Do Or Die Time

It’s been a tough month – and the timing hasn’t been great.

Usually I’ve got more to say than most people care to hear, and rattle off trade ideas like nobody’s business – but considering I jumped off the short JPY train some time ago ( and have been looking for a weaker USD) there really hasn’t been alot to talk about.

When trading Forex it’s not at all unusual to go for weeks without seeing a decent move, and considering the current state of affairs (with such Central Bank participation) it’s a much better idea being  “inactive” than getting caught on the wrong side of something bad.

We can all agree that the market fundamentals have already jumped off a cliff – and from a purely technical standpoint we are sitting in a precarious spot.

Both AUD and NZD are really at the low end vs USD – and are either gonna hang on to long term areas of support – or get ugly. The Aussie (being a pretty nice proxy for risk) really needs to show some strength here.

The next two sessions will really be key as USD ( safe haven ) pushes against large overhead resistance.

We’ve waited this long – what’s another day er two?

The two day move in USD puts my near term trade plan directly in the toilet – short of it being a wash out / smoke out.

Fundamentally it’s near impossible for me to imagine a “strong dollar” – as the majority of my near term trade ideas where / are looking that way….but the move needs to be respected.

As completely “bizarro” as currency markets have been as of late – I too had been framing some pretty nutty trade ideas, the least of which being a scenario where we’d see both equities and the USD fall together in a “risk off”  /hands off America” move. This idea is still not out of the question, but considering the big move up in USD and corresponding move down in equities  – I’d have to consider the simple USD up = Equities down may be back in play.

It will take at least a couple more days to see if the move in USD holds / suggests further upside – so as it stands..I’m hands off until then.

I’m still inclined to believe USD will continue lower – but has most certainly bought itself a bit of leg room over these past two days.

Wow……dolla smoke out.

I don’t enter a trade at a single specific level – with a single idea in mind that I’ve got it exactly right – I construct the trade over time.

The larger time frames and current fundamentals “frame the trade” – while the “finishing work” plays out day to day on the smaller time frames. Weeks can go by while building / working on one trade, as other projects are started – and others reach completion. It’s a constant process and can often grow to include up to 12 – 15 currency pairs at any given time.

Confidence in the “blueprint” is essential as the day to day work can get extremely complicated – much as you can imagine a modern day construction site with all it’s facets. With no “master plan” it’s highly unlikely you’ll see much work getting done.

The short USD trades , as well as the long JPY’s have been paying off – and should continue to pay off, but I’d be lieing if I said it’s been a cakewalk.

USD has much further to fall, and JPY is still ranging / grinding along the bottom. I see larger moves ahead.

I have no concerns about where this market is headed – only the time that it’s taking.

Originally “The Gong Show” had the judges endure 20 seconds of an act before they where able to “gong them” – then it was extended to 30 seconds….then 45 as the laughter and anticipation built higher and higher – before (unfortunately) the hapless act would finally meet their fate.

If I where one of three judges – I already “banged my kong” back on March 30th with suggestion that the Canadian “TSX” had most definately topped, and that “risk in general” was gonna sing and dance it’s way right off stage around SP 1550 -1600.

Perhaps “volume” or overall market participation is also sitting next to me as one of three….man…he “konged” even sooner!

And last but not least – our third discerning judge….I’ll leave that one for you to ponder.

Anyone consider the “crater” in TLT just a tad concerning?

I don’t.

My face is red.

Three full days on “Isla Mujeres” will do that to a guy. You can do your best to “stay safe” but those rays creep through the canopy of your golf cart, burn throuh your hat, and have the suncreen melting down your face like ice cream. It can’t be helped. You don’t get away with that much paradise, that much freedom, and that much joy  – without the additional cost.

I pay it in spades, which is hilarious considering beers at the “drive thru” are .69 cents a pop.

If you look back a day or two ( did you “mind the hammer?”) price action has played out exactly as suggested. The dollar has bounced as have equities – as has risk…….NOT.

This is a bounce not a dip. Currency wise  – absolutely nothing has changed in days……as the USD and US equities continue to trade in tandem – both in preparation for the coming “deep dive in the shallow end.”

Staying nimble has offered a miriad of trade opportunities as I now look to “re short USD” and continue “getting long JPY”.

Again – catch me waffling, fair enough – otherwise……. please stay tuned.

If you catch me waffling – you have my blessing.

I’m all too prepared for a swift kick to the knee, and you can even spit in my ear –  if you think you can run fast enough. Trust me – I can take it.

If you’ve never been in inprisoned in a foreign country ( for any extended period of time ) – I can assure you…..we’ve little in common. If the smell of “human zoo” and thoughts of sleeping with one eye open for days on end (next a tiny tin bucket – full of other people’s “sh$%t”) don’t appeal to you ( not to mention drinking stale water from a shared “cut off” coke can, and being spit on daily) – once again……..you can give it your best.

Take your shot and I’ll make you a promise………you won’t be particularily thrilled with the result.

I’m updating my earnings on a weekly basis now –  as “day to day” has surpassed tedious.

Everything you’d ever need to learn about prison ( and yourself ) occurs within the first 72 hours – I don’t care how long you had to stay. Open trades / no stops – salt on the wound.

You and I are different…not because of where we’re from……………..

Different as to of where we’ve been.

I’ve got a couple central bankers sitting on the one shoulder, and my own self respect  – chewing my ear off  from the other.

The insanity continues, as day after day I find myself coming closer and closer to an actual “emotional response” to this madness. Like I actually give a sh#%t  – short of the tumbling numbers in my head and the inevitable completion of the spaceship on the patio. It’s all about money – that’s it.

I’ve had my mind made up about “how this is gonna go” for some time now – as this “prolonged agony” is starting to cut in on my snorkel time.

My problem is – I just can’t pull myself around and consider a bullish view as Central Bank stimulus continues to fuel this  disconnect from reality. Nearly every single data point out of the U.S points to inevitable disaster, as even China’s numbers continue to “disapoint” – yet day after day  – the “bad news is good”.

Fundamentally – I’m stretched to my limit, and have little choice but to book profits and sit on my hands a day er two.

Kong in cash.

I would be mindful that a rising Yen is a direct indication of risk coming out of markets.

Regardless of the largest stimulus package known to man, the BOJ cannot hold back the tide – should “risk aversion” set forth.

You see – when massive amount of a funding currency (in this case the Yen) is sold / borrowed and the “cheap money” invested elsewhere (such as Australia with the Aussie’s higher interest rate return) – The Carry Trade is on!

But……when these investments need to be unwound / liquidated in times of investor concern – the funding currency takes a “sunami to the head” – and is completely overrun with currency flooding back.

Watch that Yen here closely as I’m well in profit across the board “long JPY”.

It’s bloody hot here now. The kind of heat that has you rollin outta bed at 6:00 a.m and heading “straight for the fridge to crack a cold one” kinda hot!

The short USD trades are on fire too – and short of a little “pop and crackle” I expect it to continue. With everyone else already baked or fried, I see no reason why we won’t see the US Dollar take it’s turn naked on the beach – it’s gonna burn! It’s hot out there!

I can’t pull a single chart that doesnt suggest the same – I think we could see a really large move here spanning several weeks as the good ol USD is set ablaze.

I’m short usd via the commod currencies as well short against CHF. The long JPY trades are actively traded, as I pop in and out on smaller time frames – still not willing to lay any major bets.

I’m expecting a big week here.

If you’ve ever taken the time to watch those professional dart players on T.V hit bulls eye after bulls eye, I’m sure you’ll agree it’s a thing of beauty. Like anything we silly humans put our minds to, with enough time and effort – eventually we get good at it.

Forex being no different, one would almost have to have the “razor sharp skills of a professional” to be nailing bulls eyes these past few days, as the fundamental backdrop continues to confuse and confound.

Individual currencies have completely decoupled from a simple evaluation of “risk on or risk off” almost as if each is truly “out there on it’s own”. Hitting the bulls eye has proven to be very challenging.

This is the sport. This is why I love it.

I’ve booked small gains in trades short USD/CAD and plan to re enter, as well have several small irons in the fire long JPY that are sitting (barely) in profit. I’m still of the mindset that USD is rolling over here (all be it slowly) and also feel JPY is close to finding it’s legs for a bounce.