currency trading

Beer Money In 2014 – Happy New Year!

Forex Kong 5 Comments

With the fundamentals “out the window” now going on some 6-9 months ( if not the entire year of 2014 ) traders and analysts alike have simply stuck with the familiar adage “you can’t fight The Fed ” and just buy the dip.

No question that “if” you’ve been able to endure the massive swings (Sept – Oct for example – essentially wiping the entire “yearly Dow gains” in a matter of 12 days ) or even the smaller one just recently ( drilling The Dow 1000 points in a matter of 6 days ) you should be very, very , very proud of yourself.

Oddly….you never really hear much from “perma bulls” during these times, and one really has to wonder…if it was just that easy to “buy and hold” – then shouldn’t virtually “everyone” be stinking filthy rich right around now??

Funny……you don’t really hear much of that kinda talk either, and by way of U.S unemployment figures ( another miss at 298,000 last week ) you have to appreciate the “mixed message” most people are getting. Is this thing going up? Or is this thing going down?

It’s really the “art of survival” these days. Bull or bear….if you’ve got some extra money in your pocket at the end of the year hey…..job well done.

2015 will undoubtedly bring with it an “even more challenging trade environment” as global geo-political tensions are clearly on the rise, Central Banks are “still” struggling to put floors underneath spiraling economies, and global growth forecasts have been cut, then cut…….then cut again.

I wish all of you the very best in the new year, and as always – encourage you to stay vigilant. The rug gets pulled very quickly, and if I’ve learned anything over these past few years….I’d rather be the guy standing over in the corner………. with a cold beer in hand when it does.

Happy New Year all!

 

Falling Oil Prices = Slowing Global Demand

Forex Kong 6 Comments

With readership here at Kong now doubling “again” over the past few months – I struggle to understand what “new information” people are looking for.

You do understand that the recent fall in oil prices ( well …actually not so recent considering it’s been falling like a rock since June – down from 110 to now 58 bucks a barrel ) is a blatant and obvious indication that “global growth” and “global demand for oil” is falling off a cliff right?

Seriously…….if you don’t see the connection between “supply and demand” in something this blatant and simple well…….one has to wonder “what you do see” – if anything relevant at all.

Finally something “other than The Fed / mainstream media bullshit” to get you off the couch and start asking yourself?

Could it actually be? You mean all this Kong talk of “global slowdown” over the past months ( despite the ridiculous rise in equity pricing ) is actually for real?

Give your head a shake. The world outside your tiny bubble of plastic wrap and pizza boxes is selling off like hotcakes and you still think Apple looks like a buy here at 110.

Oil related currencies such as The Canadian Dollar as well The Mexican Peso are getting creamed even as The U.S Dollar is falling hard, and The Japanese Yen enters “lift off stage”.

Debate over the next couple weeks and “what ever miniscule points are left” in the general propping up of both Japanese and American markets is a dead mule.

Step back and imagine oil at 30 bucks…perhaps that will get your attention.

 

No Central Bank Bull Today – Just U.S Budget Balance

Forex Kong Got something to say?

Hmmm……

Nikkei down another  150 here as of this “early morning writing ” ( it’s 5:30 here this morning ) and no big moves up in SP futures.

It still “feels” a little early but thus far reaction to the move from The PBOC has been sustained. Markets are not looking very “green” to say the least, but we all know what generally happens every morning before the U.S open.

USD/JPY usually ramps – but thus far………trading flat as are EUR/USD as well GBP/USD.

One “has to wonder” what “breaking news” from one CB or another will manage to make its way into the headlines any minute.

I can only suggest to get “under or over” currency pairs by a minimum of 50 pips, getting a couple orders into the system and just letting momentum pick you up.

Today could just as easily be a tiny “doji type candle” or very small / flat as Thursdays generally bring about the larger move.

USD has now met “all criteria needed” to satisfy the beginning of its intermediate decline, but that’s not to say things still can’t move sideways another day or two.

The sustained move lower in oil has obviously got the energy markets spooked, Yen has now put in a solid “swing low” as USD looks to have topped out. Gold and Silver consolidating the big “up moves” from yesterday so……everything “appears” to be on track.

Expect this afternoons “US Federal Budget Balance” number to again miss / disappoint as government spending continues to “grossly surpass” government revenue by oh….I dunno….120 “billion” per month?

Sounds very healthy.

Oil Prices Plummet – What Does It Mean?

Forex Kong 3 Comments

The big news over the past 48 hours has obviously been OPEC’s surprise decision “not” to cut oil production.

In a world of increasingly “lower demand” for oil ( further confirmation of a truly “global slowdown” ) The Saudi’s have opted to sustain production of 30 million barrels per day, keeping market share and putting a real squeeze on The American shale / fracking business, that generally needs to see oil at 75-80 barrel just to remain profitable.

The net effect is generally perceived as “net negative” for oil exporting countries, and could also be a potential catalyst for weakness in U.S equities, with indices carrying “significant weighting” of oil / energy related companies.

The Saudi’s can produce oil much , much cheaper than other nations so in keeping production output high ( and in turn driving prices lower ) there may be more to this than first meets the eye.

A strategic move to drive other oil exporters ( in particular The U.S with it’s high costs of production ) out of the market? 65 dollar bbl oil puts the majority of U.S oil exporters on the back foot and potentially “out of business” should these price levels remain, not to mention driving home the point that “indeed” global demand for oil is certainly on the decline.

I believe it was a 35-40% decrease in the price of oil that also proceeded equities downturns in both 2008 as well 2011.

We are almost exactly at the same point with oil prices as of this morning, so it remains to be seen “what reaction” we may see here in the West as markets digest the information.

First the currency war and now perhaps a “commodity war”? Needless to say….never a dull moment here these days – with “yet another shocker” rippling through markets here this week.

Let’s see what The Central Banks do next right? As this has absolutely nothing to do with you or I.

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.

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.

 

 

 

 

The Weekend Report – Ideas Of What To Expect

Forex Kong Got something to say?

We find ourselves in an interesting spot now, with respect to “where markets are headed next” as……the major “risk indices” have put in “swing lows” – suggesting that new daily cycles are now underway.

At the very least we know “things are set to bounce” but “to what degree” remains to be seen so we need to keep an open mind, and get our heads wrapped around a couple different scenarios, as well take into consideration “whatever else we can” in order to formulate a plan.

Regardless of near term market direction, we can also see that “volatility” has certainly picked up, providing for all kinds of intraday opportunities and short-term trading.

Forex trading is back!

Scenario 1:

Personally, I don’t feel the market has yet come to a “capitulation type moment” and would first entertain that perhaps we get another couple of “up days” early in the week, a fast roll over and a further dive to test the recent lows.

It would be from “there” that I would imagine the stronger and larger bounce higher in risk.

Scenario 2:

Off to the races first thing Monday morning markets start ripping higher, then higher, then higher still – squeezing every single short and pressing to the near term / all time highs.

I feel this is “less likely” from both a fundamental as well technical perspective, but considering these markets and the “desperation” of Central Banks to keep confidence in the system – I can’t rule out some completely ridiculous “media induced” rally closer to the highs.

SPX_Oct_19_Forex_Kong

SPX_Oct_19_Forex_Kong

Please envision the exact same chart / scenario for The Nikkei.

Either way you look at it – you’ve really got to make some solid trade decisions here. One could choose to just “sit this leg out” and be very prepared for the tiniest suggestion that things are heading lower again – then jump on the train headed in the “direction of the trend”. Or you could certainly “take a stab” at a few long ideas, just with the understanding that you are trading against the trend, and that your time may be short. Perhaps too short.

For me it’s “almost” to late already to be chasing any “short-term trades” following risk higher, as the “downtrend” in most currency pairs ( JPY related for example ) is still intact.

Take AUD/JPY for example – 150 pip counter trend move over the past two days only brings the pair to the upper portion of its downward facing trading channel, and still has it “burgundy” on a 4H as well “gold” on the 1H. It could just as easily turn lower over the next 24-48 hours and continue on its way down.

In fact considering the large moves higher in SP 500 over the past few days – the currency market “so far” has done nothing to suggest ” a major low is in” and that we should just “switch to the long side” so……..I’m gravitating towards the first scenario, and plan to sit tight Monday / Tuesday ( unless of course things are already moving ) planning to “stay short risk in theory” and look for the absolute best entries I can in re shorting JPY related pairs.

Appreciate that I am nearly 100% cash at this moment as well.

The U.S Dollar

USD is giving us no clear signals as to which direction she’s headed next week and “as per usual” the correlation with “risk” is muddled.

The Dollar has fallen from its highs yes…..but hasn’t really gone anywhere in any “big way” as it’s still trading “gold/amber” on a 1H chart.

USD_1H_Forex_Kong

USD_1H_Forex_Kong

Unfortunately this doesn’t provide for any “aggressive trades” in USD short of keeping a very watchful eye on GBP/USD, EUR/USD, USD/CHF as well USD/CAD for possible entry “if / when” USD breaks below the 85.00 area.

Most USD related charts “do look primed” for this trade to come to fruition – but things continue to grind. I see no immediate evidence that USD is “heading back towards the moon” as everything I track still suggests USD is set to fall further.

AUD/USD as well NZD/USD appear to be “impossible trades” regardless of the fact that NZD has likely bottomed here as well so……all we can do another day or two is watch USD, keep an eye on all these pairs – and be ready. ( I still feel AUD as well NZD need to “take a bounce here” – but it sure is a long time coming.)

Trade Ideas

The next leg lower in “global risk” is going to be a whopper – so you’ll want to be fully onboard for that. It’s these “counter trend” moves that will always throw you for a loop as it’s near impossible to gauge the “extent to which” things correct.

If you’re actually bullish then perhaps you’ll see this as an excellent opportunity to buy, although I certainly can’t recommend that.

The big moves ( and the big money )  have clearly been with JPY and I suggest a continued focus on these pairs. We know “without question” that the correlation of “risk off” = JPY strength so the question begs “if it ain’t broken – why fix it”?

This is the most obvious and blatant trade / market dynamic we can put our finger on today so it only makes sense to continue concentrating on it.

We wait for this “upward correction” to take our JPY related pairs as high as they’ll go – then get underneath them again for the next ” and larger” leg lower in risk.

We continue to monitor all USD related pairs ( as I’ve entered long GBP/USD ) for the first signs that indeed USD is heading lower and that these pairs will offer some good trade opportunities.

If we imagine all JPY pairs taking a minimum 150 pip bounce ( and even more likely 200 pip bounces ) then getting under even 5 of them, and seeing things move back to the previous lows ( and then lower even further ) – that’s a good 1000 pips before things have really even moved much!

GBP/JPY as well CAD/JPY and AUD/JPY have already made considerable moves higher, but with downtrends still very much intact.

I imagine we’ll have an answer as early as Tuesday, as to whether it’s worth it chasing a couple trades higher / long risk, or to just “sit it out” and plan for the “major trade” setting up for the next leg down. One way or another – we just want to see those JPY related pairs keep moving higher as to “get back underneath them” for some big wins in the weeks to come.

Please feel free to visit the members website at: www.forexkong.net for weekly reports, daily commentary and real time trade alerts.

Selling The Rip – Earnings To Disappoint

Forex Kong 2 Comments

The SP 500 has now broken below a critical area, suggesting that further losses ( over the next several weeks ) will be seen. But of course, right around the time you figure that out – markets also look set to bounce.

This “bounce” ( however great or small ) will only provide greater opportunity to continue shorting – just at higher prices.

Dip buyers will unfortunately be met with “the dip that turned into a dive”.

Regardless of near term price action over the next couple of days, what people need to understand is that we’ve turned a corner, and that as per The Nikkei in Japan ( leading us lower for several days prior to The SP finally rolling over ) any idea of a “new string of higher highs and higher lows” is very likely out of the question.

I don’t expect higher prices in Japanese stocks period so……as nearly every single index globally has now broken below significant lines of support it’s fair to say that indeed – a significant top has finally been reached.

“Selling the rips” now, not “buying the dips”. That’s the road we’re on.

Sinking below 1904 has solidified a much larger and more serious correction ahead, so investors / traders need to be aware that we’re on the other side of the mountain now. This earnings season is also expected to bring disappointement so look ahead to lower stock prices in coming weeks.

 

My Trading Framework – Put To The Challenge

Forex Kong 11 Comments

I assume you’ve all got a certain number of “economic indicators” and likely as many “technical indicators” flashing on your screens to alert you to those “specific things” you find most important to your trading. You have yours, I have mine and the key for anyone is to “just find something that works for you”.

Recently my “framework” ( as I assume many others ) has been put to the test, pushing a number of “specific little things” about as far as they could possibly go before consideration that “perhaps I’ve got this wrong” or “maybe this isn’t going to work out”.

Markets have a tendency to do this “no matter what” and at one time or another “everyone” will be pushed to question if “they really know what’s going on out there” or if their “beliefs” will actually come to fruition.

You must have a certain degree of conviction in order to see some of the larger trade ideas realized, as they often play out over weeks and even months.

  • I’ve always suggested that The Japanese “Nikkei Index” would be the first place to look for trouble, and that Japan should lead the charge lower, posting this almost a full week ago then seeing U.S equities have one of their toughest weeks in a while. Coincidence? Of course not.
  • I’ve always suggested that The Japanese Yen has served as the “principal fuel” for the massive rally in U.S Equities, as cheaply printed Yen is converted to USD in order to purchase assets priced in U.S Dollars, while the majority of “U.S printed toilet paper” just sits with the big banks.
  • As well let’s not forget my long-term “short trade” on The Australian Dollar now -700 pips from its high at the beginning of September.

A bottom in Japanese Yen ( and in turn a near term “top” in USD ) appears to be upon us, as The Nikkei has now “double topped” and been handily rejected.

I don’t expect higher prices in Japanese stocks. Period.

I also don’t expect USD goes any higher here, before making a swift ( and likely very painful ) move lower. Considerably lower.

Yen strength means bad, bad things for U.S Equities as well The U.S Dollar, as both are essentially sold on repatriation of Yen back to Japan. The 200 billion printed per month “had to have gone somewhere” right?

Perhaps now they are headed home.

More real-time trades, weekly reporting and daily commentary at the members site : www.forexkong.net

 

 

 

 

 

 

You Can't Win – Only If You Buy A Ticket

Forex Kong 1 Comment

We’ve all heard the saying “you can’t win if you don’t buy a ticket” right?

Well…as far as trading is concerned, this expression / process comes into play many, many times per week / month or even “per day” depending on your strategy.

You can’t win if you don’t buy a ticket – and I like buying tickets.

For some time now, I’ve been eyeing a large move lower in “global appetite for risk” which ( for the most part ) has eluded me thanks to our friendly neighborhood Central Bankers.

Day in day out – the “balls just keep tumbling” and the numbers just keep going round and round in what’s now become one of the longest running “lottery draws” of the century.

So the question begs – What if you miss this one? What if you don’t take a shot? Or more interesting…what if you nail it and win? Is it worth the ticket price to have tried?

In this case……with every single asset / price / elastic band stretched about as “far as it’s been” in human history, the purchase of another ticket ( then perhaps another ) looks very appealing.

I expect to be purchasing a ticket “short” mid-week, and just let the chips fall where they may.

Hey you never know right? And it certainly can’t hurt holding a ticket.