intermarket analysis

World Bank Whistleblower – Video Truths

Forex Kong 10 Comments

I stumbled upon this video over the weekend, and thought you might enjoy.

Karen Hudes “tells it like it is”, offering a glimmer of hope as well. Perhaps she’s a wack job too so…I’ll let you be the judge.

[youtube=http://youtu.be/4hgA9j-4dB0]

The usual Sunday ritual for Kong ( chipotle basil bolognese ) as we get ready for another exciting week trading. Volatility has certainly kicked up in currency markets as USD makes a bold turn “lower” as suggested. My eyes are still on JPY for the “big one” when it comes, but continued trading in GBP as well short those commods.

I expect we should see some real action here this week.

Epic Close – New Highs For Dummies

Forex Kong 8 Comments

Another fantastic week of trading comes to a close.

An epic close at that, as U.S equities continue their relentless climb higher – higher indeed, to the absolute highest level ever. EVER!

THE U.S EQUITIES MARKET HAS REACHED IT’S HIGHEST LEVEL IN THE ENTIRE EXISTENCE OF MAN.

I applaud the U.S Federal Reserve for their achievement. Bravo! You’ve done it.

You’ve successfully devised a system, “where in” you and your cronies eat lobster and fillet mignon for breakfast lunch and dinner, every day of your lives – while passing the bill on over to the waiter, bartender and busboy ( frantically scrambling for any “scraps” they can tuck away in their gym bags) leaving pennies for a tip.

Bravo! Bravo! Everything is coming together perfectly – exactly to plan.

This chart on U.S Macro Data…………again.

US_Macro_Data

US_Macro_Data

How come I keep killing it with generally “bearish stock market calls” and “100% bearish currency movements”?

Duh!

This thing is being sold on a level you’ve no possible comprehension of.

No “possible” comprehension of.

Have a good weekend all. Buy buy buy!

Pffffffff……….

 

Japan As A Model – Slaves To The Bank

Forex Kong 17 Comments

Japan is the world’s third largest economy and a key trading partner to all of the large powers with a current “debt versus the country’s GDP” at 230% – the highest in the developed world. And if you add in corporate and private debt, total Japanese debt equates to more like 500% of GDP.

Think about that for a moment.

Any given year the country of Japan “owes” (lets average it out) 3X the amount of money that it currently “makes”. That’s what I call a serious credit card limit – totally maxed.

To illustrate just how fragile this situation is ( and possibly foreshadow a likely “similar” situation currently developing in the U.S ) if the base interest rates in Japan where to rise to a piddly 2% ( as the current rate is at 0.1% ) it would have “interest expense on government debt” equate to 80% of government revenue. That’s 80% of the countries GDP ( essentially ) going to pay the INTEREST on outstanding debt alone!

This “tiny jump” in interest rates would cause complete chaos in the bond market, be absolutely impossible to service, and likely lead to full-blown economic crisis.

So what’s the plan in Japan? Seeing that even the current stimulus plan ( 3X as large as th U.S current QE) is “barely” allowing them to hang on? More printing? More government bond purchases?

And of course when all else fails….what’s another great way a government can increase its revenue?

Raise taxes, and essentially make the people “work off the debt”.

Sound at all familiar?

Slaves to the bank. That’s what I see.

The “short Aussie” “post and subsequent trades of the last 24 hours have been spectacular as “indeed” the Australian Dollar took some serious damage overnight. Do I think it’s done? No way….The Aussie’s got a ways further to fall.

Risk Appetite – You'll Get It "Eventually"

Forex Kong 14 Comments

You know me. I’m a currency guy.

As each of us “eventually” find our specific area of interest, be it options or futures, equities or bonds, currency or commodities, you’d like to think that – over time…..we get better at it.

After countless hours and many, many sleepless nights – finally……finally things start to come together. If you stick with it long enough “eventually” trade ideas and entry signals “literally” – come “leaping out of the computer screen”.

I suggested the other day that I was seeing weakness in the commodity related currencies. Those being the AUD, NZD as well the CAD. I also initiated a trade “short tech” last week – that is now about a “millimeter” from being picked up. The weakness in commodity related currencies cannot be ignored as…these currencies represent risk. Would it just be coincidence if we where to see the “short tech trade” get picked up , and see equities pullback as well?

I think not.

The currency market is like ” a gazillion times larger” than a single countries equities market, and it’s always been my firm belief that “currencies lead”.

You don’t get a “sell off in AUD” for example – because equities markets are looking weak. Equities markets “become weak” as “risk appetite” wanes. Appetite for risk is seen via currency markets “long before” it’s reflected in a silly bunch of stocks.

Take it for what it’s worth as everyone has their own views but…..to ignore movements in the currency markets, in exchange for headlines on the T.V, or perhaps an analysts opinion sounds like a great way to lose a lot of money.

I’ve entered “several new positions” short the commods against a variety of other currencies as my original “feelers” are looking quite good. GBP has been a monster, and CAD and AUD in particular have been taking some decent hits.

Sunday Trade Planning – Octopus Ceviche, Charts , News

Forex Kong 13 Comments

Sundays are special days for me.

I get up even earlier than usual – and usually start some kind of “exotic food preparation” as the sun pokes up, the birds start “doing their thing” and the wheels start turning.

It’s not unusual to find me in and out of the kitchen for most of the day actually, as an ingredient missed here or there, has me out to the market then back again – all the while “other recipes” dancing around in my head.

Sundays are for planning.

Often what I’ll do on Sundays is – break out the charts on every single asset class known to man, and pretend / imagine that I have absolutely no idea whats “currently happening in the world”, and take a look at everything from a purely technical perspective. Starting with big ol monthly charts, then weekly, then the daily and finally down to the “current action in price”. I’ll then plot some horizontal lines at key areas of support and resistance, and look to identify “how close or far” we currently are from these significant areas of price.

Chop some onions, start steaming the octopus etc….

Then I’ll do the complete opposite.

I’ll start poking around the net at the usual “news haunts” , make note of any significant developments as well any significant announcements due for the week ahead. I’ll re-evaluate / freshen up on interest rates across the board, and do what I can to formulate a general idea of where we are at – “without” looking at, or considering a single chart.

Squeeze  limes, dice tomatoes , wash cilantro…..

Putting it all together in this way, lends itself to keeping an open mind , and often provides fresh perspective where “perspective” is needed. It’s easy to get overwhelmed while you’re in the heat of battle during the week, so the “sunday reprieve” is a fantastic way to just pull back and “re align” yourself with things, get prepared for the week ahead and enjoy some fantastic food as well.

We could very well be in for some big moves here in the week ahead, but for now………lets eat.

Octopus_Ceviche_Forex_Kong

Octopus_Ceviche_Forex_Kong

Global QE – Currency Wars 2.0

Forex Kong 19 Comments

The Japanese stock market has ripped higher the past two consecutive days – pushing through overhead resistance and seemingly broken out, on the back of Janet Yellen’s last two days testimony ( I’m not holding my breath but very often these “inital moves” are the “fake out” only to be reversed days later ).

As the new chairman of the Federal Reserve, Mrs Yellen made it “all too clear” that she is indeed the “dove” everyone was expecting – and that further monetary stimulus was most certainly her “tool of choice” in the ongoing battle to right the U.S economy.

I am even more confident now that the Fed will “increase” its QE programs in the new year, and that further destruction of the U.S Dollar is all but a given. Simply put “those of us in the biz” know pretty much for fact that Japan is planning to increase its stimulus come April, and it now looks like “only a matter of time” before the European Central Bank throws their hat in the ring as well.

Given these circumstances, and the continued unemployment numbers and poor data coming out of the U.S – any idea of tapering is ridiculous, as “if anything” the Fed will need to “step it up” in order to remain competitive with the currency wars now headed for the next level.

With such an “unprecedented scenario” playing out over the coming months / year it’s pretty fair to say we’re going to see more of the same – this being the most hated “risk rally” in history. A difficult situation for “fundamental traders” as clearly the fundamentals play no role with the continued “pump of liquidity” so……..we take it day by day – rely on our technical no how , patience and experience to navigate the waves and continue to profit.

Having my longer term views yes…I could care less which way this thing goes short-term as…..which ever direction the money goes – I’ll be going there too.

I’m sticking to my guns here through the weekend and into next week, still looking at this as an excellent area to start looking “short”. The Naz short still in play, the weak USD considerations still in play, and the “inevitable turn” in JPY has only gotten juicier here as….when it does make it’s turn – its’ gonna be a whopper.

 

A Quick Look At Oil – USD Correlation

Forex Kong 13 Comments

In case you hadn’t noticed – the price of oil has been falling precipitously since September.

With the simple mechanics of supply and demand, larger U.S stock piles have been reported while U.S drivers (feeling the pinch of still “lofty prices at the pump”) are driving less. As of late we’ve also seen a strong U.S Dollar so that hasn’t helped much either.

I don’t feel we’ve got much further to go until oil reverses, and reverse hard.Perhaps another dollar or two max – with reversal coming in a matter of days.

Refiners may have already made moves on this  – with symbols such as “WNR” already popping huge over the past week.

Forex_Kong_Oil_Refiners

Forex_Kong_Oil_Refiners

I’d expect that “this time around” we’ll likely see the price of crude reverse here around 91.70 – 92.00 dollar area, with the usual correlating weaker USD.

I’m going to start running short term technicals on stocks here soon, as well hope to offer those of you who “don’t trade forex directly” additional options and trading opportunities.

Dig up “oil related stocks” over the weekend and plan to get long.

Markets Standing Still – Forex, Commodity Recap

Forex Kong Got something to say?

You can’t “make” this stuff move any faster.

As much as I wish I had a “new signal” every couple of hours – unfortunately that’s not the way it works. Here we are “yet again” looking at for a catalyst, with nearly every single thing under the sun – trading “oh so perfectly flat”.

  • Gold is currently trading at the same price as it was back in July (1270.area) once again touching the low-end of the range – 5 months running.
  • Pull up any forex chart involving the Yen / JPY and see that for the most part “they too” are currently at the same price going back as far as May! – 6 months later……same price today.
  • Oil has taken a trip over the past 6 months alright…up from around 92.00 back in May to 110 – and now? 92.00 again.

If you’d have been abducted by aliens in May, and not been returned back to Earth until this morning – you’d not have missed a single thing. As a trader it’s been a grind,  as an investor it’s been “time travel” of the worst kind, with 6 months spent going absolutely no where.

For anyone who has managed to squeeze a “single penny” out of this thing over the past 6 months – you should certainly count yourself as having some skills. I congratulate you – as you must be doing something right.

If this is what it means to have “markets screaming to all time highs” then I’m not entirely sure we’re all looking at the same things. Looks like flat to down to me.

 

Take The Trade – When Stars Align

Forex Kong 9 Comments

Patience is paying off quite well here “again” this week, as markets have been more or less at a stand still since last Friday. As tempting as it is at times, to just ” get on in there” – maintaining that “extra little level of patience” can really make the difference.

It’s difficult to get your mind wrapped around it but….for the most part ( at least in forex markets ) you can usually just “let the move happen first” and find your entry later.In fact – I’d say about 95% of the time that the “initial move” ( the move that got your attention / signal / indicator ) is retraced considerably before anything “really big” happens.

I mean think about it……you’ve been watching a currency or stock pull back into an area where you’d be interested in entering on a “daily time frame” – then plan your trade / get your signals on an “hourly time frame” – man…..Even if you waited 8 hours “after”, you’d still not miss a thing really. Imagine looking at a “weekly candle / chart” some weeks later and being worried about “missing a couple of hours”. Drops in a bucket.

As traders we love to be “razor sharp accurate” – as part of the challenge more than anything else. Putting it in perspective it really doesn’t make a lot of difference, if of course you’ve got a sense / idea of where you think things are headed in the longer term.

These days “longer term” may only be 4 or 5 days…..but that’s lots of time to catch some serious movement and make some serious money.

When stars align – take the trade.

I really like what I’m seeing here this morning – across the board in nearly every pair / asset class / indicator etc…with particular attention on the Yen. Pairs such as EUR/JPY have really popped for those looking to “re short” as well USD looks to be running into solid resistance, and could most certainly take a step lower.

I’m close here, but will continue to wait – as we see what “The Americans” are up to this morning.

Signals For Correction – What Do I See?

Forex Kong 13 Comments

With more than a handful of general indicators already suggesting “a top”  – it’s important for investors to understand what “exactly” is happening. And I don’t mean with the “price” of U.S stocks” – I mean with investor sentiment and physcology.

You don’t really want to hear this from me….(not here…not now – with your neighbor and half the guys you know down at the pub all “ranting n raving” about how much money they’re making in the market) as the temptation to “jump in with reckless abandon” is near impossible to resist.

They “say” they’ve been making money but the sad fact is…..mindless bulls are now dropping like flies, with nothing more to go on that “the Fed’s got your back”. Hot shot stock traders caught flat footed, completely oblivious to the movements in currency markets are “feeling some serious pain” as “the grind across the top” takes no prisoners.

It won’t be long now, as everything I track “other” than the misguided euphoria playing out in U.S equities already has me on the move.

If you “don’t know” what I’m looking at by now “from a currency perspective”  – I encourage you to give it a shot. It’s all here.

What do I see – that perhaps you don’t?