Economic Collapse – Food Stock Piles

Seriously I couldn’t resist.

With respect to the large storms pounding the Eastern U.S, as well it being the weekend –  just one more little video to really get you thinking. You are at home – the T.V sucks, and I can’t imagine you’d dig this one up on your own so enjoy…or not.

[youtube=http://youtu.be/Fkk95XLXW0I]

Your thoughts / opinions / views are always wanted and deeply respected so fell free to comment on this…if you can help yourself from “not”. I for one appreciate the straight forward exchange between these two lovable creatures – regardless of the content. Take it for what it is…….a cartoon no less.

Long EUR/USD At 1.3170 – Watch Me

I rarely trade this piece of junk, in that the fundamentals rarely align to offer me the kind of moves I look for. In this case though – as the USD looks to have made its “counter trend rally” over the past few days, coupled with some additional fundamental factors, I will be exploring several “long EUR” trade ideas through Monday and possibly Tuesday before seeking entry.

I generally stay away from the EUR as fundamentally it is a complete mess. As well the EUR has external forces pushing and pulling at it (as it is the second most widely held currency on Earth) that often effect its movement with little or no fundamental reasoning. It’s hard to call it a safe haven, it’s not commodity related, and its current economic position has it sitting in the junk pile so – what’s a guy to do?

I consider it a trade – and nothing more.

What might be interesting to some of you (looking to improve your short  term trading skills as well your fundamental analysis) would be to watch the EUR this week against a number of different currencies, and observe a few things you likely won’t expect to see.

I won’t give it away now but….as the EUR may rise against the USD in value – perhaps it may fall against a few others. Can you spot them? Can you tell me “why”?

It’s great to be back in the saddle again  – and I look forward to another profitable week trading with you.

USD Devaluation – Just Getting Started

If Uncle Ben’s plan has been to devalue the dollar through QE4  – he’d better get his ass in gear. Thus far since the announcements of  “QE forever” – the USD has done little more than trade sideways against most of the majors, and has GAINED considerable value against a number of others.

The USD has traded near parity against the Canadian Dollar for the past 6 months, with only a few cents in fluctuation. Both the Aussie and the Kiwi currently sit at levels seen going back a full year – and for the most part have made little sustained ground on ol Uncle Ben.

The Yen has been devalued recently, to such an extent as to represent a complete reversal of trend going back some 5 years! So absolutely zero reflection of USD devaluation there. And the GBP (Great British Pound) has taken such a beating as of late – as to have LOST 600 pips to the USD.

For the most part the only major making any headway against the USD has been the EUR – and even at that, is still trading at levels we’ve seen many, many times over the past several years – with little or no major effect or concern. In “range” if you will. Gold has been pounded into the ground – and in dollar terms – where’s the printing?  where’s the devaluation?

So…short of encouraging investors to continue buying stocks and bonds (with the knowledge that “fed confetti” should keep prices elevated) the current suggestion that the “dollar is being devalued” hasn’t really even taken hold – opening up some fantastic trade opportunities when one considers that…THE USD DEVALUATION HASN’T EVEN STARTED YET.

THE USD DEVALUATION HASN’T EVEN STARTED YET.

Dollar Takes A Fall – Markets Busy

As we’ve all seen outlined in the previous series of posts – the value if the US Dollar against other currencies/other assets clearly has a direct correlation to the “price of things” ( or commodities  ). In its simplest form – if the USD is worth less, then you are going to need a lot more of them to purchase that barrel of oil , and those lean pork bellies getting loaded in the back.

Domestically ( if indeed you live in the United States) this obviously starts to become a problem, as the cost of things you and your family need, continue to climb higher – because the dollars in your pocket are worth less and less. Oddly, in the current “repressed” economic environment you are somehow going to need to make more money – a lot more money.

However, if you are currently living outside the United States and are holding currencies such as the Euro or Great British Pound, the Loonie or the Kiwi – everything at the farmers market is on sale!  Goods and services for sale in our “global commodities market” become far less expensive ( when you come to see Kong at the currency exchange window out front) because the money in your pocket is worth more!

This is the double-edged sword of the Fed’s current QE plans – as further money printing puts the crimp on people living in the U.S , but in turn promotes exports to those living outside the U.S (due to the “incentive” given with better exchange rates and the perception of value therein.)

A person from Australia very well may book a flight to go on vacation in the U.S with the knowledge that their currency is worth considerably more – and with the perception that “things are cheaper over there”.

I don’t see QE creating jobs at all, but if the desired effect is to increase exports and “incentivize” foreign money to be spent in the U.S well…….you can now see that other countries can get in on that game as well.

It’s called a currency war.

This may seem like common sense to some of you but I thought it important to point out with the analogy of the farmers market and the significance of the U.S dollar exchange rate around the globe.Imagining yourself outside my exchange window, standing next to a group of people with happy smiley faces – ready to go in and buy – with a lot more money than you.

This Close Gets Bought Hard – Kong

I’m usually not one for moment to moment market commentary – but on occasion (for example my “risk on” post some weeks ago with reference to getting short JPY) I have been known to do so.

Take it for what it is…as this is a free blog – but if I was ever a buyer of U.S equities (which as a general rule I am not) – I would buy this close – HARD.

Forgive me for a small poke as well but….the American politicians should be absolutely ashamed of themselves. I’m not sure if anyone living in America still thinks they live in a “free country” – but once again stock holders are more or less “held hostage” till (let me guess) late Sunday night…before getting on with their lives – some I’m assuming worried if they will still have a job in 2013 and/or if additional tax hikes will break them.

Its appalling. Its embarrassing. Shame, shame, shame…..

So….obviously – buy stocks!

Im getting short the USD hard as well staying short JPY – long the commods here, as well getting long EUR late this evening or sometime tomorrow.

Good luck America! Good luck!

 

 

Risk On Alert! – Don't Just Sit There!

Japanese elections play out exactly as expected with a HUGE GAP UP in JPY crosses here Sunday night.

As the currency wars continue – everything is clearly in place for some serious USD devaluation. If you choose to just  sit and “see how things go” you will soon (if not Monday morning even.. ) be left in the dust – as the dollar has absolutely no where to go but DOWN. I don’t go making calls in a minute to minute / day to day type way ( although if you’ve been following the trades at all – you’ll find that I might as well) but…….this is it!

I expect markets to power forward here this week and as simple as it gets – all assets shall rise!

If you’ve got dry powder – I seriously suggest no…..I SERIOUSLY SUGGEST you take this opportunity ( and perhaps get out of bed a little early tomorrow morning) to pull up a chart or two, get that broker of yours on the phone – and place a trade.

I am already trading / initiating further “risk related” trades across many many currency pairs with the same ol underlying theme – buying the risk related currencies….and selling the safe havens. I am expecting to do very, very, very well this week. Watch for “whipsaw” type activity – and please take the time to find entry at areas of support – don’t be surprised if “they don’t make it easy” – but  it’s time….I believe Christmas has come a week or two early.

Kong……………………Gone.

 

 

Death To The Dollar – Reserve Status In Question

I clipped / edited this as I found it to be most interesting:

A common believe  is that there is no credible substitute for the dollar – so the dollar is safe as the reserve currency.

Another believe is that it would take decades to replace the dollar (central banks need to have “some” assets that hold or increase in value right?).

Increase in value right? …………………………………………………………….obviously the dollar is not doing this.

In truth almost any other asset is a better reserve than the dollar. There is no need for every central bank to pick the same one.

Some believe that it would take the Gulf States many years to replace the dollar as the currency oil is priced in. This is a peculiar claim since Iraq and Iran switched to non-dollar sales in short order (Iraq before the war). As should be expected with a dropping dollar, Iran says it profited from switching to non-dollar oil sales. Other countries can see this and can just as likely – switch too.

Imagine that central banks currently had their assets as 60% Dollars and 30% Euros. If the value of the dollar were to drop in half, then they would have equal value in Euros and Dollars without changing anything.

For thousands of years gold and silver have been used as a store of value. Imagine a central bank with 10% in gold and 90% in dollars. If the dollar goes down by 2 and gold up by 5 it could suddenly have most of its assets in gold.

The point is that the dollar could be replaced as the dominant reserve asset even without central banks ever selling their dollars, just by it’s dropping in value. Several times in the past the dollar has dropped significantly in value in a just a few short years.

Why would now be any different?

The Dollar – Get Down And Stay Down

I’ve been going on about this for almost a full month now, and despite the profits made dipping in and out – it has been no simple task sticking to the dollar short trade. The USD Dollar has done just about everything in its power to confuse and confound traders as of late – and has hovered around the 80.00 mark for far longer than most may have expected.

The Dollar is now set to provide some consistent and “tradable” downside action.

As outlined prior with the “swing low”  in silver (and now subsequent swing low in gold as of Monday) we now see that the dollar has (opposingly) made its swing high. Often when solid technicals line up with the underlying fundamentals in such a perfect manner – big things can happen.

We already know that The Federal Reserve wants a weaker dollar – so on a purely fundamental level (and in conjunction with the FOMC meeting set for Wednesday) it appears that this piece of the puzzle is well in place. Coupled with a “swing high” as well as a failed attempt at a downward sloping trend line break in the USD over the past two days – puts us right on track for a solid move….south.

There are several ways to play this  – be it through equities (that will rise with a falling dollar), gold and silver related stocks and ETF’s, and of course through the currency markets where I will likely be adding to current positions long both AUD/USD and NZD/USD as well short USD/CAD, USD/CHF – as well  a basket of other (and more exotic) “risk on” related pairs.

For more on the “swing low” please reference the prior post.

A Dollar Bounce – Likely A Dead Cat

If you’ve never heard the term “dead cat bounce” – here it is. A dead cat bounce is an industry term used to describe the upward movement of a given asset “contrary” to a larger degree down trend.

Dead Cat Bounce – In finance, a dead cat bounce is a small, brief recovery in the price of a declining stock.Derived from the idea that “even a dead cat will bounce if it falls from a great height”, the phrase, which originated on Wall Street, is also popularly applied to any case where a subject experiences a brief resurgence during or following a severe decline. (thanks Wikipedia)

In this case – I guess it’s not exactly a dead cat bounce, as the dollar has only just recently begun it’s expected downward fall – but I do expect a “bounce” all the same. As far as trading it goes – if you are an equities buyer – I imagine you should get some nice opportunities to buy in coming days, before this thing lifts off to new highs.

As a currency trader – I am not going to bother doing anything short of watching the dollar closely – and aim to catch it at its peak (perhaps around 81 late in the week) before re-entering “short dollar” positions across the board. It’s not worth trying to squeeze every single penny, and push any further short dollar positions now ( considering I am 100% in cash).

Best trade is no trade at all here – and as I’ve said many times before – I am not missing anything – there are a million trades – and chasing anything is a fools game.

$dxy Novemeber 26

$dxy november 26th

A Flood of Dollars – And Golden Rain

As the mighty Hudson River swelled and unleashed its fury on the Jersey Shore – so too it appears that The U.S Federal  Reserves “flood of dollars” is set to break the levees in global markets.

The dollar looks to continue its turn downward – and this gorilla is calling for rain……………..”golden rain”!

Overnight gold has popped 8 or 9 bucks and is certainly looking ready for a fast break to the upside.

My accounts as well popped an additional 2% – and (if you can believe it) have already taken profits – looking to re enter here mid day / this afternoon after the usual “morning shenanigans” play out.

I never EVER worry about missing a trade after taking profits and looking to re enter in that:

  • One has to be thankful when things go their way so early on.
  • It always feels “amazing” sitting 100% in cash (especially when there is more of it than the day before.)
  • There are a million trades – and no “train is gonna leave the station” in a 24 hour period – without a large percentage of retracement / opportunity to jump back on board.

Things are looking good across the board for continued “Risk On” in markets – and the same strategy is currently in play – Short the U.S Dollar and Yen against the Commods – as well long n strong EUR/JPY.

I might pick up another couple pairs here today (long GBP/JPY,CHF/JPY) with small orders and wide stops as these can rip your head off without a moments notice.