market analysis

2014 – You Will Never Trade It

Forex Kong 6 Comments

Ironically ( and in light of yesterday’s post “seen here first” ) overnight, both China and Japan have now publicly warned that the U.S better get its act together pronto.

As well (and again, I’ve got no crystal ball down here….only Mayan Shamans) The IMF (The International Monetary Fund) has now released the following:

“World growth will be slower than expected this year and next, and will take another big hit if the U.S. fails to resolve its debt drama, the International Monetary Fund warned Tuesday”.

“The IMF cut its 2013 global growth forecast by 0.3% to 2.9%.”

In other news ( not like you’ll see it on your local T.V ) China’s growth forecasts “specifically” have also been reduced.

Getting the message anyone????

Are you getting the message?

Zoom out and take a look at the next couple years, pull out your tin foil hats and get your shopping carts tuned up. 5 years worth of incessant money printing / stimulus, stocks “inflated beyond belief” and NO RECOVERY!

The normal business cycle ( which has been the same for generations ) has been stretched ,pulled , manipulated , extended “past” what we’d normally call “normal” and it’s time my friends……it’s time to get real.

I’m open to discussion as to “what the hell” to do about it, but the bottom line is – silver clouds / hope / faith / positivity / good attitude doesn’t pay the bills.

Start thinking “seriously” as to where you can look to tighten.

For your reading pleasure: https://forexkong.com/2013/01/31/2013-you-will-never-trade-it/

Macro Intermarket Analysis – Stocks, Gold, Risk And All

Forex Kong 4 Comments

My feelings are that…..we’ve reached a major low in the U.S Dollar.

With this in mind, some major “MAJOR” questions come to mind as to the near term direction in markets, but much more importantly – the longer term view.

U.S equities have been stretched “beyond stretched” on the seemingly never-ending “Fed pump” but as we’ve seen recently – are most certainly showing the “final signs” of exhaustion.

What happens in the next two weeks is 100% completely irrelevant as to the forward direction of markets.

My take is…….we’ll see “some kind” of relief rally in risk, when the U.S finally get’s its act together ( if you can even call it that ) – but that’s all it’s gonna be. A relief rally.

If “incredibly” equities stretch to make a “higher high” ( which I seriously doubt but don’t rule out ) it will be “blow off” in nature and extremely short lived. New retail investors will undoubtly believe that “all has been saved” and buy the top with reckless abandon – as Wall Street hands off the bag.

We know interest rates can “go no lower” so……anyone with half a brain in their head should recognize –  we are entering a time of contraction – not expansion!

Quietly, behind the scenes several other countries are already “hinting” at possible rate hikes ( Great Britian as well as New Zealand) as the writing is cleary on the wall. The big boys are preparing……as it’s now painfully clear that the U.S.A money printing efforts have done nothing to bolster a “true recovery”, and that the U.S government itself….is in no position to “govern” much.

What we are seeing unfold is a considerable shift in “investor sentiment” – and sentiment drives markets. People are now losing faith that “even the never ending printing / easing” can pull the U.S out of it’s current downward spiral.

I feel very stongly that at “some point” the Fed will print more – but the kicker will be…the markets just won’t buy it.

Charts and more in part 2.

Short Humanity – Long Interplanetary Travel

Forex Kong 4 Comments

If you haven’t ripped most of the hair from your head “yet” today…..there’s still plenty of time left. Hey! I hear that we even get a chance to see “OBomba” on the T.V! But of course we do as…..you just can’t have a couple “down days in row” without the President of the United States getting out there and sticking his nose in it. Ridiculous.

Does anyone here remember a time when “financial markets where financial markets” and the government was the government?

Weren’t those the days.

So I’ve put off the “analysis of all things relevant” as……seriously  – what’s the point?

What can one possibly consider “analyzing” in an environment / market this far off the rails?

I’ll be up on the rooftop “tinkering with my spaceship” with little “short-term” information to share.

If you’re interested in some of my long-term ideas….the title says it all.

 

Forex Kong: currently holding – short humanity – long interplanetary travel.

Trading October – Through Gorilla Eyes

Forex Kong 8 Comments

It was meant in jest as last Sunday’s post may have pissed a couple of people off.

Now in retrospect – 8 straight days “down in risk” and the “warning” doesn’t look half bad no?. In any case…..we’re smack dab in the middle of “yet another” challenging scenario for both bulls and bears alike.

It’s hard to get “overly optimistic” when the U.S Government can’t “govern” a sack of wet mice let alone themselves…let alone the largest consumer economy on the planet. Yet there’s still “Uncle Ben” lurking in the shadows, printing press in hand, there to “save the day” should things get “too far off track”. Talk about a gong show – and an extremely difficult environment to evaluate / makes sense of…let alone trade.

Every fundamental bone in your body itching to “short this thing into the ground” – while every Central Bank on the planet keep stacking their chips higher, higher and higher.

One thing we can say with certainty is that “this thing is gonna end really, really badly for a lot of people” as we are so far off the reservation now – there’s absolutely no chance of a happy ending. No chance.

What’s October looking like from a gorilla’s perspective?

I don’t waffle, and I don’t make “safe market calls” in order to stay credible. Frankly I generally don’t muck around “much” with intermediate type market calls” as I’m both macro – and micro.

What happens “in the middle” under the current market conditions is exactly what is “supposed to happen” when a significant turn / area has been reached. Confusion , indecision , sideways , churn , chop , grind. Call it what you want – it’s “by design” that accounts get blasted, nerves stretch, blood pressures rise – and traders / investors are pushed to the limit.

We need to look at the dollar (obviously) as well stocks and gold. Bonds fit in there too don’t forget so…..a look at “all things relevant” to follow – through gorilla eyes.

Massive Divergence in GBP – The British Pound

Forex Kong 4 Comments

I see massive divergence in the recent move “upward” in GBP ( The Great British Pound ).

Fueled by talk of a “possible rate hike” out of the U.K coming “before” any kind of hike in the U.S, the currency pair GBP/USD has skyrocketed in “price” – yet floundered with respect to “strength”.

Coupled with the over all weakness in USD over the past few days, the combination of factors has pushed the pound ( guess where?) yup!  Right into a long-term area of overhead resistance.

How much higher can it go?

A better question might be “how much lower” as nothing “forex wise” moves in a straight line for long, and we are pretty  stretched here as it is.

I will patiently wait for “at least” a turn on a number of smaller time frames, as well “Kongdication” but in all – it really doesn’t matter. I will get short GBP soon.

After a move of over 1,400 pips ( so in nominal terms the pound has gained 14 cents on USD ) since July – what are the odds it gains another nickel before “retracing” a portion of this massive move?

Slim to none.

Talk about a decent short-term investment return no?

Who cares what the DOW did.

The Seinfeld Post – All About Nothing

Forex Kong 3 Comments

Sitting here wracking my brain for a compelling headline ( an absolute “must” in financial blogging circles) suddenly it came to me! Seinfeld! The show about “nothing”.

Well……as the entire planet continues to sit watching “in awe” as the U.S Government stumbles around in the dark “yet again” , hoping to put a square peg in a round hole. What’s there to say?

Nothing.

At least with Seinfeld you got a good laugh out of it. This isn’t funny in the slightest.

Now hearing talk about “leaked information” seconds before the Fed’s announcement last week? Now that’s funny. Like the gang at Goldman and Ben’s “other buddies” had no clue they weren’t gonna taper!

I mean seriously….it came as an absolute “shock and surprise” to the big boys, and now  blamed on the media? Gimme a break.

Nothing to see here today that’s for sure.

Disgust. Revolt. Shame. Sickness. Loathing .Nausea.

Risk continues to sell off here “despite any kind of green arrows seen in U.S equities” today. The illusion continues to play out, as commodity currencies get wacked overnight, and the safe haven play for JPY makes considerable headway.

 

Emerging Markets – Effect Of QE

Forex Kong 2 Comments

In recent years, central banks of developed markets have used quantitative easing (QE) in an attempt to stimulate their economies, increase bank lending, and encourage spending.

To date, however, the greater availability of credit in developed markets has not been offset by demand – resulting in an abundance of excess liquidity. Much of this surplus capital has flowed into emerging markets, which has had adverse effects on their currency exchange rates, inflation levels, export competitiveness, and more.

As historical low rates gave investors cheap money and forced them to find higher rates overseas (and with the continued mess in Europe) – emerging markets were the natural place to go.

In general, financial firms that are now free to lend rush their investments into the emerging economies. This is because there is a higher rate of return on investments in emerging countries compared to highly developed countries like the United States. So, instead of a U.S. financial firm pouring money into U.S. investments, the firm piles  into India ( or Mexico ) since the investment will make more of an impact and give them a greater return.

The symbol “EEM” can be used as a broad look at emerging markets.

EEM_Emerging_Markets_Sept_2013

EEM_Emerging_Markets_Sept_2013

The effect of Fed tapering could prove disastrous for emerging markets as the flood of easy money dries up – and dollars are brought back home.

Putting this in perspective I hope gives you a better understanding of how much “rides” on the current global “injection of stimulus” as all these things are so interconnected.

I would have expected EEM to “blast for the moon” on the Feds’ shocker, but apparently not. This in itself is also suggestive of the fact that the “big boys” might just be pulling back a bit here – which would also equate to USD strength.

I like what I’m seeing as this trade appears to be taking shape, although I’m ready at a moments notice to dump and run. USD has swung low as equities have “swung high” so…..another head fake / whipsaw? Just as likely with the current conditions so……trade safe and be ready for anything.

Stock Market Crash! – Monday Get Out!

Forex Kong 20 Comments

He he he……gotcha.

Let’s get something straight here. When I make the suggestion of “a top” or (as I have been since April) a “topping process” – I don’t mean the world is gonna come crashing down around you like in some bullshit movie out of Hollywood.

The financial “powers that be” already got their wake up call in 2008 with Lehman Bros etc and it’s pretty much a given that we won’t be seeing something like that happening again anytime soon.

There is no “doomsday prophecy” here, no “go buy guns n ammo” cuz they’re coming for your gold, no “end of the world scenario’s” no. This stuff rolls out in “real time” and navigating the peaks n valley’s these days just gets tougher and tougher, as the situation gets more desperate.

We know the “coordinated Central Bank effort” is flooding the planet with cash, and we know the tensions between East and West are intensifying. We know the world’s largest consumer economy is still struggling to get back on its feet ( if ever ) and we also know that the large majority of people involved with investment / finance are hell-bent on making it so.

Global appetite for risk comes “on” and it comes “off”. Simple as that. Identifying these times can be extremely profitable for those who choose to fight it out in the trenches.

If you actually think you can weather “buy and hold” when a mere 10% correction in U.S equities has the potential to wipe your account to zero then fine! Do it! Buy all you can tomorrow – and disregard concern for the “global appetite for risk”.

I call it like I see it, and I see a lot.

I’m not particularly “optimistic” about the next few years but that doesn’t mean I think the world is gonna end.

You choose to trade, or you choose to invest. DON’T CONFUSE THE TWO.

Sorry about the misleading headline although – seriously………it’s all I can do these days not to “go completely mad” writing about this day after day. It “may” happen again but at least just this once….give ol Kong a break. (I bet you read the damn thing as fast you could get it open).

Forgive me.

We’ve ok here………………………..at least for Monday.

written by F Kong

Watch The Wilshire 5000 – I Do

Forex Kong Got something to say?

The Wilshire 5000 Total Market Index, or more simply the Wilshire 5000, is a market-capitalization-weighted index of the market value of all stocks actively traded in the United States.

As of October 31, 2012 the index contained 3,692 components. The index is intended to measure the performance of most publicly traded companies headquartered in the United States, with readily available price data.

I keep the Wilshire on my radar, as a better means to “truly track” the performance / direction of U.S stocks, in that the index includes nearly ALL PUBLICLY TRADED COMPANIES.

I’ve borrowed the chart below ( and will certainly give credit where credit is due, should anyone object) to illustrate just how “extended” U.S equities are right now, and to further the case for inevitable correction.

This is a “monthly chart” so the implications / divergence in volume and price ( look at the volume bars below ) is of particular note as this “never-ending rally” has continued for months and months, on less and less volume.

Wilshire_5000

Wilshire_5000

As well the angle of the “RSI” up top ( gradually lower, then lower over time ). The distance price has stretched above the 200 Day Moving Average ( red line on chart ) as well the MACD (below) literally “off in space”.

The entire “structure” starts to look eerily like the tops in both 2000 ( Tech crash ) as well 2008 ( Credit crash ).

A close friend of mine and another mutual friend are considering buying Facebook stock this Wednesday, with plans on seeing it hit 100. As market particpants primarily act on emotion – this in itself may lend further creedance to the fact we are indeed – “near the top”.

Buy now?

QE5 – Rain On My Parade

Forex Kong 19 Comments

It’s wet here today. Really wet.

Like there’s a two foot deep lake out front of my place…with cars stalled in it “type” wet.  Hurricane “Ingrid” blew thru early in the week, and a smaller tropical storm has now developed in her wake. As with the weather here in the Yucatan “so it goes” in financial markets as well. Having missed one of the largest one day moves in USD in the history of my career “sitting out” – I can honestly say ” I’ve had better days”.

So there it is. Rain on my parade.

Bernanke “toes the line” and doesn’t even blink with the smallest suggestion of tapering. Zip. Zero. Nada.

The U.S Dollar absolutely crushed with one of the largest one day moves lower I’ve ever seen ( all be it sitting here looking to smash my computer screens to bits). Epic dollar destruction. Continued printing. Ponzi scheme “on”.

You’d expect that anyone in there right mind would perceive this as “very , very , very bad news” as obviously, if the U.S cannot afford even the “tiniest of tapering” you’ve gotta know the trouble runs far deeper than most imagine. This is bad news. It’s bad, bad , bad news – but what’s a guy to do?

You’re supposed to go back to work , mind your own business, but stay tuned to that T.V for further updates on the destruction of your economy and currency.

If I was “modestly bearish” some time ago, I’m now OUTRIGHT growling now, as this has now passed “all levels of reason”.

Trade ideas to follow but as it stands….we’ll wait to see reaction to this over the next “day or two” and stay open to the idea of a solid dollar bounce.