trade “unwinds” ( when risk appetite wanes, and banks and major investors begin to seek “safety” ) you certainly don’t want to be on the other side of it – as the move is nothing short of amazing.

Lets take a look at the “unwind” back in 2008, and consider where we’re at with the pair today.

 

AUD_JPY_Forex_Kong_May_1_2014

AUD_JPY_Forex_Kong_May_1_2014

The pair “peaked” right along side “peak activity” surrounding the Bank of Japans massive QE program and equally massive dilution of the Yen, sometime “around this time” a full year ago.

We can see that it’s done very little since, as “risk” apparently rages on ( as seen via U.S Equity prices ) in the West.

A “swing high” here marking a “lower high” on a monthly chart would prove to be a very, very powerful technical sign that the turn is indeed near, as big banks and institutions will have used these past few months to quietly whittle away, adding to positions here, selling a bit there, getting themselves into position slowly as to not turn price against them with any large-scale moves.

Until of course the large-scale moves commence ( as seen via the “red candle waterfall” of 2008 ) where the big boys have already gotten out  and retail investors “unknowing” get caught holding the bag.

One has to consider that “if the Big Banks are running the show” ( as we all know they are ) – don’t you think they’ve got the info / knowledge / plans in place long before we ever hear of them?

Do you think the biggest players on the planet get “caught” suddenly realizing that things are turning? Or perhaps because they missed a bit on CNBC? There is absolutely 0% chance of this as it’s this is  “their market” and the house always wins.

Equities in the West continue to grind as the turn has already been realized in Japan. These past 4 or 5 days are again what we call “distribution days” as big players unload to those late to the party, in preparation for the next “real money to be made” on the short side of town. Currency wise a large and solid “short AUD position” has been building for quite some time, as other “risk off trades” slowly fall into place day-to-day.

 

Very relaxed here as positioning is well underway and the tiny squiggles don’t really mean much at this point.

I can’t see how unemployment data out of the U.S ( 344,000 more last week ) could be helping anyone with their medium and longer term trade ideas, but I’d love to hear the arguement.

Good luck everyone, and have a good weekend.

 

 

If It's "Sell" On Yellen – You'll Know For Sure

Forex Kong 4 Comments

If it’s “sell” on Yellen you’ll know for certain that the “machines that be” have most certainly flipped the switch from “buy” to “sell”.

I can assure you “anything” currently in play with respect to the big boys ( and I ) positioning for the “very near future” is already in full motion.

You have to appreciate how long it takes for Central Banks or other large institutional players to “put on” or “take off” positions SO LARGE, that it takes weeks “if not months” to slowly leg in as to not move price to quickly.

If you think “anyone” with an institutional influence is “sitting around waiting” for more clambering from The Fed this afternoon – you are sadly, sadly mistaken.

This move is well underway as seen via currency markets some weeks ago.

Yellen has absolutely “nothing” to do with what’s “already” going on.

Let retail take risk for a final “blip” higher ( as I would gladly welcome that ) as anything higher only represents better opportunity to get short.

We’re already in position. Check out the Members Area at: http://www.forexkong.net/getting-started-start-here/

Good luck to all, and watch out for that “bad weather”.

Markets On The Cusp – USD Shakeout

Forex Kong 9 Comments

We’re looking for a stronger dollar these days, as the reality of continued Fed tapering and a generally disappointing earnings season ( in my opinion ) begin to take their toll.

As we’ve discussed here in the past, the general effect of tightening the money supply “eventually” leads to higher lending rates/increased borrowing costs, pinching corporate earnings and pressuring stock valuations.

I think it’s fair to say we’ve most certainly seen the “mojo” taken out of the “momo” stocks in the tech sector already, as well the $BKX Bank Index ( which I follow as an additional “bellweather” for U.S Equity strength ) as it “continues” to on its path of “lower highs” and “lower lows”.

Via currencies I’ve been positioned “generally short” for several weeks now seeing AUD/JPY top out around 94.50 as well The New Zealand Dollar finally rolling over. CAD took its last breath here in just the past two days essentially “completing the trio” of risk related currencies to begin their journeys downward.

Pushing through the last remaining day or two of chop in USD, opens the flood gates “wide” to a plethora of excellent “medium term” trade opportunities long the safe havens, and short the commods.

My expectation is to see The Nikkei ( The Japanese Stock Index ) continue to lead markets “decidedly lower” ( and I’m talking like….Nikkei at 11,500 now at 14,500 type lower ) as the general lay of the land has obviously already shifted to a “risk off” / safety seeking environment.

For those interested in more specific and detailed “trade ideas”, regular “intermarket analysis” as well deeper learning / understanding of forex markets – please join us at www.forexkong.net as our trading community continues to grow.

Unemployment Rate In Spain – 25.9%

Forex Kong 16 Comments

Yes believe it. The unemployment rate in Spain is currently 25.9% – coming in “lower” than expectations.

Can you get your head wrapped around that?

One in four people sitting around sipping espresso, then leisurely strolling “la rambla” In Barcelona are flat-out 100% unemployed.

How can this be possible? Where does the money come from to support this? How are they not barefoot, starving in the streets, grovelling for pennies as the “rich Mexican tourists” saunter by?

Current unemployment in Mexico is 4.8%.

But I’m sure while sitting there at your local Starbucks, possibly overhearing a conversation from a couple of “spaniards” at the table next to you, with their stupid pink cardigans, horrible plaid shirts, and fancy flat leather shoes you’ll say “Oh my! I think those gentlemen are from Spain!” Oooh! Spanish!

While the hard working Mexican kid wipes down your table, and asks if there’s anything else he can get you!

What the hell has it come to, where hard working people continue to take the short end of the stick as the “entitled” just keep dragging this thing down, down, down?

Shame on you Spain!

Get off your ass and go get a job you bums!

Intraday Rinse Job – No One Wins

Forex Kong 1 Comment

Why are you evening trying?

Assume the fetal position underneath your bed, and just stay there until this thing passes over.

Oh I mean passes “lower”.

Another complete “intraday rinse job” for those poor souls attempting to win back their paper profits, and continue maxing out their credit cards on shit martini’s and over priced parking.

Perhaps you’ll have a better understanding of this a couple of “big fat red candles” down the road.

What can I suggest?

Gimme a break. It’s “been” suggested.

You’re on your own now.

 

 

Revenge Trade – QQQ Will Take You Lower

Forex Kong 6 Comments

You’ve heard of the revenge trade right?

After you’ve been knocked over the head with a baseball bat, and the market has run off with most of your account – you then decide “I’m gonna get it all back”!

Let’s say you go out and do something stupid…like…really stupid, totally stupid, “moronic” like you decide “right now” to go out and buy Tech /QQQ and “get long technology” as means to exact your revenge.

Can anyone say “doublé whammy”?

When acting on pure emotion, traders / investors don’t make good decisions. The revenge trade ( more often than not )  kicks you in both knees, spits in your left ear, and leaves you in broken heap – crumpled on the sidewalk. Nothing good will ever come of this, and the lesson comes hard.

Check you head. Kick back and re-evaluate. Go for a walk. Drink some beer.

Prepare for the “next leg down” in technology.

 

 

 

Very Often Early – Rarely EVER Late

Forex Kong Got something to say?

I’ve said it before and I’ll say it again ( you’ve read it here a “countless” number of times prior ).

I’m very often early, but rarely – RARELY ever late.

So what’s it gonna be? Are we looking ahead here? Isn’t that the future our there in front of us?

Do we want to keep staring in the rear view mirror looking at opportunities gone by ( shoulda /coulda / woulda type thing), or do you want to start looking forward, and start making “pro active decisions” as opposed to making “re-active decisions”?

“Selling on red” is “re-active” as you’ve been punched in the gut, your heart is pounding out of your chest, you panic, and you “react” by pushing the “sell button”. Period.

“Selling on green” is “pro-active” as you’ve put profits in the bank, you sleep great and you are 100% completely and totally calm the next morning knowing that your wife won’t kick your ass, you “made” money and that you’ve got every opportunity to get back in there again – when the time is right.

Explain to me the benefits of “selling on red”. Please – explain it to me.

Fact of the matter is…….you’re just too damn greedy to bring yourself to “sell on green” as you’ve got it stuck in your mind that – “I’ve got this thing beat! I can just make more and more!”.

Time and time again…your greed continues to be your downfall.

No one can say if tomorrows news will bring stories of a cure for cancer, or perhaps “the next big thing” in technology – but we “as traders” can’t depend on that.  Investors as well, must take into consideration longer term cycles and trends to recognize appropriate times to “get off the merry-go-round” short of suffering long and agonizing “drawdowns”, stress and even larger “long-term term risk” in that – what if this really is a big one? Do you “really” have a backup plan?

Personally, I don’t mind so much – being one of the first to the party cuz…..if that says anything about me at all, obviously you’ll assume….I’ll also be one of the first to leave.

As it pertains to investing / trading – I’ll go with this – and you can do “whatever” it is you do.