trade strategy

The Top Is In – In Japan That Is

Forex Kong 7 Comments

It’s been interesting to see how currencies have been doing very little, all the while The Nikkei as well SP 500 – continue to weaken.

We’ve now got a “weekly swing high” in Nikkei ( where this weeks “low” takes out the low of the previous week ) which is ( in general ) a pretty solid suggestion of future direction, although still no “reversal” in Yen.

The top in Japanese stocks looks to be “confimed”.

It’s interesting to note “the degree” of selling in risk, and it’s effect on any individual currency as with the example of Nikkei and Yen….it appears we “really need to see some selling” to get that  Yen up off it’s bottom ( jumping a little bit this morning ).

USD continues to push at it’s near term highs…high’s that are “far higher” than they should be at this point as the USD / EUR / GOLD / COMMOD cycles are all ( as they are all so connected ) completely stretched “past” stretched.

I’m holding short USD on first round of entries – currently only a couple pips in the red.

Volatility ( all the way around ) is DEFINATELY picking up, and it would be my thinking that the degree of selling we are seeing “increases” – considering that most of the Major Indexes are again in the red / weak.

A turn in USD has to factor into all of this here soon, and Yen so close to finding it’s low.

You don’t want to be on the wrong side of a rising Yen.

My Trading Framework – Put To The Challenge

Forex Kong 11 Comments

I assume you’ve all got a certain number of “economic indicators” and likely as many “technical indicators” flashing on your screens to alert you to those “specific things” you find most important to your trading. You have yours, I have mine and the key for anyone is to “just find something that works for you”.

Recently my “framework” ( as I assume many others ) has been put to the test, pushing a number of “specific little things” about as far as they could possibly go before consideration that “perhaps I’ve got this wrong” or “maybe this isn’t going to work out”.

Markets have a tendency to do this “no matter what” and at one time or another “everyone” will be pushed to question if “they really know what’s going on out there” or if their “beliefs” will actually come to fruition.

You must have a certain degree of conviction in order to see some of the larger trade ideas realized, as they often play out over weeks and even months.

  • I’ve always suggested that The Japanese “Nikkei Index” would be the first place to look for trouble, and that Japan should lead the charge lower, posting this almost a full week ago then seeing U.S equities have one of their toughest weeks in a while. Coincidence? Of course not.
  • I’ve always suggested that The Japanese Yen has served as the “principal fuel” for the massive rally in U.S Equities, as cheaply printed Yen is converted to USD in order to purchase assets priced in U.S Dollars, while the majority of “U.S printed toilet paper” just sits with the big banks.
  • As well let’s not forget my long-term “short trade” on The Australian Dollar now -700 pips from its high at the beginning of September.

A bottom in Japanese Yen ( and in turn a near term “top” in USD ) appears to be upon us, as The Nikkei has now “double topped” and been handily rejected.

I don’t expect higher prices in Japanese stocks. Period.

I also don’t expect USD goes any higher here, before making a swift ( and likely very painful ) move lower. Considerably lower.

Yen strength means bad, bad things for U.S Equities as well The U.S Dollar, as both are essentially sold on repatriation of Yen back to Japan. The 200 billion printed per month “had to have gone somewhere” right?

Perhaps now they are headed home.

More real-time trades, weekly reporting and daily commentary at the members site : www.forexkong.net

 

 

 

 

 

 

You Can't Win – Only If You Buy A Ticket

Forex Kong 1 Comment

We’ve all heard the saying “you can’t win if you don’t buy a ticket” right?

Well…as far as trading is concerned, this expression / process comes into play many, many times per week / month or even “per day” depending on your strategy.

You can’t win if you don’t buy a ticket – and I like buying tickets.

For some time now, I’ve been eyeing a large move lower in “global appetite for risk” which ( for the most part ) has eluded me thanks to our friendly neighborhood Central Bankers.

Day in day out – the “balls just keep tumbling” and the numbers just keep going round and round in what’s now become one of the longest running “lottery draws” of the century.

So the question begs – What if you miss this one? What if you don’t take a shot? Or more interesting…what if you nail it and win? Is it worth the ticket price to have tried?

In this case……with every single asset / price / elastic band stretched about as “far as it’s been” in human history, the purchase of another ticket ( then perhaps another ) looks very appealing.

I expect to be purchasing a ticket “short” mid-week, and just let the chips fall where they may.

Hey you never know right? And it certainly can’t hurt holding a ticket.

 

 

 

 

 

Short Entry Of The Century – All Things American

Forex Kong 3 Comments

If you haven’t taken notice recently…..U.S Bonds have tanked over the past few days, with TLT ( the 10 year bond ) falling hard from 119 to 113 in a pinch.

Bonds “price” and bond “rates of payment” are inversely correlated so as bond prices fall…..bond “yields” ( the amount of interest paid out to you as a holder ) increases so…..the lower the price of the bond…the higher the interest the U.S Gov needs to pay out.

The U.S Gov cannot afford to pay out higher interest on these bonds because ( as you remember from the “debt ceiling debacle of days past” ) The U.S is already 100% completely broke.

100% completely and totally broke. Period.

For every single point that bond yields rise,The U.S Gov falls deeper into the abyss – as default looms.

Absolutely nothing has changed since the last “debt ceiling debate” as unemployment continues to plauge any idea of a “real recovery” – but now with stocks near all time highs!

You don’t see a problem with this?

After 5.5 years up, everything that “can be done” HAS been done, and there is no other direction for a responsible trader / investor to do look……………….. other than DOWN.

You are a fool to consider that “this time it will be different”.

Bonds…..the currency and finally stocks.

When she goes……it’s all gonna go.

 

 

 

Calm Before The Storm – Market Update

Forex Kong 1 Comment

This morning looks about as dead / flat / boring as most these days with “yet another” doji type candle expected in U.S Equities.

The Nikkei hasn’t done a thing overnight but most certainly looks tired here, with JPY now looking like it’s found a low. Check out the “waning” MACD as well RSI ( on your own chart ) on the weekly. This thing has been getting by on a lot of hot air and “funny money” as no one in their right mind is “actually” buying Japan.

Nikkei_Sept_15_Forex_Kong

Nikkei_Sept_15_Forex_Kong

Keep in mind that the correlation of The Nikkei and USD is nearly 100% , and USD is now as overbought as it’s been in years. I think you get the picture.

The next “decent move” should have JPY, EUR and GBP ( as well gold and oil ) moving higher while USD, AUD, NZD as well CAD move lower.

USD_Sept_15

USD_Sept_15

We can also see the inverse correlation and completely “oversold” conditions in EUR.

Eur_Sept_15_Forex_Kong

Eur_Sept_15_Forex_Kong

I can’t suggest getting into anything new here today as it’s Monday ( and we all know how Mondays go ) but things are certainly falling in place for the larger trade at hand.

Taking Stock Of Summer – What Comes Next?

Forex Kong 5 Comments

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.

 

Worlds Largest Pension Fund – Buying Japanese Stocks

Forex Kong 1 Comment

The Nikkei has just moved 340 points higher on rumour that Yasuhisa Shiozaki ( who has been advocating for the GPIF to reduce allocation to domestic bonds ), may be appointed the Health Minister ( so what? ) when Abe announces his new cabinet tomorrow.

The GPIF ( The Government Investment Pension Fund ) The world’s largest pension fund ( yes a Japanese fund not American ) is expected to increase purchase of Japanese shares to 20 percent of holdings and reduce domestic bonds to 40 percent.

With the market way ahead of itself here it’s the actual “timing” of said purchases that is still unknown. The fund would need to buy an additional 3.5 trillion yen of domestic stocks to reach the 20 percent target, so the “span of time these purchases would be made over” is key. The fund will announce its new asset allocations in the fall – according to GPIF investment committee chairman Yasuhiro Yonezawa.

Both Gold and the Japanese Yen got absolutely demolished overnight, with fear “once again abated” having the largest pension fund on the planet now suggest it’s ready to “step it up” in support of the ponzi we’ve all come to love.

This comes as tough news for Kong as I’ve been trying to “get long JPY” on the inevitable turn, so it remains to be seen if this will manifest as a simple “spike” or develop into something larger. My initial thoughts are “nothing can save Japan” and that this only goes further to affirm the complete and total desperation currently sweeping the land of the sinking sun.

Regardless – one has to respect that a player as large as The GPIF most certainly has the ability to “ruin your day” should they decide to go all in.

Forex Markets Come Alive – USD Wash Out

Forex Kong 3 Comments

Wow.

A very large “gap up” here in the wee hours Sunday night before markets really kick off, and the U.S Dollar continues to surge higher against the E.U currencies.

One can’t imagine a single USD bear left on the planet.

Exactly as it should be…. before the thing tanks.

It’s amazing to me how public perception continues to view USD’s recent surge as “some indication” of a stronger U.S Economy.

How on Earth can The U.S Governement ( as well the crooks at The Fed – a private held bank ) handle the enormous contribution to the “serviceable debt load” ( remember The U.S is “officially broke”, with a continued rise in the “allowable debt ceiling” now just a given ) brought about by a stronger U.S Dollar?

It’s impossible. The Fed mandate is to “kill USD” at whatever costs, as to keep these balls in the air as long as they possibly can.

A strong U.S Dollar “kills” the U.S economy! As exports tank, and the amount/value of outstanding sovereign debt balloons “past” the balloon we already know to be.

Find me an “economist” who can make the arguement that “a strong U.S Dollar is good for America” and I’ll eat my hat.

A strong U.S Dollar represents everything the U.S Gov and The Federal Reserve fear most so….I encourage you to start looking for signs of reversal – as opposed to getting to excited.

 

 

Upside Targets Met – Thoughts On Jackson Hole

Forex Kong 10 Comments

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

Forex Kong 12 Comments

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.