With the expected move out of USD coming together over night, we’ve seen more than enough follow through here to confirm what was suggested yesterday.
Stocks won’t hang on here, and I expect the power of the U.S Dollar “repatriation trade” to flatten gold here as well.
For those of you “investor types” I imagine you’ve come this far so a couple more months ( and perhaps further drawdown ) as gold slides into “its final leg lower” likely won’t kill you.
However for those looking at gold,silver and the related mining stocks as a trade….unfortunately – I see lower prices – before higher.
This is no “small blip” as far as USD is concerned, likely marking a significant turn “not only in the currency” but “in all” that it affects.
So far only the European currencies have taken the initial hit, but it won’t be too long now til we see the Canadian Dollar, as well Australian and New Zealand follow suit, and I’m not talking about a trade here……I’m talking about a major shift over the medium and even long-term investment horizons.
Top call still very much so “intact” here as of today – with the “Members of Kong” doing very nicely in our first month working together. Feel free to poke around the members site, and hey….you can even join us if you’d like. I’d take an additional 20 if you want to contact me over the weekend at : [email protected]
Have a great weekend everyone! It’s sun sun sunshine here!
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.
I feel I’ve gotten a little soft here during the past few weeks.
In not being as “overly thrilled” with the market as I normally am – the blogging has suffered as……if you don’t have anything good to say well……you know.
This tiny blip / risk aversion based on “at least two” of the black swans we spoke of last week restores some faith in the fact that markets are still markets, people are still people, and emotions are still emotions.
The Central Banks do all they can to lull you to sleep but in reality are relatively powerless against the “true forces” of fear and greed – where human emotion will always take the front seat.
Take for example the massive printing efforts in Japan – propping up the Nikkei. It’s all going to look pretty ridiculous as “only a matter of days” can erase “1000’s of points” in a heartbeat. Imagine when things really turn? ( as they will ).
Russia has put Obama back in his bunker with suggestion ( if not action already ) dumping U.S Treasuries as well US Dollar reserves alongside their good buddy China – essentially holding the capability to “level the U.S economy” without the use of a single missile. You gotta love that eh?
As suggested earlier Putin will not let these tyrants in Washington get their grubby little mits on Ukraine without a fight….and rightfully so (if you understood anything at all of the importance of Ukraine, and its massive network of natural gas pipelines that feed Europe).
Obama can kiss my ass. He’s beyond desperate, and essentially “toying with war” as Russia merely protects what it already has.
Me…..I’ve got important things to take care of over the next couple of days – “very” important things…so I will look for WWIII to start Monday at the earliest ………..and “never” at the latest.
Have a good weekend all – keep your eyes peeled late Sunday.
Short AUD – killer, and the long list of gold and silver miners entered “weeks ago” doesn’t hurt either.
Big surge in JPY ( and we all know what that generally means right?) as commod currencies ( in particular AUD he he he… ) make a pretty dramatic turn – downward.
The Nikkei has also fallen “below” it’s bear flag / sideways pattern from the last 2 months so…..what’s left?
Good ol U.S Equities broke trendline a couple of days ago….now backtesting and wait for it…….wait for it…..
We may have to “wait for it” a little longer as one really can’t say for certain here but – weakness across the board.
For as many years as I’ve been trading and analyzing markets I’ve been told time and time again….watch copper.
If you want to get a good bead on global growth / demand just make the simple connection between “that” and the obvious need for copper.
You can’t build a building without it, you can’t build a car without it, and you can´t produce anything “electronic” without it so…..I guess that about covers it.
It’s been widely correlated with “China’s growth” as a general bellweather for continued expansion and development.
Nice chart below. I guess the default of China’s Chaori Solar Energy may have caught a couple of peoples attention. Smart people anyway.
The Aussie Dollar ( my synthetic “short China” play from a few days ago ) getting hammered as we speak.
And who’s saying that saying a keen eye on the fundamentals doesn’t do much for their trading?
With the dollar “finally falling out of bed” I’ve scratched a couple trades for a 2% loss.
USD has given us more than enough chances to “ditch” and in all honest I hung in there with a couple smaller “much longer” than I should have, suggesting some days ago that “I’m not interested in catching a falling knife” not having much conviction in hanging around “long USD”.
And so it goes.
Otherwise, I’m highly suspect of the “sudden surge” in commodity related currencies hence initiating some “short AUD” ideas over the past 48 hours.
It’s not often you’ll “ever” see a currency trade sideways a full month, then drop “lower” and out of the range…..then come screaming back to highs, near or even above the range highs.
A full “rinsing” if you will – and unlikely a sustainable move.
As much as the short term action would have one thinking that “AUD is on fire” – it’s really only now bumped into well recognized areas of overhead resistance in a number of pairs.
Seeing something like this “scream 300 pips higher” in a matter of a few short days, generally has it retrace a large portion of the move, coupled with ideas from my previous posts ( suggesting that “short AUD” essentially works as a play on China as well ) I’ll have no trouble holding / adding to these positions as things develop.
I’m short the Australian Dollar as a simple “fundamental play” on the looming troubles ahead ( not just for China but…) for global growth in general.
China slow down = Australian blues. This trade has no holes in it…..there is no “what if you’re wrong Kong”. It’s not a hunch. It’s a trade based in a simple and solid understanding of how “one” currency is likely to perform in the face of its largest trade partner slowing down, and buying less stuff.
Consider losing one of your biggest clients, or perhaps that regular customer at your burger joint has now turned vegetarian. Buying less stuff means your business will suffer.
I “could” get into all the small details, charts and graphs, facts and figures, dollars and cents, etc.. but you know me better than that. That stuff is “flat-out boring” and frankly…of no real consequence here.
I don’t need to be an economist ( god help me ) to understand how this sets up. No….I only need to manage my money correctly and let this do exactly what “I know” it’s going to do.
The trade will pay out well – I can assure you of that.
When? I don’t care.
I’ve been building a considerable position short AUD over the past month, and have continued to add at every instance the currency shows strength. These longer term trade ideas take time, patience, conviction as well solid money management as….I will continue to add “no matter what” as the trade continues forward with the ultimate “payout” likely being more than worth the effort.
If markets are just sitting still and grinding you in the short term….see what you can do about formulating some “medium/longer term plans”. Putting these in motion “today” makes for great returns down the road.
So you’ve been pushed to your limits “technically” and the majority of you’ve been pushed off the field.
Hungry bears trading “too big too fast” crushed in the recent upswing and “right around now” eager bulls feeling that it’s “safe to buy the dip”.
Has anything changed?
Last time I looked ( 15 minutes ago ) this Yellen chick (now heading the U.S Federal Reserve) is sticking to the plan and the “taper talk” continues so……check your “fundamental heads”.
U.S equities “still” pulling the wool over your eyes perhaps?
The Australian Dollar ( which generally trades” along side risk” ) just had a brief meeting with its old friend the 200 Day Moving Average and guess what?
Same old story. These two just can’t get along,and yet again part ways – unhappy.
Things setting up for a nice lil “reversal” here if you ask me.
Well the weekend has come and gone, and so far I don’t see that the sky has fallen.
With a cold front only now developing in China, and investor complacency “still” at all time highs, we can likely look forward to a day of overcast conditions, with an equal likelihood of scattered showers and even a bit of sun. Conditions are mixed – obviously.
A few dark clouds looming over gold, with USD “just starting” to poke its head out, coupled with high pressure conditions – soon forcing USD higher.
Large storms developing off both the Atlantic “and” Pacific coasts of North America, with continued hurricanes, tornadoes, and possible earthquakes down through Brasil and Argentina.
Investors and traders are cautioned to stay indoors today, and not look to make any large trips / moves – until conditions clear.
I’m still eyeing the usual as USD has “almost” ( within a penny ) swung low on the daily, suggesting a short-term bottoming – and further turn higher. JPY has also pulled back so…safe havens take a breather. I wouldn’t be doing anything today as a bull or bear – other than continuing to raise cash / stay indoors and trade safe.
Once again I have trouble containing myself.
Here’s the original post where I quite blatantly called Gary out to discuss his “incredible investment advice”. Specifically TO BUY LONG TERM PUTS ON QQQ AND SPY on December 22nd.
The crux of “my issue” with this was the suggestion of “buying long dated puts for 2016” with the expectation of “holding these puts” for “potencially massive gains”.
Now – only 3 weeks later “The Dumb Money Tracker” is suggesting – and I quote:
“””At this point I think one has to throw caution to the winds and just buy stocks. Knowing that the Fed is going to protect the market for the foreseeable future.”””
“””Don’t worry about momentum divergences or trend line breaks. All one needs to know is that the Fed is handing out free money and all you have to do to get your share is buy stocks.”””
3 WEEKS LATER! This……only 3 weeks later.
I can’t for the life of me imagine what “other gems” Gary offers for a “$1 trial subscription”.
You can do your best again man….should you choose to “pop in” and clarify – but to be honest I really don’t see the point.
How bout “No Money”.