It never hurts to consider the “what if’s” – right?
Playing the devil’s advocate here, I fully understand the complete and total “retail euphoria” currently playing out in markets. Don’t get me wrong either….I’ve missed a couple trades here and there. Fair enough.
Stepping back and taking a wider view…the SP 500 hasn’t “really” gone anywhere for a full month ( some 20 odd trading days ) as much as the general media hype would still have you think you’ve missed the boat.
“This” isn’t exactly what I call missing a large scale move:
SP 500 – 20 days flat
Now the “what if”.
You all know I watch the Japanese Nikkei much closer than I generally do the SP so….
The weekly Nikkei is still suggestive of a considerable pullback on the horizon OR…..(and this is still quite possible) a major top / market reversal spanning several weeks.
Nikkei Looks Tough To Me
There is tonnes of room below – on route towards both the 50 day MA as well the 200 ( and we all know I love that 200! ) but more than that…..the previous high back there in Nov/Dec has yet again proven to be a very strong area of resistance.
What if……the Nikkei does still lead? What if….this retail “blow up” turns dramatically dark / sinister on some kind of “nuke news” out of Korea? What if your newly financed car ends up back on the lot since you recently dumped your life savings into the market?
Personally…..and I’ll say it again….I don’t like it.
I’m looking for a good reason to jump off the fence so….. your comments and opinions more than welcome.
If it’s all just rainbows and butterflies…..why am I not buying stocks?
I’ll make this short and sweet.
Just because you’ve got your fancy new monitors set up, and all your charts / bells / whistles / lights ‘a flashing – doesn’t mean you’re gonna find a trade. Human nature would have it that you “expect” amazing things to happen. You’ve got all the tools, you’ve even gone a little overboard on that “extra screen” and you’re hell-bent on sitting down every morning at your trade terminal, and conquering the world.
Sorry buddy…ain’t gonna happen.
I can’t tell you how many times in the distant past I was 100% completely “jacked” to jump on into markets based on some over night news release, or some new article I’d found. Like a kid on Christmas morning I’d be up well before the crack of dawn, hardly able to contain myself sitting there in dark waiting……waiting…waiting for that opening bell.
Then summer came along and spoiled the party.
Hours on end sitting there staring at charts now frozen. Pacing the floor in anticipation of “hitting my exit” only to find the trade moving sideways for days……then days ‘n days more. Finally one year it got so bad that I almost gave up. I just couldn’t understand. There it all was right in front of my face…lights flashing, news running, bing bing – bam bam! Let’s do this!!
ZZZ zzzz zzzz…….zip…nada..zero – nothin.
You can’t make markets move, and as much as it’s a difficult thing to do when you’re just so excited to just get in there and kick ass…you’ve got to understand.
There is a time to step on the gas, and there are times to pump the brakes. Summer has arrived baby.
Get ready for whole lot o’ nothin.
empty trade terminal
You’re going to want to buy EUR before Tuesday.
This trade fits into the exact same framework we have been working with…with respect to The U.S Dollar taking a very large nose dive – very, very soon. You can see in the chart below that EUR/USD has now put in an absolutely “classic swing low” right at the 50 day moving average…after completing only the first daily cycle of this new “intermediate cycle”. This suggests that we’ve got several more daily cycles to go ( lasting somewhere between 30-35 days each) before this upswing completes.
I would imagine the 200 day moving average ( marked in red ) should be the next target. That’s some 350 – 400 pips!
Buy EUR Before Tues Afternoon
These correlations with The Euro, USD and Gold are batting near 100% right now….as you can’t have The Euro rise without USD moving decidedly lower. The same thing goes for Gold, and if you really want to nail this…feel free to get long The Japanese Yen ( JPY ) as well. Yen chart looks exactly the same as EURO.
So…only one more asset class to consider here right? U.S Equities.
I can’t stand the stock market right now, as it’s continued rise goes against just about every fundamental principle I can drum up. There are too many indicators and factors to list – all suggesting this thing tops out soon…or at the very least – makes a serious correction. The stock market is cyclical and there is not a single thing “any acting president” can do to change that.
Trump has certainly “empowered the common man” with the talk of bringing jobs back, and I can certainly appreciate that but…..it won’t last. Unfortunately for stock buyers – foreign exchange leads the way and the message is painfully clear.
This thing needs a complete and total reset before some incredible turn around in the U.S economy will be realized.
Wash rinse repeat people. You know this. Has it ever been any different?
I laugh out loud this morning….as Im sure you´ve seen my last two posts – encouraging you to get short USD.
Talk about timed to perfection. USD is getting hammered on ¨no real news¨ and look at that…..U.S Equities falling pretty hard too. Again I wonder about all those blow hard ¨dollar longs¨struggling to understand how I keep making this look easy.
The trade is ¨short USD¨…….the reasons are many.
Timing has been key here these past months as you´ve recently seen me come out of hiding to bang down the first trade in weeks – if not months.
Boom……. thar she be.
As I am always a touch early……..short USD trades are looking very good here.
One can see that The Buck has had it´s day, and has now been soundly rejected at the 200 SMA.
You guys can look back and recall short trades in Apple – with the exact same set up. Very straight forward…when an asset hits the 200SMA from below, then gets smoked. A very large level of resistance, and generally a pretty clear indication that things will be headed lower.
USD Rejected at the 200 Simple Moving Average
You can look for a million different reasons, but fact remains that a rise in interest rates will blow this market up, and that if anything….further easing will likely make more sense, and that´s bad for USD.
You have to keep in mind that the big boys are ¨spinning the story¨ not sheepishly following along! Long positions by the big boys have already been sold to you, as the common man ¨reactes¨ to the trickle of silly news stories aimed at keeping you on the wrong side of the trade.
You falling for this shit? Grab a backbone. Get informed. Remember the days when The U.S Federal Reserve was printing like mad, and crushing the currency with hopes to boost exports and the economy?
How did that go?
The U.S Dollar likely has a few more days of downside before petering out and completing this last leg lower, so you can feel free to hang on – at least another couple of days short.
It’s quite possible that this last leg down may mark “the end” of an intermediate down trend, where in the bounce ( and possible trend change ) could be quite dramatic.
Myself…..I’m going to close my few open positions over the next day er so…..then consider “mission accomplished” short / medium term shorting USD.
If indeed we see an intermediate cycle complete – a full stop and reversal in USD related trades could soon provide another “easy trade” in catching it so early. Obviously pairs such as EUR/USD as well GBP/USD will provide fantastic vehicles here, as well as long USD/CAD and USD/JPY ( but I’d be sure to really wait on these ).
So you see? This is traaaaaaading. Trading yes. Not beating down on The U.S Dollar like I give a rat’s ass about one particular currency or another. This is making money in a market “regardless of direction”. This is charting, this is macro economic analysis, this is timing – this is art, not some bullshit rhetoric aimed at keeping you invested and ultimately cleaned out.
You can do it…….you’ve just got to turn your biases off. You’ve got to learn to think for yourself, and filter through the noise.
Q: What did the midget say when I asked him for a dollar?
A: “Sorry bud……………………………………….I’m a little short”.
Feel free to pull the trigger anywhere in here today, as most currency pairs have done what was expected – providing for fantastic entries here “short USD” and short “risk in general”.
You’ll see a number of the other usual correlations play out ( as this is so straight forward and obvious ) with commodities moving higher as “the currency that they are priced in” slides lower, then lower…….and lower some more. And yes folks…..even gold and silver!
Again I marvel at the “hoards of financial bloglodytes” peddling this kind of information for money.
This is about as common knowledge as it gets.
Literally……”Introduction to economics 101″.
If the sideways trading hasn’t been enough to drive you insane “yet” well……..you’re one the few. I’ve had nothing to trade, and in turn nothing to “say” until today.
It looks as though we are back on track for another short entry in risk, as both The SP 500 as well $USD are signalling – downside ahead. You don’t see it? How about 2095 as a good place to start?
I’m looking for today’s high in “both” as a level to look at “getting short” – again.
Keep in mind….the levels are the levels…but the turns often take time. Get a couple orders in “underneath the action” – and you’ll do just fine.
This works short SPY, short USD/JPY , as well most everything vs JPY ( yes again and again! ) with smaller orders long GBP/USD.
Picking currency pairs is getting trickier these days….so you’ve got to stick to some of the larger concepts ie…..Risk off = JPY UP.
Watch for this to fade here this afternoon..
If you’ve heard me say it once – I’ve said it a million times. A strong U.S Dollar will not be tolerated, as it represents a “red-hot poker to the eye” of both the corporate American “and” The U.S Fed.
You can fire up with all the fancy economic bullshit you can rustle from the countless “pro risk/pro USD/pro economic recovery loser blogs” out there ( and I hope you do ) and it won’t make a stitch of difference.
This thing will be cut off at the knees as U.S earnings plummet to the depth of an ocean.
Lets just call it the “Sea of Recession”.
You’ve heard of it but have no f*^*king clue where it is…..perhaps try looking in your backyard.
Short USD trades are once again “up and running” as we prepare to snap up all those long trades – soon going overboard.
I’d take a look at U.S Equities as well and consider that when BOTH the U.S Dollar AND Stocks start dropping like a rock….the big boys will have already taken the life rafts to shore.
I’ll already be on my private island – scanning my beaches for washed up traders and radio shack suits.
Do you think New Yorker’s can even swim?
I doubt it.
Finally! Something of significance!
If you take a look at two pairs such as GBP/JPY as well GBP/USD as a “control” – you’ll see that over the past few days of general GBP strength “both pairs” have been moving higher essentially ruling out any real movement in either JPY or USD.
Zooming in closer and taking a look at each of these pairs on much smaller time frames ( take the 15 minute for example ) you’ll blatantly see the “post Fed minutes” move has GBP/USD pushing higher and GBP/JPY falling off a small cliff.
THIS IS WHAT WE WANT TO SEE! ( Yoda may not ).
Suggestion that both USD as well JPY are finally moving “regardless of the currency they are pitted against”.
Obviously the same thing can be seen just taking a look at USD/JPY as a pair unto itself but….in this case ( looking wider at many pairs ) we see clear suggestion that USD and JPY are moving ( in opposite directions) to a much larger degree.
The Nikkei has also taken quite a “fast dip” here post Fed minutes so it’s pretty fair to say that markets aren’t particularly pleased with “something”.
Any bets on where The SP 500 and The Canadian TSX are likely headed next?