trade strategies

Revenge Trade – QQQ Will Take You Lower

Forex Kong 6 Comments

You’ve heard of the revenge trade right?

After you’ve been knocked over the head with a baseball bat, and the market has run off with most of your account – you then decide “I’m gonna get it all back”!

Let’s say you go out and do something stupid…like…really stupid, totally stupid, “moronic” like you decide “right now” to go out and buy Tech /QQQ and “get long technology” as means to exact your revenge.

Can anyone say “doublé whammy”?

When acting on pure emotion, traders / investors don’t make good decisions. The revenge trade ( more often than not )  kicks you in both knees, spits in your left ear, and leaves you in broken heap – crumpled on the sidewalk. Nothing good will ever come of this, and the lesson comes hard.

Check you head. Kick back and re-evaluate. Go for a walk. Drink some beer.

Prepare for the “next leg down” in technology.

 

 

 

Here We Go! – Bring On The Recession!

Forex Kong 10 Comments

Like it’s not already here, and more so…..never even left.

I look forward to hearing of your “timely exits” somewhere along the way during the next 3 years of complete and total economic devastation. I can only imagine that you’ll “do as humans do” and hang on “right til the last penny of your investments” has been squeezed from you, then of course – sell at the absolute bottom.

Why must you endure months and likely “years” of pain watching your portfolios dwindle to nothing, only to “then” decide you’ve had too much and ditch at the lows?

That’s because you are a retail investor. You are ridiculously greedy, and “for the life of you” can’t sell with profits in hand as….you must get more, and more and MORE!

I spoke of long, dark red candles yesterday. I spoke of the setting sun in Japan “weeks ago”.

I SELL AT TOPS.

I BUY AT BOTTOMS.

When are you going to finally get this flipped around?

I’ll take a couple more in the Premium Services area as we’re moving along quite nicely now.

Hit me at : [email protected] as the service is still not available to the public at large.

Monster Trades Setting Up! – Monster!

Forex Kong 3 Comments

You would seriously have to have your head stuck so far underneath the sand as to “not” see what’s shaping up here that….well…..whatever.

The Japanese Nikkei has indeed rolled over as suggested and the YEN is on fire. Commodity currencies are getting trampled left and right, and even a pile of the stupid parts of the U.S equities markets ( $tran – Transports swinging high, and $BKX banking index creating “yet another” lower high ) continue to show fatigue.

Trading markets with a single sided “bias” isn’t trading – it’s hoping.

When you’ve got this kind of this information taken directly from the “largest, most liquid, most widely traded market on the entire freaking planet” ( the forex market ) looking you directly between the eyes….what else do you need?

Maybe a nice 3 or 4 days of big fat solid , ugly red candles will do the trick for you then…..but  of course….by then it will already be much too late.

Heed to the sun setting on Japan. Take heed risk takers! Take heed!

I’ll need to smack you in the face with a sushi roll if you don’t pull up your charts and start finding a way to get long the Japanese Yen and short Japanese stocks. The U.S to follow.

The Smoking Gun – No Love For NZD

Forex Kong 10 Comments

New Zealand has raised its base interest rate to 3% from 2.75% overnight – now pushing the Kiwi “higher” than it’s neighbor AUD ( The Australian Dollar ) as far as yield is concerned.

Now……in a typical / healthy / strong / global growth / “risk on” environment – this kind of news would have sent the Kiwi “shooting for the moon” as Carry traders planet wide would most certainly look to take advantage of the % spread. Selling JPY and USD ( at near 0% ) and in turn buying NZD at 3%.

So why on Earth is NZD “lower on the rate hike”? How is this possible? Why would this be?

It’s because Carry traders are currently “unwinding risk” in preparation for what’s ahead. These types of moves take weeks if not months to play out, so once the ball has started rolling there is no way, NO WAY major players / Central Banks / institutions are going to “shift their plans” and “change direction” just because a single country has made a small interest rate hike! Not a chance!

If you ask me – the muted reaction to the New Zealand rate hike is literally a “smoking gun”.

Big boys are turning the boat, and nothing….NOTHING is gonna stop it.

Your Broker Selling You Shares – You Still Buying?

Forex Kong 1 Comment

While the SP 500 “pass the bag to the innocent bagholders” show continues, have a peak at this (borrowed) chart of what “institutional investors” have been doing all the while.

You know “institutional investors” like your bank, your brokerage firm, your investment advisor – you know…..those guys you can really count on to let you know what’s up – and how you should be investing.

20140416_smart_money_Forex_Kong

20140416_smart_money_Forex_Kong

Think anybody’s sneaking out the back door on this last “SP 500 pump job”?

Oh right….he’s your broker, ya ya….your banker right right…….

Who do you “think” institutional investors are pal?

– I don’t want to hear it.

 

 

Nikkei Reversed – China PMI Next

Forex Kong 2 Comments

What’s absolutely hilarious about this is that….

The “planetary growth engine” China has already posted 3 straight months of CONTRACTION, with the “flash manufacturing PMI” numbers set to be released later on this evening.

The industry “expectation” is ALREADY at 48.4 ( Above 50 indicates expansion – while under 50 suggests contraction ) so……market analysts already “know” the number is low – and that this will mark the 4th straight month of continued slow down in China.

China’s amazing growth over the past 5 years “fueled” the “planet wide sale of stuff” as China practically bought “everything under the sun” in order to keep on growing/building.

So who’s buying all that stuff now? All those goods and services that made corporations profitable, all the contracts / investment made during the “boom times”?

You’ve got to be “completely 100% nuts” if you haven’t figured this out by now, and seriously starting thinking about “becoming a seller”.

Get ready “bagholders”.

Here comes good ol USD on the “repatriation trade” I made light of a couple of days ago. If Japan hasn’t already stomped you into the ground…..get ready for China on deck tonight.

Forming A Fundamental View – Climb Higher

Forex Kong 6 Comments

From a fundamental perspective we need to look at things from the top down.

Now…..depending on “how high you climb the beanstalk” things may appear very different as…we all climb as high as we can ( based on our own knowledge and understanding ) formulating  an overall view of “what we think” is going on below. But what if you don’t climb high enough? Is your perspective “all encompassing”? Or are you only seeing things from a vantage point that ( innocently not knowing ) only allows you to see a small portion of the larger picture.

How high do you need to climb in order to formulate a macro view “wide enough” to feel that you’ve got things in the proper perspective – and in turn use this perspective to your advantage?

This of course…is wildly subjective,and always up for debate as – we all formulate our “macro views” based on our own experience, knowledge and understanding.

My macro views start with “Earth” if that says anything.I then start to work myself down.

Movement in financial markets is merely a “bi-product of human activity” so……it only makes sense to better understand who’s got the largest influence and what their intensions are no? Central Banks sit high above you and are currently in “desparation mode” world wide – doing everything they can to keep the “debt balls up in the air”, while facing the stark reality of continued “slowing global growth”.

As a retail investor don’t kid yourself. This has nothing to do with “mom and pop” buying a couple stocks with hopes of making a buck or two. The big boys push this thing around “like a skinny kid on the playground” with the sole intention of extracting your “hard earned live savings” as readily as possible – then depositing them in their offshore bank accounts.

You are at war every single day you put your money at risk in financal markets, against an enemy with every possible weapon at their disposal. Failure to recognize this generally leads to one thing, and one thing only. Failure.

If you can’t adopt a “warrior type attitude” with respect to your trading / investing then you may want to consider taking something up that’s just a little “teeny weeny” bit  “safer”.

Needlepoint anyone?

 

Trade Ideas For Next Week – If USD Gets Legs

Forex Kong 11 Comments

If the U.S Dollar can put in a solid “swing low” and reversal down here ( which it appears to be doing ) then it looks like a number of solid trades setting up, with well-defined risk – having that stops can be put just above or / below any number of USD related pairs such as:

  • short EUR/USD with “stops above” 1.39 ( that’s only 30 pips risk )
  • short GBP/USD with “stops above” 1.6820 ( 100 pips )
  • short AUD/USD with “stops above” 94.60 ( 60 pips )
  • long USD/CAD with “stops below” 1.0856 ( 100 pips )
  • long USD/CHF with “stops below” 86.90 ( 75 pips )

The Kongdicator hasn’t “officially rung the bell” on any of these, as the technology “looks ahead” a specific number of bars / time , taking into account near term volatility and a number of other factors BUT!….I’m out ahead of this with some “general trade ideas” should we see a solid swing in USD, as early as Monday / Tuesday.

Short of that, seeing the U.S Dollar fall below the recent lows in $DXY around 79.28 would have it in some real trouble, simply extending gains in all the currencies mentioned above.

Looking at “EEM” turning lower as of yesterday ( near the “same ol area” of resistance ) also suggest possible U.S Dollar strength ( if you can ever call it that ) to come.

From a fundamental perspective, as much as the Fed wants / loves a lower USD,we’ve come to an interesting junction where ( for the Fed unfortunately ) a showing of strength is really whats needed if these guys want to uphold “any sense of confidence” on the world stage.

Most of you likely don’t realize that Russia’s “announcement” that Gazprom ( largest supplier of Nat Gas to EU ) will soon be signing a massive deal with China “priced in Yuan” was a huge reason for market concerns / risk off type action over the last couple of days as I don’t imagine “that” was mentioned in American news.

I guess J.P Morgan ( one of Americas most “trusted banks” ) shit canned earnings / missing both top and bottom line expectations too but……you know….”that” can’t have much to do with anything either I suppose.

As well curious if anyone took note of my “short Japan trade” EWJ puts / short going back to March 31st?

Have a good weekend all.

Nikkei Has Topped – There I Said It Dumb Ass

Forex Kong 5 Comments

It’s my belief that the Japanese “Nikkei Index” has indeed topped, and actually did so back around 16,450 at the beginning of the year. Ya, ya , ya – I don’t usually do this / make such bold calls but what the hell…..these days I see every bozo under the sun suggesting things will go up forever so…..you can “take heed” or “take a hike” – trade it as you see fit.

This last “run up to around 15,000” ( where I’ve suggested again, and again, and again we’d see reversal ) has been what some might consider “wave 2” ( if you are an Elliot Wave guy ) leaving open consideration for a much larger “next leg down”.

The Nikkei topped AHEAD OF THE DOW in 2007 in very much the same fashion.

Nikkei_Top_Led_Dow_2007

Nikkei_Top_Led_Dow_2007

Remember this “beauty” from a few months back showing the Nikkei over a 20 year time frame?

*Draw a horizontal line at 15,000 in your mind. That is what we call a very, very, VERY strong line of either support or resistance – considering it’s significance over such a long period of time.

 

Nikkei_Longer_Term

Nikkei_Longer_Term

Japan is a disaster, and when looking at things in this context – so is everything else as…..the Nikkei generally leads.

Perhaps this will shed some light as well….on my views about Central Banking and money printing as ( if you can imagine ) the massive dilution of the Yen ( as well USD ) over the past years, if only to achieve an incremental “short-term rise” in stock prices then……..to see things fall right back to where they started – just with waaaaay more “toilet paper” floating around.

Nothing has really changed, short of an incredible “transfer of wealth” from those already left with very little………to those who’ve already got a lot more than they need.

(P.S….in light of this “bold post” I might as well throw caution to the wind and tell you to run out tomorrow, sell your house, rack up every credit card you can, sell everything you own, leverage everything you’ve got another 500%, then “pre – market” dump every penny on a get rich quick “short play” Nikkei/Dow/whatever”, sit back and just watch the millions pile up.)

Please……..don’t be silly. I’m a single gorilla, with a single opinion and view of these things that for the most part – doesn’t generally fit the status quo.

Don’t be a dumb ass.

I know you’re not.

 

 

 

 

Japan To Raise Sales Tax – Consumers To Slow

Forex Kong 11 Comments

Brilliance out of Japan as we see the country’s standard “sales tax” raised from 5% to a staggering 8% here for the beginning of April.

This is very likely going to cause a considerable downturn in consumer spending for the coming quarter as the BOJ finds itself “ounce again” in a very precarious position.

In April 1997, when the government last raised the sales tax, to 5% from 3%, consumption took a dive and along with the effects of the Asian financial crisis, pushed Japan into deflation and a recession that lasted more than 18 months.

Now after 16 months of printing money like there’s no tomorrow, an increase in sales tax hardly sounds like part of a “cohesive plan” but this is not at all uncommon in Japanese central planning.

It’s one step forward ( if you consider rampant currency devaluation a step forward ) and two steps back as consumers tighten their belts and plan to cut back on spending.

We’ll keep a watchful eye on the Nikkei as always, along with those pesky JPY pairs that still refuse to budge.