Over the past 2 days. I’ve sold GPL, IMG and NUGT for a 28% return on the trades.
I’m still holding short USD/JPY as well long EUR/USD.
I expect this to be a “shallow dip” with respect to the gold and silver related stocks, so I will be scaling back in to these and more here shortly. On this next entry I am going to do my best to actually “buy and hold” something for at least a couple of weeks / if not months but then again…….we’ll see how that goes.
The larger macro turn in both USD as well commodities is slowly making its way…so there is still plenty of time to start building positions.
In the wake of President Trump´s “trouncing”of Hilary Clinton, markets have been less than kind to our beloved gold and silver mining stocks. But wait…..
The Daily Chart of IMG
Stepping back and looking at the bigger picture, one can most certainly see that “all is not lost”. In fact….as I continue to build positions in one little gem in particular ( IMG ) we can look at recent days movement in the stock ( and in my view the entire metals complex ) as an excellent “opportunity” to take your shot, likely having missed out on my last buy some weeks ago.
Keep in mind the time frame here, ands “how long it has taken” for this stock to:
Finish it’s downtrend: If you consider October 10th “the bottom” we can see price movement “gradually” heading in the upward direction, but it’s not until the green box that an experienced / seasoned trader / chart reader can honestly “confirm”….
Uptrend has been established: Why you ask?? Because the series of “lower lows and lower highs” ( the zig motion of assets in a downtrend ) is now broken with the establishment of a “higher high”. It’s this signal that essentially “confirms that the downtrend has ended” but then of course you get this….
The first major pullback in a newly established uptrend: It’s the stock market right? Everything generally moves opposite to what the majority of traders are thinking / doing so it only makes sense to see a major “dump” directly following confirmation of a new trend right?? This is so basic, so common and such a standard that many an experienced trader develops plans to “always look to buy on the first major pullback in a newly established uptrend”.
You can see how the levels so closely match those of the previous downtrend ( the orange line across the chart ) as the same levels that once offered resistance, now offer support ( see what happens when you start marking your price levels! ) with this major reversal looking something like a big huge “W”.
Price could just as easily stick around these levels for some days, but if traditional technical charting is worth a damn….this would be an absolutely fantastic place to take a shot at entry, as I am adding to my current position here at 4.98.
The expected “pop n drop” post-election looks to have run it’s course, and I would expect that both gold and Euro will continue to move higher, with stocks and $USD finally topping out. Opportunity abound my people….all you need to do is pull the trigger and keep yourselves protected.
This is a quick look at where I’m looking for my next trade entry.
This scenario suggests that USD has not yet found its intermediate term low, and that we’ll see another substantial leg down “first”.
On the flip-side USD breaks upward, breaking though the 50 SMA ( now clearly pointing lower ) and heads for the highs..only to stall out there and spend “eternity” flopping around at similar levels.
You’ll have to appreciate that all the fuss about Eur/Usd is just more “retail propaganda” manufactured by the financial / foreign exchange industry to have you trading the pair “thinking” you’ve got an edge or an advantage. These are the planets two most widely held “reserve currencies” and will always “flip and flop” based on simple market mechanics.
Pull a monthly chart of EUR/USD and realize the pair can trade in as wide a range as .40 cents! Without a single “meaningful repercussion” to either economy. There is no “fundamental reasons” to track the pair…..and I rarely trade it.
Retail flock to it….as the media would have you. Silly.
If USD turns “on cue” you’ll have to expect U.S Equities to do the same…. but then again….I’ve been saying that for a looooooong time now.
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.
From a purely geopolitical point of view things just keep getting hotter.
An expected “bounce in risk” ( considering the oversold conditions ) not as forth coming here as Putin pushes back with sanctions of his own BANNING EUROPEAN FOOD IMPORTS ( something which will further push Europe into a triple-dip recession ).
“Take that” then Obama / EU cronies.
Apparently the big boys in Washington and The EU are both completely shocked and outraged ( yet imposing sanction of their own is always Ok – right? )
Putin will not be bullied, now with the “supposed recovery” in The EU ( ya right ) hanging in the balance. Like it has anything to do “what so ever” with Putin or Russia.
This is now coming to a head as the West continues to do anything possible to provoke the “calm cool and collected” Putin.
The U.S must make war in order to retain “reserve currency status” and continue with the Ponzi at whatever cost.
Putin’s latest action keeps the game in check, and provides hope for those of us ( most of the planets population ) who look forward to a day when The U.S looks to concentrate on its own “completely f#&ked up situation”, starts taking care of its “own people” and keeps its big fat “overly indebted nose” out of other people business.
You’d think the people of The Ukraine were “made of gold” considering the amount of interest from Washington! No wait…….gas/oil – that’s it.
Currency wars turn to trade wars…….
Trade wars turn to “people wars”.
Hey – what’s up fellow traders? I know the flow of “daily trading info” has dwindled to a certain degree here at the public blog as it’s now “hopping” in The Members Area!
Things are really looking to pick up here in coming days / weeks with “The Fed news” late August as well current weakness in global equities assuring fireworks to follow!
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?
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 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”?
If anyone’s had question as to “just what extent” the Central Banks have got their hands wrapped around these markets – you’ve gotta love this.
A -34 point loss on The SP 500 as U.S Equities erases 2 full months trading in a matter of hours, while the U.S Dollar ( and the entire currency market for what it’s worth ) remains unchanged.
Honestly, on a day like today ( perhaps a year ago ) I would have been dancing around the patio naked, with a sombrero and the Ipad, busting a gut at the ridiculous amount of profits made with my “short risk” positions – but today?
I can’t freakin well believe this. The entire Foreign Exchange Market is on lock down.
The U.S Dollar has moved all of 15 pips vs JPY and for the most part, not a single currency has made a move “any larger” than one might expect during a typical “hour” of normal trading. It’s like nothing has even happened!
Frankly, I’ve never ( in my entire career trading ) seen anything like it, and find this to be extremely concerning.
If a “day like today” can’t get this thing off it’s ass – WTF???
As these things don’t turn on a dime – I understand, but in this case we’ve got a real anomaly here.
We’ve discussed how important this pair is with respect to it’s “drive in equity markets” ( with JPY being sold/borrowed then converted to USD in order to purchase equities ) and it’s interesting to note that:
Regardless of whatever fluctuations we’ve now seen around Yellen’s “slightly more hawkish” comments….USD/JPY refuses to break higher thru the downward sloping trend line that has contained it for so long.
What would appear as “USD strength across the board” really only manifests as a couple pips rise in USD/JPY.
This is because strength in JPY is even GREATER. With both currencies taking inflows only JPY taking MORE creating a net result of USD/JPY falling “lower”.
This may appear counter intuitive as one might imagine “well USD is going higher….this pair should also be going higher right?” WRONG.
Understanding the fundamentals behind this pairs movement can tell you a lot about market’s appetite for risk as “USD will be converted BACK to YEN as U.S equities are sold.
A stronger Yen correlates to “weaker U.S Equities” near 95%.
Something to add to your toolbox if it’s not already in there.
You know that…..everyone knows that. The actions of The U.S Federal Reserve with it’s complete and total disrespect for the currency and continued abuse of it’s position as the “world’s reserve currency” is enough to make anyone sick.
So when would we start looking for USD to move higher? Why would we even “consider there a chance” for this beaten down piece of junk to go anywhere but down the toilet?
What many fail to understand is that “the value of a given” currency can only be deemed in “comparison” to another currency…or another asset. The pieces of paper themselves carry no intrinsic value what so ever.
Consideration of “dollar strength or weakness” as compared to a single thing ( like The Euro for example ) is ridiculous as….it is exactly that – a “comparison” of only two given currencies.
How’s the U.S Dollar stacking up against The Canadian Dollar?
Looks like a fantastic buy opportuntiy as USD has merely “pulled back” vs Cad.
USD vs CHF looks like a pretty classic reversal over the past few months, making a higher high, breaking the series of lower lows and lower highs. A swing low “somewhere in here” would mark a fantastic entry point long.
What about Crude Oil?
Pretty straight forward. When the price of something “goes down” in can equally be argued that the “value of the money” you are using to purchase such products has “gone up”.
What many just can’t wrap their heads around ( one dumb fellow in particular ) is that “there is no blanket statement” in considering being “long or short” USD as it only depends “against what”?
Another chart “sniffing out” coming USD strength:
A good indication of a stonger dollar can be seen when Emerging Markets start to fall.
Imagine all that “free paper money” printed by The Fed and in turn “invested abroad” as to actually get some return ( you don’t actually think the banks invest the money they get from The Fed in “America” do you? – Please.) piling back into U.S bank accounts / converted back to U.S with concern for a possible rise in interest rates.
An absolute “sunami” of USD floods out of Emerging Markets and back into the United States, on even the smallest “hint” that interest rates may rise.
But……Interest rates ARE rising! In fact….( how soon you forget ) that interest rates on the 10 year U.S Treasury have DOUBLED in the past year and a half!
Rising interest rates cramp corporate borrowing and in turn kill bottom lines. A rise in rates pushes USD up, as well equities down.
Rates have already reversed, adding more fuel to the fire if considering a stronger dollar.
The short term squiggles are more or less meaningless at this point as…..The Fed and Central Banks abroad are just doing what they can to grind this thing a little longer before shit hit’s the fan.
How much longer can they keep this propped up? Not much longer if you ask me.