forex trading

AUD Falls Out Of Bed – GBP To The Moon

Forex Kong 10 Comments

A quick update for those who’ve been following and have come to understand the “extremely large” position I’ve been building “short” The Australian Dollar.

They say that “good things come to those who wait” and believe me……I’ve been waiting.

If you can imagine, The Australian Dollar has traded sideways / flat for an incredible 24 weeks, until just yesterday smashing lower -250 pips in a matter of hours.

AUD_Sept_10_Forex_Kong

AUD_Sept_10_Forex_Kong

We all know that “in general” The Australian Dollar trades along side risk, moving higher with stocks so it is worth noting that with yesterdays “tiny fall” in U.S Equities we certainly got a reaction out of AUD.

If / when a larger correction unfolds one can only imagine profits generated “staying short” AUD as I plan to.

On a side note – I don’t believe for a second that Scotland will vote “yes” to separate from The U.K, and that long GBP here is looking very, very good.

Long GBP/AUD anyone? Kinda makes sense if you actually take a minute and think about it.

GBP going up….AND AUD going down. These are the trades that pay.

 

 

Taking Stock Of Summer – What Comes Next?

Forex Kong 5 Comments

These past summer months had to have been the “absolute worst trading environment” I’ve experienced in my entire life.

A virtual “dead zone” with many currency pairs barely fluxtuating in tiny ranges, extremely low volume and a continued stream of “every conflicting data” flying directly in the face of any realistic fundamental analysis. Many a trader threw their charts out months ago, choosing to either sit on the sidelines until volume returned or possibly adopt the attitude of “oh to hell with it – let’s just buy stocks and everything is going to be fine”.

I haven’t really heard much from many “perma bulls” since the correction back in July wiped an entire 6 months worth of profits in a matter of 10 days, and wonder how the “let’s just buy” strategy has really worked out. Hats off to those nimble traders who may have not only sold at the correct time, but possibly even caught the next leg up. Fantastic trading.

So September is now upon us, and it finally appears that markets are starting to come alive once again, only that “volume” seems to be returning on the “down days” and not so much on “the up”.

  • Both gold and silver have been taken down to test the near term lows made back in June, with silver in particular testing the “ultimate low” around 18.00.
  • The Japanese Yen ( which trades in tandem with Gold as they both generate “safe haven flows” ) has now reached it’s most oversold level of the past 2 years.
  • The U.S Dollar ( inversely ) has now reached the most “overbought levels” of the past few years.
  • U.S Equities as seen via The SP 500 have recently made “all time highs” around 2011 level.

Call me crazy but, would one not agree that each of these correlated assets are just about as stretched to extremes as we’ve seen them in a very long while?

Does it not make complete and total sense that “this would be the case” just prior to a sizeable move being made in the opposite direction? Of course it does….as this is how markets function.

Get the boat as “loaded to one side” as you possibly can – “just” before tipping it.

We’ve seen it over and over, and over again and this time it will be no different.

Amber lights flashing ahead.

 

Central Banks New Normal – Will Humanity Prevail?

Forex Kong 2 Comments

So Draghi actually did something but…..so far – not really.

The European Central Bank’s plan is to buy “repackaged debt” to help boost lending and the euro zone’s lagging economy. What’s important to understand is that the program is designed to encourage banks to increase lending by allowing them to “repackage loans into bonds” and sell them to the ECB and other investors – freeing up their balance sheets to make further loans.

It’s my view that until the euro zone banks “know” how much the ECB intends to buy ( which at this point they do not ) there will be little movement in this area, and that for the most part banks will likely just hang on to these assets ( considering the costs of selling them ) and continue to “choke” lending – essentially killing the programs intended effect.

We’ll get more information early October but for the most part I still see Draghi’s actions as “lots of talk and no action” and assume ( perhaps after another day or two ) markets will also come to this conclusion.

FTSE_Sept_07_Forex_Kong

FTSE_Sept_07_Forex_Kong

The Euro vs USD scenario appears pretty self explanatory as the “Central Bank ponzi ping-pong” continues, with The Fed essentially “ending QE in October” and The ECB cranking it up. I find this somewhat ironic if one didn’t already have the broad understanding that it’s all just a part of the same coordinated effort.

The United States looking to come out as “the shining winner” as both The BOJ and now ECB look to carry the weight of the world on their “balance sheets”.

Is this the “new normal” as Central Banks continue to run the show? or will the natural forces affecting human decisions making / behavior again be reflected in markets, as they have been in the past?

Will humanity prevail?

So we’ll see here soon.

Worlds Largest Pension Fund – Buying Japanese Stocks

Forex Kong 1 Comment

The Nikkei has just moved 340 points higher on rumour that Yasuhisa Shiozaki ( who has been advocating for the GPIF to reduce allocation to domestic bonds ), may be appointed the Health Minister ( so what? ) when Abe announces his new cabinet tomorrow.

The GPIF ( The Government Investment Pension Fund ) The world’s largest pension fund ( yes a Japanese fund not American ) is expected to increase purchase of Japanese shares to 20 percent of holdings and reduce domestic bonds to 40 percent.

With the market way ahead of itself here it’s the actual “timing” of said purchases that is still unknown. The fund would need to buy an additional 3.5 trillion yen of domestic stocks to reach the 20 percent target, so the “span of time these purchases would be made over” is key. The fund will announce its new asset allocations in the fall – according to GPIF investment committee chairman Yasuhiro Yonezawa.

Both Gold and the Japanese Yen got absolutely demolished overnight, with fear “once again abated” having the largest pension fund on the planet now suggest it’s ready to “step it up” in support of the ponzi we’ve all come to love.

This comes as tough news for Kong as I’ve been trying to “get long JPY” on the inevitable turn, so it remains to be seen if this will manifest as a simple “spike” or develop into something larger. My initial thoughts are “nothing can save Japan” and that this only goes further to affirm the complete and total desperation currently sweeping the land of the sinking sun.

Regardless – one has to respect that a player as large as The GPIF most certainly has the ability to “ruin your day” should they decide to go all in.

Markets Set To Roll Over – All Things Say Yes

Forex Kong 4 Comments

We are very close here folks.

Aside from the currencies, nearly every other thing I track / read / research suggests that this may not only be a strong area for “correction” – but the start of something much larger.

There has rarely ( if ever ) been a time in history when as many separate indicators / charts / graphs and info has been “this skewed” to suggest such divergence and risk of serious “downside action in global appetite for risk”.

Considering the current geopolitical backdrop and with U.S Equities still “clinging” to the highs, personally – I don’t see a blow off top scenario. To whatever degree that retail investors have “taken the bait” over the past 7 months….I believe they are “already in”.

The situation with Ukraine really only being the tip of the iceberg now as Putin’s “Gazprom” now announces “massive oil deal with China” again…bypassing the U.S Dollar in trade. These are tremendous blows to the U.S system, and make clear The U.S “true intension” in Eastern Europe.

They must save the U.S Dollar as world reserve currency – and will stage a war to do so.

The Nikkei rolled over a couple of days ago, USD looks set to plunge along with equities, and the entire currency market has more or less moved “risk off”, with USD/JPY “not breaking out”, falling back into range and expected to fall further.

The real-time trades in currencies, gold and silver as well U.S Equities, weekly reporting and daily commentary  can be found at the members site: Forex Trading With Kong.

Citi Sells All USD Positions – No Really?

Forex Kong 2 Comments

Again….you generally need to be “ahead of these moves” in order to take advantage ( note yesterdays post- please scroll down ).

Gold, & Silver Jump As Citi Sells All USD Positions Fearing “Squeeze”

I envision a time ( in the not so distant future ) when “all things American” ( USD, Stocks and most certainly the bonds ) are sold.

I’m sure you’ve noticed the correlation of USD strength = U.S Equities strength so…..one would have to imagine the complete and total “inverse relationship” as well right?

Or they just all keep going up forever. RIght.

Little chance of that.

Other than the few short USD positions already in play I’m more or less “cash ready” for the large positions “long JPY” ( against most every other currency on the planet ) kicking in here soon.

No shorts in SP 500 as of yet.

More at the Members Site: Forex Trading With Kong

 

 

 

Forex Markets Come Alive – USD Wash Out

Forex Kong 3 Comments

Wow.

A very large “gap up” here in the wee hours Sunday night before markets really kick off, and the U.S Dollar continues to surge higher against the E.U currencies.

One can’t imagine a single USD bear left on the planet.

Exactly as it should be…. before the thing tanks.

It’s amazing to me how public perception continues to view USD’s recent surge as “some indication” of a stronger U.S Economy.

How on Earth can The U.S Governement ( as well the crooks at The Fed – a private held bank ) handle the enormous contribution to the “serviceable debt load” ( remember The U.S is “officially broke”, with a continued rise in the “allowable debt ceiling” now just a given ) brought about by a stronger U.S Dollar?

It’s impossible. The Fed mandate is to “kill USD” at whatever costs, as to keep these balls in the air as long as they possibly can.

A strong U.S Dollar “kills” the U.S economy! As exports tank, and the amount/value of outstanding sovereign debt balloons “past” the balloon we already know to be.

Find me an “economist” who can make the arguement that “a strong U.S Dollar is good for America” and I’ll eat my hat.

A strong U.S Dollar represents everything the U.S Gov and The Federal Reserve fear most so….I encourage you to start looking for signs of reversal – as opposed to getting to excited.

 

 

Fed Speak Today – Yellen To Make It Or Break It

Forex Kong Got something to say?

Well you can never boil this down to a single days trading ( especially these days ) but as per our outline last week, this “relief rally” has played out to the letter.

As seen via Japan’s Nikkei Index ( $Nikk – the symbol I follow in case you want to add it to your watch lists etc.. ) we’ve seen our “correctional move higher” with this mornings over night action now down -175 points forming a potential “swing high” – suggesting we are ready for reversal.

The chart from last Sundays report:

Nikkei_August_17_Forex_Kong

Nikkei_August_17_Forex_Kong

All corresponding and related JPY pairs ( AUD/JPY, NZD/JPY, CAD/JPY, GBP/JPY as well EUR/JPY, CHF/JPY and USD/JPY ) have now put in bearish reversal type candles with their daily RSI’s all rolling – now pointing lower.

The movement of The Nikkei (lower) and JPY (higher) correlates near 100% these days so there is no rocket science here. It’s very easy to see and follow along. I’ve also suggested the correlation with Gold – being that both Gold and JPY should move higher when risk comes off.

European Indices are also trading down / in the red here as of this morning, leaving us with of course…U.S stocks, Bonds and the U.S Dollar firmly held in the hands of Janet Yellen and the statements  / information expected today at the Jackson Hole Meeting.

If not for this risk event ( pure gambling if you think you’ve already got the markets reaction figured out ) the “long JPY trade’s we’ve been setting up for” are now in fantastic shape across the board.

Please get these on your screens and note these levels.

The Australian Dollar has obviously ( and expectedly ) rallied along side risk the entire week – now fading and looking weak.

Will markets take Yellens comments as full blown dovish ( suggesting all is well in “Fed land” ) and just continue to climb? Or will there be suggestion of “possible tightening” and a more hawkish view ( possible rate hike coming earlier than expected ) be the case?

You’ve only got a couple more hours to wait ( which I certainly suggest you do ) and find out.

Everything I track suggests we move lower next week, but one can’t discount the idea of an immediate “upward reaction” to Fed comments here this afternoon as “this is what the people want” right?

Still holding a couple of small “short USD trades” ( underwater at present ) and suggesting everyone just “stay out of the way” until this very large “risk event” passes.

Kramer Knows Everything – Says Yellen Should Sell

Forex Kong Got something to say?

Your beloved Kramer of CNBC fame just suggested “It’s time for Yellen to ring the register”.

I tune in to CNBC at times to get a good dose of what “home investors” are being fed these days, and was actually quite surprised here this morning.

As CNBC’s ratings and viewership continued to plunge ( to the absolute lowest levels in the history of the channel ) frankly I get “more interested” in what nonsense they are coming up with.

Could it be that they are actually leaning more towards telling the truth with hopes of staying on the air?

You’d have to imagine a room full of executives praying to god they will still have jobs come Christmas time thinking “hmmmm……perhaps we should do something about the format….we’ve gotta save this thing!”.

Not like they really have much choice in the matter, having their headlines / scripts / stories spoon fed to them from the “boys upstairs” ( the media big wigs who are also Central Bank big wigs, corporate America big wigs etc…) but to what ever degree they can – perhaps a bit of “reality” can creep in.

Kramer says “Yellen should sell” with respect to the now “4 Trillion Dollar Balance Sheet” The Fed is currently holding. That’s a whole lotta stocks n bonds isn’t it?

So the question begs regardless…….

If not now……..then when?

And even more so – How?

 

USD/JPY – This Market "IS" USD/JPY

Forex Kong 9 Comments

Some snippets from conversation on the currency pair USD/JPY from the Members Site, as I see it as valuable information for all.

**Watch it trade along side risk here as……USD/JPY has only managed to make it “back to the top of it’s range” while the SP 500 as well Nikkei have rallied to complete a total retracement of the move lower last week.

If that’s the best USD/JPY can do….”now” with markets back near the all time highs….you’ve got to question what it’s got left in it.**

 

**USD and JPY both represent the two “base currencies” currently being printed at alarming rates.

These are considered “funding currencies” as money is borrowed on the cheap…and in turn “invested” in assets ( U.S Stocks for example ) where “yield can be found”.The comparison of the two throws many for a loop….and as a currency pair it’s a tough nut to crack without broader understanding. The last piece of this puzzle rests with JPY.

As risk comes off ( I don’t care if it’s tomorrow…but in general ) all those investments “funded” by cheap JPY bust…..and the money flows back home.

Like a tidal wave….all the “free money” suddenly comes out of “all easy assets funded by it” – and comes racing back to it’s place of origin.**

 

**Nothing can stand in the way of this as the trade is “so massive” that it’s movement overtakes / over shadows all other movements in markets. U.S Bonds are sold, U.S stocks are sold, Australian and NZD Dollars are sold….EVERYTHING funded by cheaply printed JPY is sold as the elastic band “snaps back” and JPY is repatriated back home. The BOJ has printed , devalued , intervened MANY times before this ( although not on such a desperate scale ) and every single time…..I’m talking EVERY SINGLE TIME – the same result.

It doesn’t work….it won’t work this time.

Only thing is…..with such desperation – it’s already gone on far longer than one would imagine…..hence.

The disaster / BANG we’ll eventually see when she “once again”….does what she always does.**

 

**USD/JPY “IS” the market ( as per my entire trading thesis since you’ve followed ).

Seeing it “top out” back in January “WAS” the top of the market and this entire summer has merely been “retail distribution” as the big boys ( and myself of course ) plot our way towards the next “real move”. Watching USD/JPY fall thru 101.20 will mark ” the beginning of the end ” in global risk…..as ALL THINGS will follow suit.

A valuable observation / consideration for one to take forward.**

Obviously much more info available in at the members site, should you be so inclined to “broaden your horizons”.