Cry Me A River – Kong Is Pissed

Ya I’m pissed.

I guess I’m just ” the new guy” or perhaps it’s that  I expect alot from people – ok fair…….you don’t know me!

I do this as means to “give back”. I blog cuz in some small way I feel that I might contribute……maybe I can even help someone. What a concept – maybe I can “make a difference”.

Screw it. It’s no wonder .05% of us succeed – let alone on our own dime.

I’m not lookin for respect here on the Internet as the majority of are likely fat old men living in your mothers basement, surfing teen dating sites dressed up like Superman – but I’ll tell you what……..

You think it’s been cryptic up til now?

Get out your reading glasses.

Kong……………”gone”.

The smoke hasn’t cleared. There is no clarity so…….grab a breath of “reasonably fresh air” if you can – and prepare to wait this out a little longer.

Correlations did indeed make a “twist” in yesterday’s action as USD popped (as expected) – with equities moving decidedly lower….and gold – poor, poor gold more or less melted away.  I assume that now is the time ( all be it like….at least a week too late) where hopeful bulls may finally be putting down the rose colored glasses a second or two (and seriously taking a look at their screens) and as well hungry bears – excited and over zealous are jumping into positions a touch “too confident”.

Currency wise – risk related countries continue to get absolutely pounded with really no end in sight confirming (and further signaling) that the big money ( and Kong ) have been more or less “short risk” for a considerable time now – while the circus in U.S equities continues to play out.

I need to watch USD here ( as it is still the world’s reserve currency – and the most widely held ) to see it max out here in coming days – and continue it’s downward slide for what I expect to be the “larger leg” in it’s near term demise.

It remains to be seen weather or not USD and U.S equities will regain the previous correlation (both moving in the same direction) as I expect they will – as all things U.S are likely sold.

I’m compelled. I need to share this with you as it’s been on my mind for some time, and in this instance – It “could” serve as extremely valuable.

Understanding “correlations” (and getting a grasp on intermarket analysis) is an integral part of success in foreign exchange trading, as in any trading for that matter. All the working parts of our global economy do indeed fit together as one, and here the age old saying that “knowledge is power” has never carried such weight.

Long term intermarket analysis ( such as with the relationship of bonds, commodities and the dollar ) doesn’t provide short term trade signals. The big picture analysis still sees “nestled within it” the usual day to day stuff, and on occasion a change in the “big picture stuff” overlaps with a change in the near term / news driven / psychotic mahem stuff…and POW! You’ve got a problem. One of those times where you consider “son of a bitch – I never saw that one coming”.

Well…if we look at the general trends / correlations as of late  – what have we got?

I’ve been considering a “pop” in USD and as well U.S equities as the two have generally traded hand in hand – BUT….the “accepted” correlation has had the two trading opposite no?

Gold has traded down for weeks on end – yet so has the dollar. Don’t these two as well – generally trade opposite one another? Short of blatant manipulation ( of the paper markets without question ) how can the price of Gold go down….as well as the value of the currency it’s priced in? – It’s impossible.

The point?….ahh yes the point. Well…I can’t give it all away in a single post but…….I’d encourage you to keep your eyes peeled for one or two of these to give you a nice quick “kick in the face” anytime soon as they’ve likely been out of kilter longer than you’ve been following them anyway. Not to mention…we’d better throw the Yen in there for good measure.

If it where easy – everybody would be doing it right?

Hey I’m only calling it like I see it –  but when you’ve got a day / night  of supposed “bounce / recovery” and two of the higher risk/yielding currencies the Aussie and the Kiwi are weaker than both the Japanese Yen ( with a literal army fighting to weaken it) as well the U.S Dollar ( with it’s 85 billion per month devaluation currently in full swing as well ) – You my friend have got yourself a problem.

If indeed markets are poised waiting for Uncle Ben to “wave the ship in”  – someone has totally forgot to tell the two currencies who generally lead the charge – when there is strong appetite for risk.

I’ve completely cleared the decks for a point – and short of sitting here patiently until “after” Wednesday’s possible “bombshell” ( that’s what AUD and NZD suggest) I have absolutely zero interest in chasing / playing this lil bounce at all.

I’ve seen alot of stormy seas, and just about as many times as I can count – the good ol Aussie and his friend the Kiwi have been right up front plowing ahead – pushing on in search for better waters.

As it stands, I’ve stayed up with both of them all night while they’ve both been puking their guts out, and if they’ve got some silly idea of just “playing sick” a day er two longer – they’d better get their asses of my boat!

I’m out.

I just caught a little bit of ” The Last Samurai” with Tom Cruise repeat here on T.V.

The spanish language adds a certain flare, especially when you’ve got actors in the movie speaking Mandarin/ Cantonese overdubbed in Spanish and in this particular case – along side English subtitles. Very entertaining to say the least as on many occasions, one or the other – or even two at a time…are completely wrong and make absolutely no sense at all. Talk about adding an entirely “new dimension” to your typical daytime television viewing.

Not so unlike the current state of currency markets – if perhaps you find yourself struggling. A singular  perspective may not be enough.

Of particular interest a scene right near the beginning where an elderly man is captured by the Samurai, then given opportunity to “die with dignity” and take his own life ( via knife to the heart / chest ) only moments before his inevitable beheading. Perhaps similar to the feeling of “cutting one’s losses as opposed to having their account blown up.

A noble man indeed, if you really consider given the choice – thrusting the knife yourself – could you do it?

In any case – a dip, a trap, a buy , a sell , melt down, melt up , a bull , a bear, blah , blah , blah.

You need to stay true to yourself, as it’s you and you alone who lives ( or dies ) by the decions you made.

My trading has been going great, as we continue to nail the smaller swings with the larger framework firmly in place. I’ve taken small positions ( mid day yesterday ) long NZD and AUD vs USD, as well hit the counter trend move in JPY for additional weekend spending.

I don’t plan to be in these positions long at all, and will actively be trading throughout next week with thought in mind of playing this lil bounce for what it’s worth.

We are clearly (well) on the other side of the mountain now – as the simple correlation of the U.S dollar and stocks continues to trade lock step. Huge inflows of cash from Asia ( brought on by Japan’s liquidity pump) surged into U.S equities in this “last gasp” for yield, and had to be converted to U.S dollars on purchase ( through with ever banks and brokers) – so…you got this strange situation where U.S dollar and U.S equities went up – hard.

We now see the reversal of this market dynamic – coupled with talk of “tapering” and sprinkled with some bullshit from Turkey. Throw in the fact that the global “powers that be” are more than uncertain that Japan is gonna get it’s house in order – and of course the “disaster” we know as Europe….and the inevitable “rising of interest rates”.

Ben’s 85 billion per month is literally a drop in the bucket in comparison to the larger macro forces acting upon markets.

This “might” bounce – and even bounce fast n hard ( as to fleece a larger majority) but that’ll be that.

Come Sept when this thing is deep in the toilet , you’ll get QE5 -which will provide a “lower high” – and again – that will be that.

I’m playing long NZD/USD for fun here  – as a couple days upward move in USD (oddly larger move higher in NZD) should be good for some beer money. Otherwise…….same ol same ol – I’ll watch for USD to peter out quickly – and hit the long JPY’s again for the “real leg down”.

I feast on bamboo tonight – the imported variety as well a salad of wild celery,  thistles and stingy nettles with a few of my Japanese buddies  – taking care of the booze.

We are extremely pleased that the short term trade system (originally created via my experience trading foreign exchange) has proven equally reliable in equities markets, and has provided us this glorious bounty.

Come morning ( pending that I am in good health and have indeed survived this evenings events) I will keep a wary eye open for “bouncing dollar bills” as well tiny “bearded men in suits”  – as they too no doubt will have been up most the night, priming their presses, and making their plans.

We shall drink! We shall get fat! We shall argue in several languages! We shall fight! We shall Celebrate!

In having knowledge of things found only in nature.

Gees…..and just yesterday I suggested to a valued reader that I’d do my best to be “less cryptic”.

Sorry Mistic….tonight’s not the night.

At times…. I’m sure we all question our “take on things” and weather or not we’ve got our heads screwed on right.

These days you can easily find a dozen different  interpretations of a particular market event, and hundreds of opinions ranging from “we’re all doomed” to “buy all you can”.

Success is achieved when you can rely on your own views and stop looking for answers in the opinions of others.

Of particular interest  – how often I find myself fighting against the crowd.

How is it that no one else see’s what I see?

Currencies have been painting it pretty clearly.

Ok…..we’ve seen some real “fire crackers” in the currency markets as the BOJ “out Qe’d” Ben by a long shot and has subsequently been paying the price. Markets haven’t really made up their minds about it all as the japanese bond market has been a minefield since.

Tonights BOJ policy statement is out  around 9 : 30 pm.

What “MORE” could the BOJ possibly suggest moving further? Can you imagine? Further stimulus? Further easing?

Impossible.

You’ll need to “trade the news” on this one, and ask yourselves the age old question….

Will “no news” be good news?

Will “good news” be “bad news”?

Will “bad news” be “no news”?

One for the books Im sure.

Considering my short term technical system suggested a “sell” on $SPX at 11:46 a.m last Friday morning….things look to be playing out much as they do with my currency trading.

As suggested –  the signal ( first seen on Wed) allows for an additional period of time, for additional criteria to be met – and “guns a blazing” – confirmed on Friday.

Keep in mind that this “short term signal” only comes into play when several “large term signals/ criteria” have already been met on even higher time frames so….

So what next?

Now I wait….and watch closely if even greater opportunity presents itself  – for example, an even larger push higher. As with my staggered (buy/sell around the horn) order entries with currencies – anything above the levels of around 1632 in $SPX “can provide” for even better selling opportunities if one chooses to make decisions outside the technical system.

I’m assuming we get a bounce in both USD as well U.S equities perhaps into Thurs, before momentum again shifts steadily to the downside.

Correlation wise – this should also provide for a lower JPY and even better opportunities to enter again LONG as risk makes a final push.

Again I do invite any and all to view / commment and follow along.