Now that we’ve got that out-of-the-way ( the Fed’s sill little rate hike, and of course the nearly “not covered” debt ceiling debacle) we can move on. It’s time for more “mind bending macro market analysis” considering that these last few calls have been bang on the money. In short…..the U.S Dollar “plunge” shall continue, as both gold and The Euro continue to move higher. Further riches will be made with this simple concept burned into the back of your skull like a bad tattoo.
Let’s have a quick look at the weekly chart of my old friend AUD/JPY and refresh our memories, as to how this currency pair can help you gauge risk appetite with another simple concept.
AUD/JPY UP = Risk on.
AUD/JPY DOWN = Risk off.
AUD/JPY – Risk on vs risk off
You can see how AUD/JPY has been trading completely flat for the past 10-12 weeks as U.S Stocks have really only taken a small leg higher during the same period of time. U.S Stocks are always ALWAYS the last to go when risk appetite ( and the machines on Wall St ) switch from “buy” to “sell”. Always.
AUD/JPY has been up against very solid resistance for an extended period of time, and if “all was well” would surely have broken through, and climbed higher along side U.S Equities some time ago.
Such is clearly not the case as this currency pair has “literally” miles to fall. And fall it shall.
I am currently tracking this pair but not getting excited about entry “short” until I see a nice solid read candle and a decisive break lower. Even 85.00 and lower to truly seal the deal.
You see how this works right? I’m “tracking / observing” market activity with a pre conceived notion of at least two ( if not two hundred ) things.
AUD/JPY ( a significant indicator of risk appetite in markets in general ) is trading in a range against significant over head resistance.
A significant break lower should “clear the field” and is suggestive of a much larger shift from “risk on to risk off” across markets in general.
Eezy Peezy when you have a plan. Do YOU have a plan? There could be 1000 pips below this currency pairs current price.
Damn rights I’m still short USD. Damn rights I still own NUGT. Damn rights I’m killing it long EUR/USD.
Unfortunately….for those of you who’s investment and trading decisions depend solely on the grunt’s and groans of some smart mouthed Silverback with an attitude – I am busy today.
An esteemed colleague and I have been summoned to the head offices of Google San Fran – where we will be building time machines, slipping microchips under our skin, and dancing through holographic simulations of the future. Jealousy will get you everywhere. I’ll post some pics later this week.
The Euro has continued higher – as expected. The U.S Dollar has taken its beating over the past few days and ( in my view ) will continue to get hammered – as expected. And good ol’ gold has now put in its daily cycle low somewhere here around 1200.00 per ounce.
The current trade hypothesis still resting on the fact that “whatever happens” on Wednesday with respect to both interest rates rising and the U.S debt ceiling being reached “again”…The U.S Dollar sees its day, and continues South.
This “could” stretch another month if indeed the powers that be somehow appease markets – by what? Raising both interest rates AND raise the debt ceiling? This I truly have to see with my own eyes to truly get the full sense of just how “totally F’d” this system is.
I don’t particularly enjoy trading ahead of macro news events, but in the case will take it on the chin one way or another.
Good luck to all over the next 48 hours…you’ll likely need it.
Best advice…..don’t move a muscle til ‘after the announcements on Wednesday….and even then – don’t get “trigger happy” Thursday morning either.
The near term strength in The U.S Dollar ( although still no higher than 5 days ago…. ) is a ramp into the proposed rate hike and a clear “sell on the news” trade. It’s so obvious. Staring you right in the face as Gold’s near term slide looks to FINALLY end – in the congestion zone around 1200.00
Looks pretty clear to me, as per the previous post and information provided by James Rickards. A “nominal rate hike” with stocks at all time highs ( when else could these bozos possibly even consider it ) and perhaps a short-term “extension” of this ridiculous euphoria….then reality, as both stocks and The U.S Dollar hit the skids.
USD/JPY should hit resistance around 114.85-114.95 and that will be that.
EUR/USD is perfectly fine here around 1.0525-1.055 ( as it’s STILL above 1.05 despite USD bounce )
AUD/JPY ( our “risk barometer” ) hasn’t even budged. No breakout. No nothin so…..
Don’t get too excited. Nothing has changed except of course – further bad news on trade deficit with China and of course…..Trump instability / Tweetfest and generally nuttiness – still on the rise.
These things take time so…let’s just take a minute and re group.
The entire blog / financial community at large is pretty much sitting at a stand still, with a couple of “ridiculous” factors and circumstances in play. Get a load of this….March 15th is not only the DAY the debt ceiling “freeze” does exactly that – but ALSO the day the Fed is widely expected to raise interest rates?? Can you wrap your head around that? Can you?
The dichotomy here is unprecedented. I see the debt ceiling biz being completely and totally “blacked out” in the main stream media, as it could very likely lead to government shutdown, as well as some pretty “snappy headlines out there” when the world at large is again reminded….The United States is again 100% flat broke.
I would assume “the powers that be” will keep things lofty moving into the 15th, then regardless of an interest rate hike or not….you’d have to expect our “long-awaited sell off / correction” to start, which will likely take us well past May ( as I also feel that SELL IN MAY will be in effect this year ).
In a broad sense I’d be looking to put some protection in place…start raising cash for a much better time and place to “jump back in”.
There is very likely one more push higher later this year ( and it could very well be a whopper ) so maybe July/Aug would be a great time to grab that cash…..and put it back to use moving into the fall.
See the green area on RSI – How long it’s been overbought? See the distance DOWN to the red line ( 200 Moving Average ) See the “rolling hills” of the MACD ( useless indicator anyway ) as price on the chart is so much higher…yet the near term “rolling hill” so much lower than the previous. Divergence baby – Huge divergence.
Even a correction down to the 50 MA will wipe any and all profits that anyone “envisions” prior to actually realizing them – and pushing the sell button.
This is the blow off top. How long she goes? Who cares! Just be sure to get out alive.
Anyone else find this absolutely amazing / hard to even comprehend?
From some article:
“” The Digital currency bitcoin jumped to a record high above $1,200 last Friday, as investors speculated the first bitcoin exchange-traded fund (ETF) to be issued in the United States is set to receive regulatory approval.
Traditional financial players have largely shunned the web-based “crytpocurrency,” viewing it as too volatile, complicated and risky, and doubting its inherent value.
But bitcoin, invented in 2008, performed better than any other currency in every year since 2010 apart from 2014, when it was the worst-performing currency, and has added almost a quarter to its value so far this year. “”
Bitcoin Now As Valuable As Gold
Another indication of just how stretched / ridiculous things have gotten when a digital crypto-currencies “perceived value” has matched / surpassed the price of gold.
You don’t think this thing is just a tad over extended?
So it all comes down to Trump’s speech tonight….as market participant stand like fat deer in the headlights..
Gold still the same. EUR/USD up nicely but still more or less the same, and the beast of all beasts NUGT takes the world for a diving lesson. Boom…talk about a stop run. These things don’t happen unless the big boys are making their moves. They can push price a couple bucks in a couple of hours without batting an eye….all the while your piddly 200 shares with a .50 cent stop get’s gobbled up. Multiply that by a couple 100,000 ( or million ) and you start to better understand just how difficult it is to “trade” with a “pea shooter”…when those on the other side of your trade carry billion dollar bazookas.
You really don’t have much of a chance.
I find it incredibly ironic that the Trumpster is calling for some 54 billion more spending on Defence, and 1 Trillion on infrastructure when the country is already 100% flat busted / broke / bankrupt. As suggested by a few of the brightest minds in the comment section here at Kong – sounds like the ol debt ceiling with just get raised, then raised again…then again. Where does the money come from?
Sounds like more money printing to me..but I thought the economy is expanding and there is now talk of the rate hike cycle beginning? Not.
I used to go on and on about it, but with The Fed printing confetti each and everyday for the past 8 years – it didn’t really matter. The United States is 100% totally broke / Greece style / Flat out busted.
You guys remember that thing called “the debt ceiling”? Well……March 15th – Here we go again…only this time it’s different.
March 15th is the day that the “debt ceiling holiday” that Obama and Boehner put together right before the last election in October of 2015 expires.
The debt ceiling will freeze in at $20 trillion. It will then be law. It will be a hard stop. The Treasury will have roughly $200 billion in cash. The U.S is burning cash at a $75 billion a month rate.
By summer, they will be out of cash. Totally out of cash.
The holiday is over.
You think I’m joking about this….you don’t take this seriously, and you bury your head in the sand – I won’t be very happy.
Let’s ask ourselves a few very simple questions. On a fundamental level…
What do you think would benefit the Trump presidency / program more? A strong U.S Dollar or a weak U.S Dollar? And why? ______________ (comment please).
Would you say that the world at large currently views the Trump train as a stable and positive contributor to international trade and global economic development…or as a negative? ___________ (comment please).
In the advent of some “international conflict” involving The U.S, Russia, China, Japan and/or any country in Europe would you expect this to be a positive or a negative for USD? ___________ (comment please).
What do you think the probability is of further escalation of conflict between The U.S , Russia , China , Japan , Korea , ISIS etc? _____________ (comment please).
Throwing around a bit of “geo political analysis” is always great, as it can help provide a viewpoint that isn’t centered on one’s own “local situation” not to mention a break from the math and charts.
Remember…fear and greed are what moves human beings to do the crazy things they do so…. keep this in mind while formulating your answers.