It’s been a great run, but markets look set to bounce here with the SP 500 finding support area around 1880.
Long JPY trades closed, as a “swing low” on daily charts ( when tomorrow’s closes “higher” than today’s high ) should confirm a short-term move to the upside.
This will be a bounce, but considering volatility these days one can’t say for certain just how “big a bounce”.
Technical damage to markets is massive. I expect we float /drift sideways for the next couple weeks – offering few decent trading opportunities.
Stack all the cash you’ve recently made long JPY / short risk and go hit the beach for a couple of days. You won’t miss a thing.
It’s one of the most counter intuitive trade concepts out there….and not surprisingly – also one of the most lucrative as the vast majority of retail traders continue to find themselves on the wrong side.
The Japanese Yen has been one of the largest contributing factors to the seemingly never-ending rally there in the U.S , as the Bank of Japan ( some time ago ) obeyed their master ( The U.S Fed ) as always…..printing Yen like mad and taking some heat off USD.
Yen then borrowed at 0% – and used to pump U.S Equities. It’s called the Carry Trade….and the big banks love it.
Until it’s time to unwind of course. Fast and furious, leaving the majority of retail traders in the dust…The Yen literally “takes off into the upper atmosphere” when risk ( U.S Equities ) is sold….and all those little Yen head back to Japan.
You are seeing a small example of that this morning with AUD/JPY trade now well in profit ( hey! Wasn’t that suggested a few day ago?? ) as well as nearly every single JPY pair making reasonable moves.
If you take anything away from this blog short of the odd chuckle – put this in your tool box. It will make you some serious coin.
Members! – The site is still down as these morons just can’t get it figured out ( hosting is so difficult right? GRRRRR!! ) Pick up here in the short term and we’ll be back up and running pronto.
Stubborn as a mule…this kind of mindset can really get you in trouble.
If it wasn’t for the reasonable understanding of the “big picture” it would be very easy to just jump on the ‘long train” and passively assume the The U.S Dollar will continue to rise.
What’s also interesting to note is that no matter how much media hype, or how many days where risk is still “seemingly in the green” – world markets are still in the process of putting in a “lower high”.
After an entire month trading sideways The SP 500 as well DOW are still unable to make new highs, and are now “juuuuuuust on the edge” of tipping back to the dark side.
I hear rumors that Luke Skywalker slips over to the dark side in the new Star Wars film.
Sign of the times maybe. The timing looks right to me.
I took this graphic from “somewhere” as it’s a great visual representation of what is “really going on” with the U.S Dollar and international trade.
Don’t be a dope. If the arrows and numbers where pointed in the “other direction” then perhaps you could build a case. The numbers speak for themselves. The U.S “strangle hold” on the world’s reserve, and in turn “slice of the pie” generated via currency exchange ( in order to buy commodities ) is over.
Finally! Something of significance!
If you take a look at two pairs such as GBP/JPY as well GBP/USD as a “control” – you’ll see that over the past few days of general GBP strength “both pairs” have been moving higher essentially ruling out any real movement in either JPY or USD.
Zooming in closer and taking a look at each of these pairs on much smaller time frames ( take the 15 minute for example ) you’ll blatantly see the “post Fed minutes” move has GBP/USD pushing higher and GBP/JPY falling off a small cliff.
THIS IS WHAT WE WANT TO SEE! ( Yoda may not ).
Suggestion that both USD as well JPY are finally moving “regardless of the currency they are pitted against”.
Obviously the same thing can be seen just taking a look at USD/JPY as a pair unto itself but….in this case ( looking wider at many pairs ) we see clear suggestion that USD and JPY are moving ( in opposite directions) to a much larger degree.
The Nikkei has also taken quite a “fast dip” here post Fed minutes so it’s pretty fair to say that markets aren’t particularly pleased with “something”.
Any bets on where The SP 500 and The Canadian TSX are likely headed next?
One of the most entertaining parts about “financial blogging” truly lies within the “immediacy of it all” as….unlike “posting a recipe” (where people may choose to “give it a try or not”) here in the financial space – real money is at stake.
Traders on both sides of the fence get an opportunity to “compare as they dare” when fellows like myself ( and all you other guys with the balls to do so ) put it out there for all. You write it down…you make your move, and regardless of whether you fail or succeed – people really get a charge out of “watching you burn” – or “watching you earn”.
Oddly….or perhaps not so ( considering humanity in general ) I think the majority of people (as sick as it is ) rather “enjoy” watching others fail. Perhaps it makes then feel better about themselves – I can’t say for certain but…..I guess if I lived in a lean-to behind my grandmother’s trailer park and ate spam each day for breakfast, maybe I wouldn’t “mind so much” hearing that the guy eating lobster on a Caribbean beach took a hit or two.
I dunno….its small, it’s petty but for the most part – sounds pretty “human” to me.
In any case….by close today I will initiate the “first of three” planned trades ( as I always spread my total allocation to a given trade idea over 3 separate entries – over time ) short The U.S Dollar against a number of other currencies.
I assume the trade will pan out late January / early February ( or perhaps earlier ) with a total allocation / risk of 10K – spread over 3 separate entries over the coming days / weeks.
I have fully factored that the entire 10k could be lost….so for “lovers and haters alike” I invite you to follow along and comment ( uncensored ).
You can see what kind of “gorilla I can be” so……………….let’s see how “human” you can be.
Good luck to all.
You don’t need to hear anymore from me on the subject, but I strongly encourage long-term investors and perhaps anyone over the age of 40 to pull up a chair, sit back in front of your beautiful hi-res monitor, get comfy and watch the following video.
Jim Rickards is an extremely intelligent and highly regarded professional in his field, with a unique ability to take very complicated and confusing elements of the global financial system, simplify them, and explain their implications/ramifications – making it very easy to understand.
From the coming fall of the Petro Dollar to China’s interest in buying gold, Mr. Rickards cuts through the bull and provides a very clear picture of what investors can expect in the years to come.
I strongly recommend you take the time to familiarize yourself with the information and principles outlined, as there is absolutely no question it will be of considerable value to you.
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.
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.
I know it’s hard to take investment advice from a gorilla, and if you’ve been reading / following for any length of time you’re also well aware that I am almost “always” early ( and rarely ever late ) with my market calls / trading decisions.
But what about billionaire investor guru George Soros?
Would you ( obviously ) look to take his word over mine?
It seems legendary hedge fund billionaire George Soros might be souring in his view on the market outlook for US stocks, showing a 605% increase in his short S&P 500 position (through put options on 11.29 million shares of SPDR S&P 500 ETF) to $2.2 billion.
Even though he is still net long stocks, his short position on the S&P 500 (where he owns an option which will profit from a fall in stocks prices) has now risen from 2.96% of his Soros Funds Management Portfolio to a whopping 16.65%.
So now we’ve got Goldman ( looking for Japan to implode ) George ( creating a massive position short SP 500 ) and myself aligned.
Another look at institutional activity ( big banks and brokerages ) over the past 6 months, while you’ve been buying and these guys have been selling to you.
If you want to trade with the big boys, it might make a bit of sense to consider “what these guys are up to” no?
Markets making their final bounce exactly as expected…all be it even weaker than originally suggested.
Heads up people! Sept is not that far off now.