trade strategy

USD Repatriation – Up Before Down

Forex Kong Got something to say?

Repatriation – is the process of returning a person to their place of origin or citizenship. This includes the process of returning refugees or military personnel to their place of origin following a war.The term may also refer to the process of converting a foreign currency into the currency of one’s own country.

So from a financial perspective – it’s the currency part of it we’re concerned about.

Don’t you find it interesting how… just when you’ve finally got a handle on the current fundamental issues and geo political concerns that “may” influence movements of a given currency – things start moving in the complete opposite direction?

Huh? Dollar going up? Well……I thought the U.S Dollar was doomed?

Well…..( after weeks of me going on about it ) you “now” have a much better understanding of what’s “really going on” with respect to the U.S and it’s concerns / involvement in The Ukraine right?

Russia continues to “call the bluff” and continues to move forward ( along with her good buddy China ) in creating and promoting trade agreements “outside use of the U.S Dollar” – representing likely one of the “largest and most serious threats” to the U.S “global domination campaign” of our time.

The U.S can’t have this, as it represents a major, major , MAJOR blow to the dollar’s status as the  “global reserve currency” and throws a big monkey wrench into the U.S plans to “print and export toilet paper” – keeping  the ponzi scheme alive a while longer.

They will go to war over this. I guarantee it. They will go to war before letting go of this “insane privilege” as it serves as the very backbone for their ultimate plans.

The east has had it, and has finally decided enough is enough.

So…..before the U.S Dollar can “fall off the side of a cliff” and in “preparation” for such an event many investors will begin “selling/closing” investments financed in USD abroad, and bring that money home FIRST. Get it?

An example:

If you thought the shit was gonna hit the fan and had recently bought a summer home in Italy lets say……you might now consider “selling that home in EUR” and in turn sending / taking that money BACK HOME TO AMERICA ( converted to good ol USD) – where you’ll feel safe/ better knowing your investment isn’t at risk and your money is “safe” back in your piggy bank.

You see? Repatriation. Reee-paaat-reeee-a-shaaawn.

A simple concept with massive implications.

USD needs to go up up up up up ( as investors “unwind” investments abroad) and bring those babies home.

Only “then” to see them further reduced to toilet paper.

 

There's Our USD Swing – Right On Time

Forex Kong 4 Comments

As suggested there on Friday “if” we saw an expected turn upward in USD ( or at least…I was expecting it ) this is clearly a “swing low” at a fairly significant area of support.

This could possibly be a very significant “low” for USD, marking “the bottom” of what could turn out to be a very powerful new set of “higher highs” and “higher lows”.

All trades suggested on Friday – moving in the right direction.

Otherwise, The Australian Dollar continues to baffle as “risk is clearly expected to come off” here in coming days and weeks.

The Nikkei taking a bump up this morning –  and that’s “all it is” a bump up, as you’ll recall – nothing moves in a straight line for long. This too…soon shall pass.

We’ve moved from an environment of “buying the dips” to now “selling the rips” so…..you better get your head wrapped around it.

Stocks can and will “fall further” over the coming weeks, if not months.

Over the weekend I’ve had incredible interest in the “Members only / paid services” area – thank you. I’m only a day or two away so for those who’ve already contacted me so I will get back to you via email as to login / site address etc. The payment system will be Paypal based so please be aware and maybe even look ahead. You’ll need a paypal account in order to subscribe/use credit card. It’s a snap to set up.

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.

What If I Was Right? – And The Top Is In

Forex Kong 24 Comments

Lets entertain a hypothetical situation for a moment…I mean – why not right?

Let’s say “what if”………

What if I’m correct in suggesting that the 15,000 area of The Japanese Nikkei Index marks the top, and that indeed ( as seen in the past ) this “top” will soon be mirrored in U.S Equities as well?

Now I’m not talking about a “mid-term top” or a “short-term top” – I’m talking about the “top of all tops”. The kind of top you can only imagine / dream that you may have been fortunate enough to have identified, and in turn – traded accordingly.

Yes….”that” kind of top.

So…..What if I’m right?

Can you imagine having yourself positioned not only “before” a major turn in the markets but for a “bearish turn” at that? Allowing your trades to move into profit based on market dynamics “driven by fear and panic”?

How bout letting those trades sit ( much like an investment ) for several months, or even ( in timing it correctly ) “several years” considering what might be coming down the pipe in a longer term “global macro” sense?

What if these levels in stock market valuations ( in both Japan as well U.S ) reflect levels that may “never be seen again”, or at least not for several years to come?

What if?

It’s fun to think about, especially as these past months have been so tricky.

I keep coming back to that 20 year chart I posted the other day, considering that “wow you know Kong……you might just be right”.

Nikkei_Longer_Term

Nikkei_Longer_Term

You might just be right.

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.

 

 

 

 

What Do You Know? – I'm All Ears

Forex Kong 1 Comment

Friday’s sell off in U.S Equities certainly took a number of people by surprise now didn’t it?

This in itself “not surprising” as the current state of “passivity” and “complacency” among investors is at or “above” all time highs. People have got this crazy idea in their heads that everything is moving along as planned, the “recovery” is well underway and that essentially ( no matter how many times they change their tune ) the Fed is there to screw you oops – “save you” if things start to get ugly.

I borrowed this chart from the good fellows at Zero Hedge to illustrate an important point.

Realistically – how much further do you think the market can stretch ( considering we are already in one of the longest, overstretched, Fed induced, pump job markets in the history of mankind ) before doing what “markets always do” as illustrated in the chart below?

Markets_Top_Forex_Kong

Markets_Top_Forex_Kong

What could possibly have you think that for “whatever reason” – this time it’s going to be different, with historical data going back to “the beginning of time” showing the “boom and bust cycle” repeat, again , and again , and again?

Tell me! Don’t just read this crummy little blurp and go back to the T.V! You tell me what it is that “you know” that has it that “this time”…yes “THIS TIME” – IT’S GOING TO BE DIFFERENT.

  • It can’t be the Fed…..cuz ( haven’t you been listening? ) the Fed says it’s going to continue with it’s tapering and within the next year END IT’S QE PROGRAM all together….so don’t give me that.
  • It certainly won’t be U.S Corporate earnings as expectations for earnings have come down considerably for the first quarter, and what? You imagine the spring and summer quarters will be any better?
  • It can’t be “global growth” as every estimate from the IMF down to the average joe blow walking down the street knows – global growth “ain’t goin nowhere” anytime soon so…….

So what is it Sherlock? What is it that “you know” that the rest of us don’t, that would have you “buy and hold” now?

5 plus years of full blown money printing and equity pump job to have it that 326,000 MORE Americans stood in the unemployment insurance line last week, and 1 in 5 households in American are currently on food stamps.

I can’t wait to hear back. I seriously “can’t wait” to hear back.

 

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.

 

 

The Psychology Of Trading – Emotions Take Control

Forex Kong 2 Comments

When you consider the “psychology of trading” what we are really looking at is “plain old human emotion” – and one’s ability to control it.

This is without a doubt, the absolute most difficult aspect of trading you’ll need to conquer in order to be successful as without emotional control, fear and greed will wreak havoc on your mind and your account.

New traders often overlook this.

Caught up in the technical aspects of “timing entries” or “learning a new indicator” it’s very normal for new traders to operate on a “hey I think I’ve got this figured out” type basis, scoring a winning trade even, or seeing “another light come on” as another technical aspect falls into place.

This is all well and good, but I can tell you with certainty – there is “no short-term trade strategy” capable of beating the markets consistently without the one element that generally keeps both fear and greed in check.

Proper money management.

If you want to get your emotions under control, get your money management under control.

To start….trade MUCH smaller than you are currently.

Let me ask you……if you had a handful of change….perhaps 5 dollars worth of nickels lets say – would you really be that “emotionally distraught” if you lost one? How bout two?

Let’s say you even lost 3 or 4 – but then during the same week, you found a couple new ones behind the couch or in a pair of jeans? Would you really be that broken up?

There it is. You’ve got to start looking at your total account balance, and the amount you are flat-out “able to lose” in a given trade / trade plan without crying about it, essentially “removing” fear from the equation.

Consider you’ve already lost the money “before you even enter the trade” as another great way to put fear on its ear. Done. I’m in with a 100 pip stop, If I’m wrong I’m wrong….and I will lose $200.00. Ok mom! Good night. See you in the morning. Done.

Now….if you get this far and then find out that you are consistently losing on your trades, you’ll have to get back to the drawing board on your actual strategy as….it’s not “fear” that’s got the best of you. If you’ve been caught offside, and am now deep underwater well….I’ll bet you where trading to large right?

And….. if you can honestly sit back in your chair any given day and say “I have no freakin idea what the hell is going on out there!” – you stop trading until you do know.

I’ve got a million of these, and could likely write on “forever” but will keep this short enough to stomach in one sitting.

The number one way to get your emotions under control…..is trade smaller, lower expectations of “hitting home runs” and then concentrate on consistency. Small wins, small losses = more time in the game, and more time to observe and further hone your skills.

It’s a long road my friends, but the key is to still have a couple of those nickels left, when you’ve finally put all the puzzle pieces in place.

Then you can start building spaceships.

The Psychology Of Trading – Reader Response #2

Forex Kong 1 Comment

Rob,

I saw fundamental changes / shifts in the market that tipped me off, as well factored in a number of other “broad stroke” indicators – suggesting that markets might stall / move sideways / remain “trendless”.

1. The economic cycle “in general” has become about as stretched as it can stretch (now pushing on to be one of the longest economic cycles in the history of markets!). This has solely been “fueled” by funny money out of Washington.

The Economic Cycle – A Simple Explanation

2. Earnings ( and even more importantly ) “guidance” has been pretty much flat / bad to even “horrible” as U.S companies have done everything they can to show profit, when in reality it’s really about cost cutting / down sizing etc…..( your bottom line might look a bit better too after cutting 300 workers etc….this doesn’t mean “more profits/growth”.

Caterpillar Earnings – What It Means To Me

3. Emerging Markets continue to but up against resistance, and even worse – in the face of a rising dollar ( as suggested via tapering, and now “higher rates” ) will likely “collapse” as they’ve grown so used to the flow of “funny money” coming out of Washington.

Emerging Markets – Update 

4. Proposed reforms in China.

Reflections On China – Where To Next?

Gees…..and the list goes on, with continued unemployment in the U.S, housing going nowhere, Obamacare ( my god ) and continued tensions in the Middle East etc…

All of this most certainly contributed to my “extended holiday” through February and March as these factors ( and many others ) fly in direct opposition to the current mandate from the Fed.

Keep the masses calm. There is no problem. Everything is going as planned. Buy stocks. Go to sleep.

You can’t trade in these types of cross winds. You will be ground to pieces with such conflicting forces pushing and pulling on markets.

Ok enough……

Looks like “part 3” will finally get to the “psychology” of it all….and how a trader can maintain an ounce of sanity through all of this.

For starters……tequilla doesn’t hurt a bit!

 

 

The Psychology Of Trading – Reader Response

Forex Kong 3 Comments

In response to a fantastic line of question from valued reader “Rob” – let’s pull a couple of stops here.

It’s Saturday afternoon…my family and friends have now headed home, and it’s back to business “full-time” for Kong. So what better thing to do than “let loose a bit” after a full two weeks more or less “sitting on the bench”.

After suffering a bit “psychological damage” himself ( alongside the rest of us ), with continued effort actively trading markets these last few months, and in light of one my recent posts “Position Size – When Markets Have No Clue” Rob asks how I may have been able to identify this treacherous market dynamic ( chop ), and manage to keep myself out of harms way.

Excellent question Rob. Absolutely fantastic.

My first tip-off, aside from already having  been very wary of markets going back several months was the complete and total “disregard” markets showed for the taper.

Knowing full well that the fundamental story in the U.S continues to deteriorate , one would have assumed that the “initiation of the taper” would have been the first clue that “the party is over”, and the “free money is ending” right? Apparently not.

Seeing U.S Equities continue to rally in the face of continued negative/poor data “coupled” with the suggestion and “initiation” of tapering told me almost immediately that the puppet still dances and that the Fed was still just as busy behind the curtain.

I never believed they would taper. I still “know” they have done nothing more but generate a media campaign, and if anything are even harder at work propping this ponzi up.

Recognizing this had me immediately trim positions, get to cash , scrap trade plans, get out-of-the-way as…..if I thought the Fed was controlling things when QE was “hip” how do you think I felt seeing things continue to push higher as QE was “supposedly” being cut back.

Bullshit. Total 100% bullshit.

Nothing has changed ( short of a couple of entries / zeros / ones in a couple of computers ) as QE will continue until a scapegoat is found, and an excuse can be made for the bubble bursting – period. Then QE will be doubled.

As well keep in mind that “I too” got caught” getting long the dollar, posting a loss of a % or two regardless of how many times I second guessed / knew in my gut that nothing had really changed.

I too – took the bait.

Then looking at things from a technical perspective, I didn’t get a decent signal from the Kongdictator on even as small a time fram as a 4 H, looking at pairs like USD/JPY trading flat as a pancake for now the entire last 2 months there’s been no question.

Markets have no clue.

I’ll break this into two post….and touch on another point Rob touched on – how this all plays out with traders “psychologically”:

The Psychology Of Trading – Reader Response #2