Author: Forex Kong

Australian Dollar – Honesty In Decline

Forex Kong 5 Comments

The following a direct quote from Glenn Robert Stevens – an Australian economist and the current Governor of the Reserve Bank of Australia.

“The foreign exchange market is perhaps another area in which investors should take care.

While the direction of the exchange rate’s response to some recent events might be understandable, that was from levels that were already unusually high.

These levels of the exchange rate are not supported by Australia’s relative levels of costs and productivity. Moreover, the terms of trade are likely to fall, not rise, from here. So it seems quite likely that at some point in the future the Australian dollar will be materially lower than it is today. “

 Boom!

You’ve got to love it when a central banker:

  1. Tells the absolute truth.
  2. Tells the absolute truth.
  3. Tells the absolute truth.

Short AUD has been ” and will continue to be” an absolutely fantastic trade moving forward, as perhaps “finally” we get the correlation to “global appetite for risk” back in vouge.

Forex Trade Strategies – October 29, 2013

Forex Kong 16 Comments

Forex Trade Strategies – October 29,2013

It would appear that the U.S Dollar is making its “swing low” here this morning, suggesting that a bottom is close at hand. This one isn’t likely going to be your “usual” bottom in the dollar as it’s now reached extreme oversold levels as well as an area of sizeable support.

As we’ve discussed here many times – when the elastic band gets stretched “too far” the corresponding “snap back” is usually quite fierce, as many inexperienced traders are caught leaning to heavily in the wrong direction.

Wednesday’s Fed meeting/ announcement “should” likely provide the catalyst, and it will be very interesting to see which way a number of asset classes move with respect to whatever is said.

When looking “long USD” here its fair to say that the currency pairs EUR/USD as well GBP/USD should turn downward, as well USD/CHF to the upside – these are pretty much a given, but the commodity currencies will remain “on hold” until we get more clarity.

Both AUD as well NZD have taken “reasonable” turns to the downside as of late “along with” a continually falling US Dollar so……it remains to be see if these will also “continue lower” as the USD carves out this turn.

I plan to trade this quite aggressively as I expect the USD move to be a whopper. Off the top it usually doesn’t bode well for the gold and the metals when we see the Dollar rise….but if this time we see a “rise on flight to safety” it’s not at all hard to imagine both gold and the USD moving higher together.

I will be watching / posting via twitter for real-time moves , as well looking to celebrate my 1st Year Anniversary here at Forex Kong tomorrow!

 

 

 

 

The Fed – Do As I Say Not As I Do

Forex Kong 13 Comments

What “is” wrong with me?

Have I become so crotchy and skeptical as to actually consider next weeks FOMC meeting as yet another “wonderful opportunity” for the Fed to “yet again” pull a fast one the unsuspecting and “all too trusting” American investor?

They said they where going to taper “last time” ( as the Fed “should” be trusted to give guidance on its plans moving forward ) with every analyst and talking muppet on T.V talking it up as if it was an absolute “given”. Then “blasted” anyone and everyone who may have been “preparing” by “not tapering”. The Fed lost what little credibility it still had, and many lost “mucho”.

Am I insane? Have I lost my mind?

Would I be completely out to lunch considering that there is just as likely a chance “this time” that the Fed ( in the current scenario with the massive blow over the debt ceiling, government shut down and still terrible employment data) has everyone assuming “it’s impossible to taper” ( which in theory it is) and “once again” finds opportunity to screw the lot of you?

“Fed announces small 10 billion tapering of bond purchasing program” and the markets go crazy….(Only to then INCREASE QE a month later and catch everyone again)

Or even better……”Fed announces INCREASED QE” Straight Up! Boom! Bet you didn’t see that one coming!

You can see where I’m going with this. It’s long past ridiculous, and “non of the above” would surprise me “any more” than the other.

The Fed’s involvement ( or lack of ) in today’s markets is unpresedented, and weilds such influence that getting it wrong could prove disasterous.

I KNOW what the Fed is going to do , but week to week, minute to minute –  NO ONE KNOWS what these weasels are going to “say” they are going to “do”.

My gut has me thinking that “no matter what the outcome” to the FOMC meeting here wrapping up Tuesday, the market is gonna “pop” on news….and sell like hotcakes. I’d have every confidence that we are “lower” looking a week out. I’ll get these trades lined up as they come.

Caterpillar Earnings – What It Means To Me

Forex Kong 32 Comments

I don’t care what anyone else says ( obviously no? ) as we’ve all got our own opinions.

You can listen to the constant stream of bull%&it coming across CNBC justifying company after company’s earnings misses – then the ridiculous “short-term reasons” they suggest.

Fact of the matter is, the majority of companies that indeed “have met earnings expectations” have  largely done so via cost-cutting and margin expansion. Don’t be fooled – this is not revenue growth. Your company might “appear” to be doing better as well –  with 60 fewer employees etc…

As “the “global supplier to construction and mining industries, Caterpillar (NYSE: CAT ) sees the very foundation of economic expansion,  and is often considered an economic bellwether, particularly in emerging economies like China. More machines sold means more holes dug, more roads built etc.

If in the absolutely “simplest sense” one can’t see / comprehend CAT’s massive earnings miss as indication of global growth “slowing” and forward guidance as “further slowing” – I’d be extremely concerned that you may need to have your head examined.

CAT is no “one hit wonder” or some “.com fly by night”.

As CAT goes………global growth goes.

Trading The NY Session – Or Not

Forex Kong 11 Comments

I’ve booked ( and I do mean booked….ie sold positions and placed the money on the “plus” side of the account ) an additional 4% here this a.m  – as per the trades outlined just yesterday.

If there is one thing I really can’t stand – it’s watching these “real profits” disappear during the NY session as the usual “POMO ( permanent open market operations ) pump job” continues to mask the true fundamentals….lurking underneath.

More often than not, an entire “weeks” worth of planning/strategy and profits  can be completely “wiped clean” during the NY session as “counter trend rallies in reality” ( as I like to call them ) play out daily.

You’ll note that Asia and the commodity currencies got absolutely hammered last night with the Japanese Nikkei down a whopping 445 points, yet today “during the con job” I don’t imagine you’ll hear a thing about it.

Do think it just might be possible that our dear friends in Asia woke up to see the NFP / employment numbers out of the U.S and said: “Holy shit – that’s crazy!! What the hell is going on over there? Are these guys seriously talking about “recovery”? Bleeep! – sell.

Left to their “own devices” U.S markets should be crumbling like a moldy ol tortilla – left to sit out on the counter too long.

I’ll tuck my pennies in my pocket and continue on “after” the gong show rolls through.

Kong…….

Gone.

 

Kong Enters Market – Trade Positions And Levels

Forex Kong 21 Comments

I’m In! These for starters….and far more to come.

Short:

AUD/USD at 97.00

NZD/USD ( adding to existing postion ) 85.13

EUR/USD ( small position ) 1.3780

GBP/USD enter at 162.58

Long:

EUR/NZD at 161.85

GBP/NZD at 190.50

USD/CAD at 1.02 85

I’m trying to get some of this out in as real time as possible so….please forgive the “lack of meat on the bone” here from a fundamental stand point.

We’ve been into all that already….and obviously there’s plenty more to come.

Fundamentals – Out The Window

Forex Kong 3 Comments

I couldn’t help myself as well  – can’t possibly outline it any better.

Please….I encourage you to click the link below and ACTUALLY read it! In particular the 3rd chart where we see US Macro Fundamentals are diverging…

THE GREEN LINE IS THE SP 500.

http://www.zerohedge.com/news/2013-10-22/spot-odd-one-out

TAKE THE TIME TO ACTUALLY LOOK AT EACH INDIVIDUAL CHART AND ASK YOURSELF……..

” What the hell is going on? ”

Just keep buying the dip right?

 

 

 

 

 

A Lesson In Trading – Patience And Risk

Forex Kong 9 Comments

New traders / technical traders tend to move too quickly in looking to take advantage of short-term price action.

Looking at this morning’s “risk event” and the markets “completely insane near term reaction to it” would most certainly have any short-term “short time frame” trader ( anything under a 1 H time frame ) up to his/her elbows in sadness – scrambling to find a life line.

https://forexkong.com/2012/12/11/how-to-trade-a-risk-event-or-not/

Then, with little knowledge of the fundamentals and a heart beating out of your chest you come to understand that: “I’m way too leveraged”, “My position is too huge” , “I’ve gambled here” , “What have I done??” – and you’re wiped from the planet.

We all make mistakes granted – and I’m the first to tell you – I can’t stand watching this “continue pushing higher” against every fundamental known to man but…..the key point being – “I’m watching”.

Trading within your means, and exercising “sick” levels of patience are extremely difficult psychological hurdles to overcome……….yet essential for long-term success.

“Patience young grass hoppa……..patience!”

Fade This Move – The Turn Is Near

Forex Kong 13 Comments

So the jobs report out of the U.S this morning is literally “beyond horrible” – yet…..initial reactions across the board have people partying in the streets.

What could possibly be discerned from such an absolutely dismal report that would see equities/risk futures “burst higher” ?

The disconnect from any rational evaluation of fundamental economic principles and this “euphoric bliss” has now truly taken on a life of its own.

I will be fading this action no question, and will be initiating trades “after the dust settles” as suggested previously, in that we cannot be far from a major turn.

This “turn” will have a seriously “long USD / short risk” vibe.

Unreal.

Emerging Markets – Signal A Trade

Forex Kong 22 Comments

Forex Trade Signal – October 22, 2013

You can visit a thousand different financial websites, each evaluating the markets using a different sets of tools, each with their own “take” on where things are headed next. More often than not I find the majority of  these sites generally have a steadfast view either “bullish or bearish” – and tend to just stick with that. Each looking like “heroes” for a time then taking their turn getting wacked when the market turns against them.

Staying objective and working to “trade both sides” can be challenging no question.

I wanted to draw your attention to a chart and concept I had posted on some weeks ago “EEM” the Ishares ETF tracking emerging markets. Take note that we are now at “the exact same spot” as some weeks ago, as U.S equities have continued to reach new highs.

We had discussed how “lots of those freshly printed U.S Dollars” find their way into investments in emerging markets ( as the yield on anything U.S related is nil) and how when “risk aversion” comes into play – these dollars are repatriated back to the U.S and converted “back into USD.”

Why no breakout in “EEM” then? We’re at all time highs everywhere else?

EEM_Emerging_Markets_Forex_Kong

EEM_Emerging_Markets_Forex_Kong

Perhaps I’ll eat my words here, but to see this turn downward “again” in light of the fact that “everything U.S” is apparently headed for the moon certainly warrants interest.

Tomorrow’s “highly anticipated employment report” may prove to be the catalyst either way.

I remain focused on AUD and NZD as well ( and obviously ) USD here as “yet again” we find ourselves in a precarious position. It’s tough to argue with the continued “ramp” in risk assets but my analysis suggests we’ll see pullback before heading higher.