US Dollar Rinse Job – Now Complete

The U.S Dollar as well as U.S equities have failed to breach the highs from Fridays “Sell Risk” post.

Equity markets look to be rolling over here “again” at the 2040-2060 level, while USD takes out the last of the smaller traders.

One can assume that things are now “hanging in the balance” with respect to an outcome with the current “Greece situation” but in all….I really don’t think it matters.

The markets move on much larger time frames, and whatever is to become of Greece ( all will turn out fine in my view ) will just be another silly headline geared to moving the masses.

Greece is not leaving the EU Zone. It will continue to “hang in there” as well continue to keep you up at night – if you let it.

Countdown till the “real action” starts, as we are flat as a pancake “yet again”.

**FEBRUARY 12TH UPDATE – ALL TRADES HAVE NOW BEEN INITIATED!! PLEASE FOLLOW IN THE MEMBERS AREA:

FOREX KONG MEMBERS AREA

Watching Oil, USD – Earnings To Suck

Watching oil here – now exhibiting some “bottoming characteristics”. Still very early ( as thus far only the 1 minute, 5 minute and 15 minute charts have reversed ) but…….

What do we know about “the price of oil” and the “value of USD”?

Oil is priced in U.S Dollars right? A low in the price of oil could very well mark the high in USD no?

Both Gold and Silver ( including the miners ) look to have found some support these past days, regardless of USD poking a touch higher.

Looking at oil related currencies such as The Canadian Dollar as well The Mexican Peso we can also see USD weakness.

A flood of money coming into commodities in general would clearly suggest USD topping out “medium term”.

The SP 500 has now retraced a full 50% of the recent plunge ( now at 2035 ) so even a touch higher at 2051 would provide for a low risk entry – short.

Earnings season is gonna “suck” as there is not a U.S based multi-national company on the planet that can “honestly” report that they’ve increased bottom line profits in the face of the rising dollar, let alone the number of energy related companies that just got their asses kicked by falling oil.

It’s impossible.

 

Fed Speak Today – Yellen To Make It Or Break It

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.

Fourth Time's A Charm – The Market Decides

Obviously you can’t win if you don’t buy a ticket, and at times….these tickets can cost you a pretty penny may it be psychologically, financially or both.

So when things are trading sideways ( as with the example of EUR/USD for example ) how long does a trader choose to hang on before considering the trade a wash / scratch or even a loss?

It’s always up to the individual, as no two traders have the same “threshold for pain”, each with their own set of rules / factors influencing their decision-making but ideally…the decision is made “sooner than later” – as there will always be another opportunity.

One particular “dynamic of price action” I like to use ( in order to help with this decision-making process ) is what I call the “fourth time’s a charm”.

When any asset price has tested an area of support or resistance for a fourth consecutive time over a span of perhaps a few days – it’s time to take note – as the next move is likely going to be the one that counts.

Breakout or breakdown, one can usually “make it or break it” on the fourth time an area of support or resistance is tested, suggesting that the asset has “done all it can” to either push through the area of resistance overhead or succumb to the pressure, finally falling through support below.

And so we find ourselves in the case of the U.S Dollar vs a number of currencies, currently testing the “fourth time’s a charm”-  not to mention both our patience and our discipline.

Which way does she go from here?

The fourth time’s a charm so…….we’ll just have to let mother market decide.

 

The Countdown Begins – Greed Finds Its End

Well this is it people – the countdown begins.

You can count yourself as lucky – no…..”very lucky” as to have some idea where / when the merry-go-round stops spinning – this being the “final turn” before the party ends.

We’re down to a matter of weeks now – if not days.

I don’t generally speculate on such short-term movements, but with respect to “this one” having such significance to the longer term / larger trend – I feel it’s reasonable to put something out there.

Let’s give it a full two weeks, 14 days ( give or take a day here and there )  before anyone “greedy enough” to still find themselves “hanging around” – finds themselves wishing they’d taken note.

This will mark the “final surge” in global appetite for risk, and the final push towards the highs, before the historical repetition of the typical “boom and bust cycle” takes effect once again.

The Fed meeting at Jackson Hole ( scheduled for Aug 21st ) will undoubtedly be the trigger, as Yellen suggests “for the very first time” that indeed it’s time for “risk takers” to exercise caution, or to be blunt – get the hell outta the way as fast as they possibly can.

In a matter of weeks “nay-sayers” will be left holding the bag, giving each and every one of you ample time to act accordingly – if you do so choose.

Currency markets have already made the transition ( with commodity related currencies smashed as of late ) as they will always lead, with safe havens catching the bid – suggesting the turn is already well underway.

You don’t want to be the last one out the door, and their will be ample trading opportunities on the “other side of the mountain” if you can just manage to discipline yourself to “get out of this while you can” and not get caught holding.

The countdown has begun.

Best of luck to all of you.

 

 

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….

 

U.S Interests In Ukraine – A Brilliant Synopsis

Cut and past from a fellow named Mike Whitney ( thank you very much Mike ) who can be reached at: [email protected] as I could not have possibly explained it better myself.

In Ukraine, the US is using a divide and conquer strategy to pit the EU against trading partner Moscow.

The State Department and CIA helped to topple Ukraine’s elected President Viktor Yanukovych and install a US stooge in Kiev who was ordered to cut off the flow of Russian gas to the EU and lure Putin into a protracted guerilla war in Ukraine.

The bigwigs in Washington figured that, with some provocation, Putin would react the same way he did when Georgia invaded South Ossetia in 2006. But, so far, Putin has resisted the temptation to get involved which is why new puppet president Petro Poroshenko has gone all “Jackie Chan” and stepped up the provocations by pummeling east Ukraine mercilessly. It’s just a way of goading Putin into sending in the tanks.

But here’s the odd part: Washington doesn’t have a back-up plan. It’s obvious by the way Poroshenko keeps doing the same thing over and over again expecting a different result. That demonstrates that there’s no Plan B. Either Poroshenko lures Putin across the border and into the conflict, or the neocon plan falls apart, which it will if they can’t demonize Putin as a “dangerous aggressor” who can’t be trusted as a business partner.

So all Putin has to do is sit-tight and he wins, mainly because the EU needs Moscow’s gas. If energy supplies are terminated or drastically reduced, prices will rise, the EU will slide back into recession, and Washington will take the blame. So Washington has a very small window to draw Putin into the fray, which is why we should expect another false flag incident on a much larger scale than the fire in Odessa. Washington is going to have to do something really big and make it look like it was Moscow’s doing. Otherwise, their pivot plan is going to hit a brick wall.

“Ukraine’s Parliament adopted .. a bill under which up to 49% of the country’s gas pipeline network could be sold to foreign investors. This could pave the way for US or EU companies, which have eyed Ukrainian gas transportation system over the last months.

Boy, you got to hand it to the Obama throng. They really know how to pick their coup-leaders, don’t they? These puppets have only been in office for a couple months and they’re already giving away the farm.

And, such a deal! US corporations will be able to buy up nearly half of a pipeline that moves 60 percent of the gas that flows from Russia to Europe. That’s what you call a tollbooth, my friend; and US companies will be in just the right spot to gouge Moscow for every drop of natural gas that transits those pipelines. And gouge they will too, you can bet on it.

Is that why the State Department cooked up this loony putsch, so their fatcat, freeloading friends could rake in more dough?

This also explains why the Obama crowd is trying to torpedo Russia’s other big pipeline project called Southstream. Southstream is a good deal for Europe and Russia.

On the one hand, it would greatly enhance the EU’s energy security, and on the other, it will provide needed revenues for Russia so they can continue to modernize, upgrade their dilapidated infrastructure, and improve standards of living. But “the proposed pipeline (which) would snake about 2,400 kilometers, or roughly 1,500 miles, from southern Russia via the Black Sea to Bulgaria, Serbia, Hungary and ultimately Austria. (and) could handle about 60 billion cubic meters of natural gas a year, enough to allow Russian exports to Europe to largely bypass Ukraine” (New York Times) The proposed pipeline further undermines Washington’s pivot strategy, so Obama, the State Department and powerful US senators (Ron Johnson, John McCain, and Chris Murphy) are doing everything in their power to torpedo the project.

“What gives Vladimir Putin his power and control is his oil and gas reserves and West and Eastern Europe’s dependence on them,” Senator Johnson said in an interview. “We need to break up his stranglehold on energy supplies. We need to bust up that monopoly.” (New York Times)

What a bunch of baloney. Putin doesn’t have a monopoly on gas. Russia only provides 30 percent of the gas the EU uses every year. And Putin isn’t blackmailing anyone either. Countries in the EU can either buy Russian gas or not buy it. It’s up to them. No one has a gun to their heads. And Gazprom’s prices are competitive too, sometimes well-below market rates which has been the case for Ukraine for years, until crackpot politicians started sticking their thumb in Putin’s eye at every opportunity; until they decided that that they didn’t have to pay their bills anymore because, well, because Washington told them not to pay their bills. That’s why.

Ukraine is in the mess it’s in today for one reason, because they decided to follow Washington’s advice and shoot themselves in both feet. Their leaders thought that was a good idea. So now the country is broken, penniless and riven by social unrest. Regrettably, there’s no cure for stupidity.

The neocon geniuses apparently believe that if they sabotage Southstream and nail down 49 percent ownership of Ukraine’s pipeline infrastructure, then the vast majority of Russian gas will have to flow through Ukrainian pipelines. They think that this will give them greater control over Moscow. But there’s a glitch to this plan which analyst Jeffrey Mankoff pointed out in an article titled “Can Ukraine Use Its Gas Pipelines to Threaten Russia?”. Here’s what he said:

“The biggest problem with this approach is a cut in gas supplies creates real risks for the European economy… In fact, Kyiv’s efforts to siphon off Russian gas destined to Europe to offset the impact of a Russian cutoff in January 2009 provide a window onto why manipulating gas supplies is a risky strategy for Ukraine. Moscow responded to the siphoning by halting all gas sales through Ukraine for a couple of weeks, leaving much of eastern and southern Europe literally out in the cold. European leaders reacted angrily, blaming both Moscow and Kyiv for the disruption and demanding that they sort out their problems. While the EU response would likely be somewhat more sympathetic to Ukraine today, Kyiv’s very vulnerability and need for outside financial support makes incurring European anger by manipulating gas supplies very risky.

The funny thing about gas is that, when you stop paying the bills, they turn the heat off. Is that hard to understand?

So, yes, the State Department crystal-gazers and their corporate-racketeer friends might think they have Putin by the shorthairs by buying up Ukraine’s pipelines, but the guy who owns the gas (Gazprom) is still in the drivers seat. And he’s going to do what’s in the best interests of himself and his shareholders. Someone should explain to John Kerry that that’s just how capitalism works.

Washington’s policy in Ukraine is such a mess, it really makes one wonder about the competence of the people who come up with these wacko ideas. Did the brainiacs who concocted this plan really think they’d be able to set up camp between two major trading partners, turn off the gas, reduce a vital transit country into an Iraq-type basketcase, and start calling the shots for everyone in the region?

It’s crazy.

Europe and Russia are a perfect fit. Europe needs gas to heat its homes and run its machinery. Russia has gas to sell and needs the money to strengthen its economy. It’s a win-win situation. What Europe and Russia don’t need is the United States. In fact, the US is the problem. As long as US meddling persists, there’s going to be social unrest, division, and war. It’s that simple. So the goal should be to undermine Washington’s ability to conduct these destabilizing operations and force US policymakers to mind their own freaking business. That means there should be a concerted effort to abandon the dollar, ditch US Treasuries, jettison the petrodollar system, and force the US to become a responsible citizen that complies with International law.

This in an absolutely “perfect synopsis” of events currently unfolding in Ukraine….and you’ll have to appreciate the irony with respect to the “false flag” and the mysterious “Malaysian Jetliner now “downed” in Eastern Ukraine”…….a coincidence? A chance event?

I hardly think so.

Go Obama go – you moron!

Second Quarter GDP – Reality Check Anyone?

The “advanced estimates” for U.S GDP ( gross domestic product ) are to be released on July 30th, and promise to bring with them a “flurry of market activity”, with traders, economists, analysts and speculators alike clambering to find an edge, and get positioned for the news.

I pose a simple question.

With first quarter GDP coming in with  a devastating contraction of  – 2.9% growth ( consider for a moment that is the worst quarterly GDP report in 5 years….those last 5 years with the Fed printing billions per month ) what on Earth could possibly have occurred in the past 3 months ( the second quarter of 2014 ) to not only make up for the massive loss, but to suggest anything close to “positive growth”?

You’d need to see a headline like ” Second Quarter Growth Sky Rockets! ” a whopping 4% to even consider the United States is “not” heading straight back into recession ( never left actually ).

Impossible.

What “magical changes” could possibly have taken place in the past 90 days to produce a second quarter GDP number that “doesn’t signify recession”?

Answer: None.

With “consumer spending” accounting for more than two-thirds of economic output, how can people making $7.25 per hour ( minimum wage ) or just under 1200.00 per month pre tax  be expected to buy anything other than beans / rice and “hopefully” keep a roof over their heads?

The false sense of wealth created by The Fed and its ponzi / racket in U.S Equities has done absolutely nothing to bolster further growth of the American economy, and soon…..yes soon……..chickens will be coming home to roost.

2nd Quarter GDP disappoints, and “maybe” it’s reality check time.

 

 

 

Negative U.S GDP – Just How Negative?

All eyes on U.S GDP numbers this morning to “once again see” if this market “finally” looks to recognize the deteriorating fundamental picture.

This is the third “revision” of first quarter GDP ( I have no idea how/why it’s the 3rd time this number is estimated but… ) it’s expected to come in around -1.8% Yes…..that’s “negative growth” for the first quarter of 2014 folks.

What’s interesting with our trading is that…..we’ve effectively “gone long USD” to a certain degree in taking profits across GBP/USD, EUR/USD as well USD/CHF now holding long USD vs NZD, AUD and CAD with the long JPY trades still in play.

I hope that members come to recognize how “fluid” this trading can be as……the fundamental landscape may change “underneath” while we move with the “swings” and keep ourselves nimble.

This can obviously go two ways here this morning….so please be very alert / numble / ready to act. Yesterday’s bizarre “late day reversal” seemed quite telling to me, as we’ve already seen the weakness in Nikkei, the commods ( AUD and NZD ) as well a pretty brutal day for U.S equity bulls so…..

A big day today or not? We should get some solid clarification on USD future movement as a decent move higher here would be quite exciting, possibly putting to rest our “concerns” for USD movement “lower” over the medium term.

Man the battle stations everyone! Today could be a whopper!

Swing High – On The Old Nikkei

Most of you know that I follow Japan as a leading indicator right?

It’s not at all uncommon to pull prophecy from “Krystal Kong Balls” seeing what happens in Japan overnight spill into U.S equities the following morning.

Would I have told any day trader in U.E Equities that “today” would open lower? Absolutely.

Would I suggest that 15,000 in Nikkei and it’s clear rejection at that level will usher in the coming correction? Absolutely.

Will you take any interest in this, and possibly “learn something” or perhaps consider this in your trading / investing moving forward?

Absolutely not. I highly HIGHLY doubt, that the ramblings of some gorilla as to the peaks and valley’s in “some stock market” far,far away will have any impact on you and your trading what so ever.

Why?

Because you won’t open yourself to change. You “can’t believe” anything like this is relevant, let alone “possible” as you continue to view the world via CNBC and the hordes of “financial bloggers” regurgitating the same nonsense and “predictions” day after day.

I’m buying a bunch of EURO here today and am selling a whole bunch of USD too but I’m sure “that” makes no sense to you either right?

Here’s the symbol for The Nikkei should you crawl decide to crawl outside your hole: $nikk