Dollar No More – A Global Perspective

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.

Dollar_No_More

Dollar_No_More

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.

 

Don't Go Chasing Waterfalls – Well Maybe This One

There is a potential USD breakdown in play here as we’ve been playing the short side lately – with great success.

Waiting for a bounce before re entering “short USD as well short risk in general” may not even be an option as USD pairs are moving fast and furious this morning.

You leg in……get a couple contracts here this morning long EUR, GBP short USD/CAD etc as to not miss potential “waterfalls” BUT…stay liquid enough to buy additional contracts “if” a bounce occurs over coming days. IT WON”T LAST LONG ENOUGH TO MATTER.

Average in for a medium term hold, or just a “great freakin trade” here short term.

Yellen openly suggests danger in equity prices………bubble popping time?

If you haven’t sold NetFlix by now……ugh.

Watch those little mining companies…lower USD means Gold and Silver UP.

 

 

 

Forex Kong Goes Dark – Markets Go Nowhere

Recent travels have taken me to the far reaches of the planet…..far far away from these pesky markets, deep into the darkest flora and fauna this world has to offer.

I am literally in the middle of nowhere…..and loving every minute of it, short of the “pancake sized” blisters on the back of my heels from having to actually wear shoes / boots. It’s slowed me down a touch….but I’m on the mend now.

No Internet. No Television and barely a scrape of food for miles, let alone a crisp cold beer. I freeze my ass off at night and am now as white as a ghost, blending in the best I can with “wonderful savages” who inhabit this land.

I speak nothing of markets as I am now deeply entrenched in far more “pressing matters” the likes of which I’m not at liberty to discuss – at least for today that is. ut I can tell you this: Something big is about to happen.

Cryptic as it may be, there is no question in my mind that “change is in the air” and considering how stagnant things have been – it’s about freakin time.

I will be back on top of markets as I am now this “mountain we call life” from this afternoon on.

I appreciate your patience but hey……did you really even miss me?

Waiting On Yen – Waiting On USD – Waiting Waiting…

As contrarian as it may sound – you all know I’m looking for an intermediate “top” in USD –  leading to a much larger decline.

The immediate reaction ( obviously ) to the “official end to QE” resulted in a huge spike in USD, sending EUR/USD and GBP/USD lower as well USD/CHF higher.

Today’s “candle” in $DXY ( pin bar ) is now looking prime for reversal, as it will take very little price action tomorrow – to close under today’s low.

This would fall right in line with a bottoming in JPY, and our expectation of “risk aversion” to continue.

JPY_Futures_Forex_Kong

JPY_Futures_Forex_Kong

If you’ve had any doubts of my continued view of both JPY as well The Nikkei – I hope this “blatant example” can finally put them to rest.

The correlation  of “JPY down = risk on” and “JPY up = risk off” could not be more obvious as The SP 500 has done “the exact opposite” over the past week and a half.

Exactly.

I suggested some time ago that the currency pair USD/JPY  “is the market” as Yen is borrowed on the cheap , then converted to USD to buy stocks. This could not be more obvious in viewing the correlation over this last “massive V-shaped move” in both Yen as well The SP.

USD reversal “lower” ( any day now ) and JPY confirming reversal “higher” will put a stamp on the end of this upward correction – and the beginning of our next leg lower.

Taking Stock Of Summer – What Comes Next?

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.

 

USD/JPY – This Market "IS" USD/JPY

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”.

Upside Targets Met – Thoughts On Jackson Hole

Well that has my upside targets in both The Nikkei (15,499 ) as well SP 500 ( 1668 – 1678 ) more or less met so…….

Give or take another couple of points over the next day or so, this certainly creates an interesting scenario moving towards Jackson Hole – and the expected “chatter” out of The Fed.

It’s been my believe that “this indeed will be the time” where markets are given “some kind of clue” that perhaps the time has come to buckle up / take profits / begin taking precautions as to coming changes in monetary policy etc but…..I’ve obviously been disappointed by Yellen in the past.

Lining up the fundamentals as well technicals would have both USD as well as Equities take a turn lower, with JPY ( as well gold ) moving higher ( and obviously the commodity currencies falling off along side risk ) so…..the question obviously begs……

Will The Fed do it or not?

One has to keep in mind that, as much as a strong USD ( in at least one way ) creates an impression of a stronger economy, it also represents a tremendous burden on the American Governments debt load. For every single point that USD moves higher…..the amount of outstanding Government debt also moves higher – having to be repaid in USD.

It’s been The Fed’s plan since all of this began to “keep a cap on USD” ( well actually to drive it into the basement ) with the thought in mind of “exporting inflation” and keeping the “service of outstanding debt” at a bearable level.

One has to keep in mind that The American Government and The Fed NEED a weaker dollar in order to keep the ponzi going so…..it’s difficult to imagine USD “shooting for the moon” before at least another solid move lower, as changes to monetary policy ( and the supposed “end of QE” ) take root here in October.

Trading it is a nightmare as…….one stands to take a substantial hit getting caught leaning to hard in either direction – with these types of “risk events” best viewed from the sidelines.

As it stands I will continue to hold the few “short USD” irons currently in the fire, and let the chips fall where they may, with continued focus on JPY vs the commodity currencies setting up for the larger trade at hand “post Fed”.

Continued divergence across several currency pairs still see USD moving lower….before higher.

Trading The Week Ahead – Fed Speak Looms

The raft of geopolitical concerns out there ( in particular Ukraine ) are finally starting to influence markets. The largest “current concern” now being what effect Russia and it’s supply of natural gas ( or “lack there of” – should things continue down this road ) will have on The European Economy, which is in a sad enough state of affairs as it is.

This isn’t going away anytime soon, and will likely be the catalyst ( or at least via the main stream media ) where blame can simply be placed on Russia for all problems in Western Economies wherein these problems have just been papered over – having been there all along.

My original post back in February “U.S Wants Ukraine – No Matter What” on the subject.

Of particular interest as it pertains to our trading here, take note of any “1 Hour Chart” containing JPY ( AUD/JPY for example ) from Friday, and see the “blatant and obvious” currency move on news that Ukraine attacked a Russian military convoy.

Japanese Yen is going to absolutely “explode higher” given any type of “black swan event” aside from its continued strengthening on safe haven flows.

Trading The Week Ahead

Our charts for both The SP 500 as well Nikkei have played out almost literally “to the letter” – having taken the anticipated bounce and now looking like they are ready to roll back over.

For more detailed trading, real time trade alerts and daily commentary please consider the Members Area as September is setting up for some of the largest opportunities we’ll have seen over the past several months.

 

Navigating The Turn – 2 Years Without Returns?

Considering that markets have more or less “skyrocketed higher” for such an extended period of time that the majority of investors / traders are likely convinced that this is just the “new normal” ( I can’t stand that expression by the way – as it reeks of complacency and “idleness”) and that dips should be bought, on and on, no worries, The Fed has your back etc etc…

It’s easy to understand, as even heightened geopolitical concerns continue to take the back seat, along side lowered global GDP forecasts, poor data out of Japan etc..It could easily appear to the casual observer that “nothing” can get in the way of markets just moving higher, and even higher.

But what happens when the turn is made? I mean…..we all have to appreciate that “nothing goes up forever” right? Historically speaking we can see the typical “boom and bust cycle” usually manifests in a “5 year up and 2 year down” type scenario – and we’re well past the 5 year up mark.

As investors / traders it would completely foolish to “simply ignore” these longer term patterns as I can imagine most of you…..have likely been caught doing that a time or two before right?

Tech / boom / crash 2000 maybe? Credit / housing / crash of 2007 perhaps?

I find it highly unlikely that many of you successfully navigated these “significant turns” to continue generating profits during the 2 year period following these incredible crashes in risk.

Take a look:

Market_Tops_Forex_Kong

Market_Tops_Forex_Kong

Market tops can be seen almost “to the letter” on a 7 year cycle with 5 years up….and 2 years down, with us sitting “right at the max” of this “extended 5 year move higher” based solely in the “money printing efforts” made by Central Banks.

The idea of going through this again ( as why would this time be any different? ) can’t possibly be appealing. Considering where you are in life, and the prospects of a “full 2 years” with your portfolio drawndown considerably – not to mention the mental and psychological end of things – who needs the grief?

You’ve come this far with your investing / trading decisions while the “good times have been good” so…..why not extend the same effort when ” the good times are bad”?

Suggestions to follow….

 

BRICS Nations – Bypass Washington With New Bank

I’m sure you are familiar with the “BRICS” nations ( being Brazil, Russia, India, China and South Africa ) right?

Well…..disatisfied with The United States “overwhelming influence on global finance” these fellows ( accounting for almost half the world’s population and about a fifth of global economic output ) have recently put their heads together ( and lots of money ) and started “their own” development bank.

The New Development Bank (NDB), formerly referred to as the BRICS Development Bank,is a multilateral development bank operated by the BRICS states (Brazil, Russia, India, China and South Africa) as an alternative to the existing World Bank and International Monetary Fund.

The 100 billion dollar bank ( complete with another $100 billion currency reserves pool ) is aimed at funding infrastructure projects in developing nations, and will be based in Shanghai, providing these nations with access to funding “outside” the usual channels of World Bank or IMF funding.

The genie is clearly out of the bottle here, as a growing number of extremely powerful and influential nations continue to move further and further away from Washington’s insane monetary policy and stranglehold on global financial movements.

You wanna impose more sanctions on Russia? You want to keep printing U.S Dollars like toilet paper? Have at it Obama – knock yourself out.

A major game changer here as The NDB has finally arrived.

more here: http://thediplomat.com/2014/07/3-reasons-the-brics-new-development-bank-matters/