Forex, Stocks And Gold – Trading The Week Ahead

The updates trade table offers little in the way of “new trades” here as of this morning, as last Thursday’s “drop” and in turn Friday’s “pop” has left the higher time frames unchanged, and more or less “yellowed the waters” shorter term.

Weekly_Forex_Overview_Sunday_July_20_2014

Weekly_Forex_Overview_Sunday_July_20_2014

 

What may be of particular interest to you this week will be USD, and “yes once again” the debate as to which way she’ll go ( with conviction and follow through ) should we see this distribution environment “flip” to something with a little more trend / conviction either way.

We’ve got JPY and its related pairs under the thumb, with eyes on Nikkei if considering to “beef up / add ” to any positions under our current framework. Ideally we’ll want to see JPY “breakout” from it’s ascending triangle moving higher…as “appetite for risk” moves inversely lower.

NZD in particular remains weak here this morning, but Thursday brings with it “another possible rate hike” out of New Zealand. It’s my thinking perhaps they “hold off” on an additional hike here and perhaps markets have already suspected as much but….that’s just speculation.

Still no aggressive trades in EUR, GBP vs USD as I want to give it another day or so to see if  USD turns lower here as I expect it to.

A weak open here as Japan was weak overnight as well EU stocks so…..it remains to be seen of “the machine’s that be” will again step in at the U.S open and work their “usual magic” to keep this thing flying a little longer.

Comments from both The BIS ( Bank of International Settlements) as well the IMF “AND” even The Fed suggesting that it’s getting a little out of hand here – with public perception and the underlying fundamentals now clearly out of touch with reality.

Gold miners entries as of a few days ago remain strong, and the final “short SP 500” added at 1956.00 ( via Sept 191 puts ) appears to be holding its own.

 

Want to see what other irons we’ve got in the fire? Come join us in the members area for weekly reports, daily strategies, real-time chat and trading of “anything and everything under the sun” at: www.forexkong.net

U.S Interests In Ukraine – A Brilliant Synopsis

Cut and past from a fellow named Mike Whitney ( thank you very much Mike ) who can be reached at: [email protected] as I could not have possibly explained it better myself.

In Ukraine, the US is using a divide and conquer strategy to pit the EU against trading partner Moscow.

The State Department and CIA helped to topple Ukraine’s elected President Viktor Yanukovych and install a US stooge in Kiev who was ordered to cut off the flow of Russian gas to the EU and lure Putin into a protracted guerilla war in Ukraine.

The bigwigs in Washington figured that, with some provocation, Putin would react the same way he did when Georgia invaded South Ossetia in 2006. But, so far, Putin has resisted the temptation to get involved which is why new puppet president Petro Poroshenko has gone all “Jackie Chan” and stepped up the provocations by pummeling east Ukraine mercilessly. It’s just a way of goading Putin into sending in the tanks.

But here’s the odd part: Washington doesn’t have a back-up plan. It’s obvious by the way Poroshenko keeps doing the same thing over and over again expecting a different result. That demonstrates that there’s no Plan B. Either Poroshenko lures Putin across the border and into the conflict, or the neocon plan falls apart, which it will if they can’t demonize Putin as a “dangerous aggressor” who can’t be trusted as a business partner.

So all Putin has to do is sit-tight and he wins, mainly because the EU needs Moscow’s gas. If energy supplies are terminated or drastically reduced, prices will rise, the EU will slide back into recession, and Washington will take the blame. So Washington has a very small window to draw Putin into the fray, which is why we should expect another false flag incident on a much larger scale than the fire in Odessa. Washington is going to have to do something really big and make it look like it was Moscow’s doing. Otherwise, their pivot plan is going to hit a brick wall.

“Ukraine’s Parliament adopted .. a bill under which up to 49% of the country’s gas pipeline network could be sold to foreign investors. This could pave the way for US or EU companies, which have eyed Ukrainian gas transportation system over the last months.

Boy, you got to hand it to the Obama throng. They really know how to pick their coup-leaders, don’t they? These puppets have only been in office for a couple months and they’re already giving away the farm.

And, such a deal! US corporations will be able to buy up nearly half of a pipeline that moves 60 percent of the gas that flows from Russia to Europe. That’s what you call a tollbooth, my friend; and US companies will be in just the right spot to gouge Moscow for every drop of natural gas that transits those pipelines. And gouge they will too, you can bet on it.

Is that why the State Department cooked up this loony putsch, so their fatcat, freeloading friends could rake in more dough?

This also explains why the Obama crowd is trying to torpedo Russia’s other big pipeline project called Southstream. Southstream is a good deal for Europe and Russia.

On the one hand, it would greatly enhance the EU’s energy security, and on the other, it will provide needed revenues for Russia so they can continue to modernize, upgrade their dilapidated infrastructure, and improve standards of living. But “the proposed pipeline (which) would snake about 2,400 kilometers, or roughly 1,500 miles, from southern Russia via the Black Sea to Bulgaria, Serbia, Hungary and ultimately Austria. (and) could handle about 60 billion cubic meters of natural gas a year, enough to allow Russian exports to Europe to largely bypass Ukraine” (New York Times) The proposed pipeline further undermines Washington’s pivot strategy, so Obama, the State Department and powerful US senators (Ron Johnson, John McCain, and Chris Murphy) are doing everything in their power to torpedo the project.

“What gives Vladimir Putin his power and control is his oil and gas reserves and West and Eastern Europe’s dependence on them,” Senator Johnson said in an interview. “We need to break up his stranglehold on energy supplies. We need to bust up that monopoly.” (New York Times)

What a bunch of baloney. Putin doesn’t have a monopoly on gas. Russia only provides 30 percent of the gas the EU uses every year. And Putin isn’t blackmailing anyone either. Countries in the EU can either buy Russian gas or not buy it. It’s up to them. No one has a gun to their heads. And Gazprom’s prices are competitive too, sometimes well-below market rates which has been the case for Ukraine for years, until crackpot politicians started sticking their thumb in Putin’s eye at every opportunity; until they decided that that they didn’t have to pay their bills anymore because, well, because Washington told them not to pay their bills. That’s why.

Ukraine is in the mess it’s in today for one reason, because they decided to follow Washington’s advice and shoot themselves in both feet. Their leaders thought that was a good idea. So now the country is broken, penniless and riven by social unrest. Regrettably, there’s no cure for stupidity.

The neocon geniuses apparently believe that if they sabotage Southstream and nail down 49 percent ownership of Ukraine’s pipeline infrastructure, then the vast majority of Russian gas will have to flow through Ukrainian pipelines. They think that this will give them greater control over Moscow. But there’s a glitch to this plan which analyst Jeffrey Mankoff pointed out in an article titled “Can Ukraine Use Its Gas Pipelines to Threaten Russia?”. Here’s what he said:

“The biggest problem with this approach is a cut in gas supplies creates real risks for the European economy… In fact, Kyiv’s efforts to siphon off Russian gas destined to Europe to offset the impact of a Russian cutoff in January 2009 provide a window onto why manipulating gas supplies is a risky strategy for Ukraine. Moscow responded to the siphoning by halting all gas sales through Ukraine for a couple of weeks, leaving much of eastern and southern Europe literally out in the cold. European leaders reacted angrily, blaming both Moscow and Kyiv for the disruption and demanding that they sort out their problems. While the EU response would likely be somewhat more sympathetic to Ukraine today, Kyiv’s very vulnerability and need for outside financial support makes incurring European anger by manipulating gas supplies very risky.

The funny thing about gas is that, when you stop paying the bills, they turn the heat off. Is that hard to understand?

So, yes, the State Department crystal-gazers and their corporate-racketeer friends might think they have Putin by the shorthairs by buying up Ukraine’s pipelines, but the guy who owns the gas (Gazprom) is still in the drivers seat. And he’s going to do what’s in the best interests of himself and his shareholders. Someone should explain to John Kerry that that’s just how capitalism works.

Washington’s policy in Ukraine is such a mess, it really makes one wonder about the competence of the people who come up with these wacko ideas. Did the brainiacs who concocted this plan really think they’d be able to set up camp between two major trading partners, turn off the gas, reduce a vital transit country into an Iraq-type basketcase, and start calling the shots for everyone in the region?

It’s crazy.

Europe and Russia are a perfect fit. Europe needs gas to heat its homes and run its machinery. Russia has gas to sell and needs the money to strengthen its economy. It’s a win-win situation. What Europe and Russia don’t need is the United States. In fact, the US is the problem. As long as US meddling persists, there’s going to be social unrest, division, and war. It’s that simple. So the goal should be to undermine Washington’s ability to conduct these destabilizing operations and force US policymakers to mind their own freaking business. That means there should be a concerted effort to abandon the dollar, ditch US Treasuries, jettison the petrodollar system, and force the US to become a responsible citizen that complies with International law.

This in an absolutely “perfect synopsis” of events currently unfolding in Ukraine….and you’ll have to appreciate the irony with respect to the “false flag” and the mysterious “Malaysian Jetliner now “downed” in Eastern Ukraine”…….a coincidence? A chance event?

I hardly think so.

Go Obama go – you moron!

U.S Debt – A Ton Of Debt, A Pound Of Growth

The following article and series of charts / graphs should scare the living day lights out of you, if you don’t already have a general idea how artifically low interest rates and the “U.S debt situation” fit together.

http://www.zerohedge.com/news/2014-07-15/why-status-quo-unsustainable-interest-and-debt-what-yellen-wont-tell-you

Shocking when you consider that net interest costs will double in five years, and triple in eight.

So…….The Fed is gonna hold rates at zero forever then?

Impossible.

USD/JPY – A Pair You Can Learn From

We’ve discussed how important this pair is with respect to it’s “drive in equity markets” ( with JPY being sold/borrowed then converted to USD in order to purchase equities ) and it’s interesting to note that:

Regardless of whatever fluctuations we’ve now seen around Yellen’s “slightly more hawkish” comments….USD/JPY refuses to break higher thru the downward sloping trend line that has contained it for so long.

What would appear as “USD strength across the board” really only manifests as a couple pips rise in USD/JPY.

This is because strength in JPY is even GREATER. With both currencies taking inflows only JPY taking MORE creating a net result of USD/JPY falling “lower”.

This may appear counter intuitive as one might imagine “well USD is going higher….this pair should also be going higher right?” WRONG.

Understanding the fundamentals behind this pairs movement can tell you a lot about market’s appetite for risk as “USD will be converted BACK to YEN as U.S equities are sold.

A stronger Yen correlates to “weaker U.S Equities” near 95%.

Something to add to your toolbox if  it’s not already in there.

I’m adding short USD/JPY here at 101.63

Yellen Must Get Hawkish – Doves Will Cry

To garner even the tiniest amount of respect over the next few days….Janey Yellen “must” do something to forewarn markets / prepare investors for the inevitable “unwinding” – coming soon to a theatre near you.

It would be completely irresponsible for Yellen ( at this point ) to continue looking into the camera with those “beady little eyes”, suggesting that interest rates aren’t going up ( much sooner than markets are currently pricing in ) with the continued stance that “no bubbles are seen” and that all is going according to plan.

I believe it’s come to the point now…..where even the “just shut up and buy the dip / The Fed’s got your back crowd” would just as well get the signal here soon…….as they’ve pushed this about as far as “even they” think is possible.

Interest rates are on the rise much faster The Fed cares to make mention of, and this “playing dumb” act has about run it’s course.

I encourage everyone to take “extra special notice” over the next few days as to “what Yellen says” and more importantly “how markets interpret / react” as…..

If The U.S Fed had even the smallest shred of human decency ( which we already know it doesn’t ) now would be the time to “give the market a little heads up”.

The massive positions / time it takes to unwind has this so  ridiculously”one-sided” that without an appropraite amount of time…..you may just see everyone run for the exits all at once.

It’s 100% up to Yellen.

She can make this “somewhat orderly” or she can roll the dice another turn, and have this thing tank later.

That’s what I call a free market baby. That what I call – America!

 

 

 

Second Quarter GDP – Reality Check Anyone?

The “advanced estimates” for U.S GDP ( gross domestic product ) are to be released on July 30th, and promise to bring with them a “flurry of market activity”, with traders, economists, analysts and speculators alike clambering to find an edge, and get positioned for the news.

I pose a simple question.

With first quarter GDP coming in with  a devastating contraction of  – 2.9% growth ( consider for a moment that is the worst quarterly GDP report in 5 years….those last 5 years with the Fed printing billions per month ) what on Earth could possibly have occurred in the past 3 months ( the second quarter of 2014 ) to not only make up for the massive loss, but to suggest anything close to “positive growth”?

You’d need to see a headline like ” Second Quarter Growth Sky Rockets! ” a whopping 4% to even consider the United States is “not” heading straight back into recession ( never left actually ).

Impossible.

What “magical changes” could possibly have taken place in the past 90 days to produce a second quarter GDP number that “doesn’t signify recession”?

Answer: None.

With “consumer spending” accounting for more than two-thirds of economic output, how can people making $7.25 per hour ( minimum wage ) or just under 1200.00 per month pre tax  be expected to buy anything other than beans / rice and “hopefully” keep a roof over their heads?

The false sense of wealth created by The Fed and its ponzi / racket in U.S Equities has done absolutely nothing to bolster further growth of the American economy, and soon…..yes soon……..chickens will be coming home to roost.

2nd Quarter GDP disappoints, and “maybe” it’s reality check time.

 

 

 

Central Banks To Pop Bubble – IBS Says Do It

With The Fed minutes being released this afternoon, it’s pretty fair to say we’ll be going “nowhere fast” here this morning. That’s fine – we’re used to that.

But I will be particularly interested in today’s “Fed minutes release” as something “very, very interesting” has developed here just recently.

The Bank of International Settlements ( also considered the “Central Bank of Central Banks” ) has “sounded the alarm” and has now more or less stated to its members to “pop this bubble now” to save yourselves even worse fallout later.

A few quotes from the recent report / statement:

Few are ready to curb financial booms that make everyone feel illusively richer. Or to hold back on quick fixes for output slowdowns, even if such measures threaten to add fuel to unsustainable financial booms,” …

“The road ahead may be a long one. All the more reason, then, to start the journey sooner rather than later.”

Apparently a few “intelligent people” at the IBS who see the clear disconnect in current market valuations and “reality” are now flat our suggesting that the World’s Central Banking Community “just get’s on with it” – and bring forward the downward leg of the cycle.

So…..that being said, I think it warrants “lending an ear” here this afternoon as to even the “smallest hints coming out of Washington” that perhaps The Fed may drop, in order to keep itself on the right side of public opinion, whilst planning the next phase of the inevitable “boom and bust cycle”.

As I’ve suggested to you “countless number’s of times” this cycle being stretched to 5.6 years of upward movement now, with no real evidence of economic recovery – 2 years moving lower is really just standard fair.

Here’s more: http://notquant.com/did-the-bis-just-call-for-a-collapse/

 

 

Correction Time – We've Finally Made The Turn

Do I dare suggest that we’ve finally come to the turn?

As per The Nikkei chart posted ( well…..again here today! ) I do hope the odd “nay sayer” out there has opened their eyes just a “touch further” to put together a clearer picture of what’s been going on these past few months.

Nikkei_Weekly_Forex_KongNikkei_Weekly_Forex_Kong

Nikkei_Weekly_Forex_KongNikkei_Weekly_Forex_Kong

With The Fed’s “supposed taper” ( which hasn’t been a taper at all…only that the money has found its way into markets via “other means” – ie….Belgium ) highly liquid “floating mounds of Japanese Yen” have continued to come ashore in the U.S seeking yield.

The U.S Dollar hasn’t done “jack squat” for The U.S, short of keeping the Wall St bankers coffers “fat” and allowing for even further risk / exposure in investing in emerging markets and NOT AMERICA.

As the Japanese stock market falls and “risk off” takes hold…..Yen is repatriated…( flowing back to Japan ) as U.S Equities are sold ( in U.S Dollar terms ) then “converted back to JPY” in order to come home to bank accounts in Japan.

All you need to watch / worry about these days is the “coming breakout in Yen” and the waterfall effect it will have on U.S Equities and global appetite for risk in general.

If you are interested in actionable trades and solid plans as to how to take advantage of this, via currency trading, options and ETF’s please come join us at the members site for real-time trading, weekly reporting and day time discussion.

www.forexkong.net

What are you gonna do then ? Just sit there and pout?

Future Moves In USD – The Case For Higher

I can’t stand The U.S Dollar.

You know that…..everyone knows that. The actions of The U.S Federal Reserve with it’s complete and total disrespect for the currency and continued abuse of it’s position as the “world’s reserve currency” is enough to make anyone sick.

So when would we start looking for USD to move higher? Why would we even “consider there a chance” for this beaten down piece of junk to go anywhere but down the toilet?

Hmmmm………

What many fail to understand is that “the value of a given” currency can only be deemed in “comparison” to another currency…or another asset. The pieces of paper themselves carry no intrinsic value what so ever.

Consideration of “dollar strength or weakness” as compared to a single thing ( like The Euro for example ) is ridiculous as….it is exactly that – a “comparison” of only two given currencies.

So……..

How’s the U.S Dollar stacking up against The Canadian Dollar?

USD_CAD_June_28

Looks like a fantastic buy opportuntiy as USD has merely “pulled back” vs Cad.

 

USD_CHF_June_28

USD vs CHF looks like a pretty classic reversal over the past few months, making a higher high, breaking the series of lower lows and lower highs. A swing low “somewhere in here” would mark a fantastic entry point long.

What about Crude Oil?

Crude_Oil_June_28

Pretty straight forward. When the price of something “goes down” in can equally be argued that the “value of the money” you are using to purchase such products has “gone up”.

What many just can’t wrap their heads around ( one dumb fellow in particular ) is that “there is no blanket statement” in considering being “long or short” USD as it only depends “against what”?

Another chart “sniffing out” coming USD strength:

CNBC_Josh_Brown_Market_Call

CNBC_Josh_Brown_Market_Call

A good indication of a stonger dollar can be seen when Emerging Markets start to fall.

Imagine all that “free paper money” printed by The Fed and in turn “invested abroad” as to actually get some return ( you don’t actually think the banks invest the money they get from The Fed in “America” do you? – Please.) piling back into U.S bank accounts / converted back to U.S with concern for a possible rise in interest rates.

An absolute “sunami” of USD floods out of Emerging Markets and back into the United States, on even the smallest “hint” that interest rates may rise.

But……Interest rates ARE rising! In fact….( how soon you forget ) that interest rates on the 10 year U.S Treasury have DOUBLED in the past year and a half!

10_Year_Bond__Yield_Forex_Kong_June_22

 

Rising interest rates cramp corporate borrowing and in turn kill bottom lines. A rise in rates pushes USD up, as well equities down.

Rates have already reversed, adding more fuel to the fire if considering a stronger dollar.

The short term squiggles are more or less meaningless at this point as…..The Fed and Central Banks abroad are just doing what they can to grind this thing a little longer before shit hit’s the fan.

How much longer can they keep this propped up? Not much longer if you ask me.

 

Negative U.S GDP – Just How Negative?

All eyes on U.S GDP numbers this morning to “once again see” if this market “finally” looks to recognize the deteriorating fundamental picture.

This is the third “revision” of first quarter GDP ( I have no idea how/why it’s the 3rd time this number is estimated but… ) it’s expected to come in around -1.8% Yes…..that’s “negative growth” for the first quarter of 2014 folks.

What’s interesting with our trading is that…..we’ve effectively “gone long USD” to a certain degree in taking profits across GBP/USD, EUR/USD as well USD/CHF now holding long USD vs NZD, AUD and CAD with the long JPY trades still in play.

I hope that members come to recognize how “fluid” this trading can be as……the fundamental landscape may change “underneath” while we move with the “swings” and keep ourselves nimble.

This can obviously go two ways here this morning….so please be very alert / numble / ready to act. Yesterday’s bizarre “late day reversal” seemed quite telling to me, as we’ve already seen the weakness in Nikkei, the commods ( AUD and NZD ) as well a pretty brutal day for U.S equity bulls so…..

A big day today or not? We should get some solid clarification on USD future movement as a decent move higher here would be quite exciting, possibly putting to rest our “concerns” for USD movement “lower” over the medium term.

Man the battle stations everyone! Today could be a whopper!