This is hilarious.
Or at least…..it’s hilarious to me as – you know full well what I’ve been talking about these last few months. With only 2 or 3 days down and emerging markets hemorrhaging, currencies selling off like hotcakes, and equites taking it on the chin.
A little “wakey wakey” out there people! Anybody just “a little nervous” about what’s going on?
Gees….2 days and the sky is falling. Hello!
Well – CNBC is stumped of course, but still very, very positive about “buying the dip” and tapering “just getting started”. Uh Huh. Right..tapering as global growth / appetite for risk sets up for a major “tanking”.
The Fed will freak out sooner than later, pull taper and double QE as suggested.
EEM ( The Emerging Markets ) will be temporarily “saved” , U.S equities will rally “once again”, the U.S Dollar will continue it’s slide into the toilet, and the American people will be told “once again” that the Fed is a freaking superhero.
If you’re piecing this together at all, I hope you’ve come to realize what an impact “tapering” would have had ( I’m already talking in the past tense ) as the global “dependence” on these massive injections of liquidity has become so great – that essentially…it’s the only thing holding the house of cards up.
UPDATE: CNBC now quoting Kong with suggestion that “the Fed may need to look at “pulling back” on tapering!! But….I thought it was “pulling back on QE! – Give me a break!
I’m not putting a date on it, but as suggested here “forever” – this thing is so fragile, so dependent on stimulus, that ( in my view ) even the ridiculous “suggestion” of tapering QE could very well be the catalyst for a global move towards risk aversion.
Confirming that China’s growth is slowing, Canada pulling down GDP estimates, The EU a complete and total “disaster waiting to happen” and the U.S data so fudged…SO FUDGED it can’t even be considered relevant – what have you got?
Recovery baby…..oh ya – you bet. You buy that dip……then you keep buying.
Killing it……kiiiiillllllling it short humanity……long interplanetary travel.
Kong loved the post. Also really cool how you have been saying currency markets saying risk-off in equities was coming. And it did. Amazing.
I’m still new to all this ForEx stuff. But I’m learning and loving it every single day. Thanks for the ongoing truth bombs.
Well….it’s been stubborn – as these last ( I dunno ) several hundred SP points have been Fed pump / hot air anyway.
This may not be “the last of that” so……as much as markets “should” reflect” the true nature of what’s really going on, these markets are 100% completely artifical so…. – I imagine we’ll get some kind of news / announcement before too too long.
Pulling the QE rug now ( or ever ) is impossible, as the rest of the planet would essentially have to follow suit / raise rates etc…
I don’t see that happening any time soon.
Nice to the see the GBP coming back down from frothy levels. All GBP/CAD shorts started in the 1.83’s into the 1.85’s are now in profit under 1.83; just in time to have a nice relaxing weekend.
A lil touch n go there for a couple hours eh man???
He he…..you bet – she’s on her way back down to Earth.
Those GBP crosses just get ridiculous sometimes, I wouldn’t have been surprised if we got up to 1.87, but they do like to pullback pretty hard when they do at least. The GBP/AUD was crazy around 1.92, back down well under 1.90. Longer-term I can see it hit 2.0 though.
When/If AUD hit’s 0.80, I like the GBP/AUD short for a medium-term hold.
This “France downgrade” rumor doesnt fit with da action of EUR crosses at the moment..
EUR crosses aren’t really of issue here as risk selling off is “risk selling off” no matter what.
USD is the focus, and by default EUR takes the opposite.
USD slid yesterday / this a.m and EUR tooka pop. I expect that to reverse pronto.
I know, it was a sleepless january so far for me with equity shorts and short the usd/jpy. Only I am surprised that investors are treating euro bonds and therefore the euro as “safe haven”. Ridiculous..
Risk market looks pretty disorderly and sloppy. I like it. Yen pullback looks a bit orderly. A trend? No way!
Big candles man…GBP/JPY etc….so – this will likely whip the shit out of people but it’s got some legs looking out.
I’ll tred lightly but will continue to push the long JPY’s – short of the Fed getting on T.V – or announcing something “this quickly” over the weekend.
Yup me too man. I’ll trade these yen breakouts from consolidations lightly so I can continue to press the move. You would think by the looks of things we can expect to get to 177 or 178 ish on the SPY which means we probably have a little more to safely run.
What are you talking about? The JPY is rallying because Japan has indicated it won’t push their QE into extra-overdrive. This is a great opportunity to short the yen as at the end of the day, that is bullshit. Countries as indebted as Japan and the UK (especially Japan since so much of the debt is central government debt) have no choice but engage in financial repression. If the Fed tapers, the yen will collapse faster. If the Fed doesn’t taper, the yen will collapse slower. Either way, it will collapse as there is no indication at all the the japanese will stop spending their way into oblivion. Trading GBP/JPY in either direction is not wise.
Thanks for such valuable insight Andre – How’d all your previously posted “short JPY” trades work out?
I remember something about me being “absolutely idiotic” er something like that?? ( I’ll dig back through and find it – we can have a look )
Man…I’ll “allow” you to post your junk here a couple more times, but let it be known.
I am extremely confident that you have “absolutely no clue” what you are doing, and no interest in contributing here in any way that is “the least bit” helpful to anyone.
Happy trading…or “losing” I should say.
Andre, this isn’t my blog so I will tread lightly. But, it is really constructive to the readers if you have criticism to post your timeframe consideration. As many here know we are dealing with range based opportunities within many possible timeframes. Sure its easy to understand that there are several questionable currencies out there right now. One of the obvious ones is the yen. But, there are still great opportunities long any of these so called doomed currencies if you understand what to look for within said timeframes during risk on or off periods.
@Andre, you do realize that the short yen trade is one of the most overcrowded forex trades out there. In short, the easy money has been made (in the short and/or medium term) and now this market can easily reverse because it is so one-sided. Although, from a fundamental standpoint, your short yen trade makes sense longer term, you must be aware that the yen will surge during a risk-off event (in the short and/or medium term) as Kong has been pushing. Add together a risk-off event in a highly crowded risk-on trade and you have the ingredients for a very fast move against your short yen position in the short term. Trying to fight that classic risk-off paradigm is foolish at best.
The way I think is that your trades should carry a high level of certainty. That is, you should not have to panic if the market turns against you. There is no such high level in the short term as markets in the short term are always irrational. If the long direction is highly certain, I do not trade short term movements in the opposite direction. Instead, I view movements against me as opportunities to get a better price. The short yen trade is not overcrowded, it is undercrowded by ten trillion dollars, or a quadrillion yen. All sovereign debt amounts to a speculative long position in a currency and it is foolish to pretend otherwise.
What is this risk-off event? China’s collapsing growth/credit default? A steep rise in interest rates? A failing recovery in western nations? War? All things that would crush Japan. I find all the stories about warmongering from the japanese hilarious; take away their nuclear umbrella and they are as vulnerable today as China was when they started invading, murdering, raping and pillaging their way through the mainland. If the shit really hits the fan, Japan will be lucky to become a chinese province. Unless they are hiding a cylon army underground.
It’s time for people to take a good look at the situation and realize Japan is no longer a risk-off haven. It is a highly leveraged fraud. I don’t think it is wise to invest in frauds just because other people are doing it. The illusion of saving by lending money to the government cannot be sustained with their demographics. The greed in Japan will push the japanese youth out of the country entirely and all those doomsday demographic charts for Japan are just a best case scenario. So while sure, there is room for rallies in the JPY, there is no ground beneath them. When markets began to crash, Madoff actually attracted more investors. Until he didn’t… “aaaand it’s gone”.
I have focused on long AUD when I spoke before so let me use it as an example. I think it is perfectly possible for GBP/AUD to hit 2.0 and even a bit higher; but I think eventually it will be closer to 1.0 than 2.0. I also think it is perfectly possible for AUD/JPY to trade in the high 70’s at some point in the future but it will certainly trade above 200 before the end of the decade. And, I think AUD/USD is essentially destined for near parity so take those numbers as the same for USD/JPY and GBP/USD. I do not know where they intend to take the EUR.
So okay, what does that mean? It means I rather make 1,000%+ for sure than worry to death about what irrational movement markets will make next. 2015 is going to be a bloodbath. But I do not think it will be the kind of bloodbath we got into in 2008 as back then, sovereign debt levels around the world were mostly at reasonable levels.
The fact of the matter is that since 2008 the world has been desperately attempting to induce a demand-side recovery. There is not and has never been such a thing. Without supply-side improvements, economies do not improve, ever, period. The only good news I know of is the shale oil boom. This insanity has placed most of the world in a highly leveraged position as they eat their seeds instead of planting them. Sure, in the short term you get fatter, but then you starve. Japan and the United Kingdom are the two most vulnerable nations in the world. They make the United States look good. Their collapse will be glorious and a wonder to watch.
QE to double? When?…Kong I need to know exact date! 🙂 …ask your crystal ball.
Anyway…I just hope it will be announced properly at FOMC meeting without any rumors before. It’s great to trade unexpected big news that shock the market and move it in one direction.
Kong, what are your thoughts about holding a nzdjpy short into the weekend for a possible big gap down on Sunday? This free-fall could just be getting started. The risk, of course, would be some positive (intervention-style) news over the weekend but I’m betting that the market will need to fall a bit further before panicked politicians and CBs get involved.
Ya I’d be amazed ( but not really ) if they crack this fast but……who knows.
I’ve got a couple stragglers long JPY I’m holding so….I’m not too worried.
Thanks. I might regret this but…”damn the torpedoes full speed ahead” — I’m holding into the weekend. Looking for a panic bottom Monday before a slight mid-week rebound.
Fabulous week of trading. Thanks Kong. Enjoy your weekend. Imma knock off early go buy some wine and shoot model rockets into the sky with my kids. Peace out.
Nice insight this week. Never watch cnbc but caught a few min this afternoon. Sell now is their call. What a f**king joke. At all time highs the call is buy now. That works if you like buying highs and selling lows. Managed to sell some volitility pop in spy this afternoon. Pure gift IMO. Just curious what fundamental piece of data are you eyeing next if anything specific? Thanks
Anybody catch the NG long & short Tesla trade I mentioned a couple days ago? if you did your sitting pretty into the weekend….
If this double post’s Kong just delete on – sorry man not sure why this happens..
I also have a daily Neg fire in the Dow & S&P posted – DOG options taken on yesterday…….
Weren’t you short Tesla into the fire fiasco as well? I remember reading the news thinking holy crap he must have slayed that trade. Or maybe you were lighting fires who knows haha. Nice work!
Yeah man….. went short the day before…. the fire fiasco was a fluke I went short for other reason…. looked over-bought plus there is a GAP way down at 69…. does it get closed maybe – maybe not…. but the recent bounce off the low looked like just that a bounce…. BBRY did me well over the last few days but looking at that still from a longer perspective like out 6-months but took everything off the table & will re-load…. NG was another as with the pending cold weather – was a no-brainer…. also break-even is @ 6.00 by producers so in and around there for a top for now…. Still short FB & Twitter…. that’s out with options for 6-month time-line but will take profits on and large moves lower then reload….. ( All these positions are in options )
PM’s still long mostly Silver as I am tracking the daily squeeze running some 29-days now…. once this fires positive or negative the move should be extreme…. I thought it would have fired this week but it’s been range bound…. looking for that to fire positive into Wednesday this week…. should I be right… have a price target of $28-$30 for spot….. over the next 2-3 months….
Plus the recent DOG positions – might pan out well early next week but we will need to see there… I do as mentioned have negative fires in both the DOW & S&P on a daily TF so there should be more follow-through into Wednesday at the very least if not longer…. I don’t think the Fed will move just yet but that’s just me & my view….. March is my TF for further Fed intervention…. right now it’s just a dip which could turn into a correction/crash…. too early to tell…
& no I was not out lighting fires LOL….. that was again just lucky…. never hurts to be a little lucky & right…. the China deal relative to sales not going to be a big things in my view as MSM things… but again that’s just me….
Cheers Schmed … have a great weekend…
How is the Dumb Money Tracker’s call to buy stock on January 14th holding up? LOL
Exactly my point.
Toasted on that call, and soon to be completely whippsawed on the “brilliant” long term puts strategy.
Soon going to zero as well…
I don’t know how the guy sleeps at night.
Pretty sure that was dumped before yesterday & today…. however I could be wrong…. the puts should do well if we continue lower….. with the set-ups I have relative to S&P & the DOW….. daily NEG fires we should continue to see weakness there…. but one never knows… I think the tell is in Nas as it’s been the strongest of the three IMO…. we will know soon…. next week is a big week all around…. expect fireworks!! I am ..
Ya significant technical damage was done but I’m personally expecting some dip buying to start soon by overly eager longs that haven’t seen a decent dip in months. Hopefully a decent reload point
Great posts here guys, but I’m going to be a little contrarian as my mate Kong and I don’t agree on QE, so:
1) The Fed will continue to taper, as the market has simply overreacted to the perceived issues in the em’s over the last couple of days
2) The US is recovering albeit slowly and FED voting members change in favour of the hawks this year, thus keeping the pressure on to normalise monetary operations
3) Because of the EM issues the USD will still be seen as a safe haven, keeping a lid on bonds and interest rates, which will rise but not a lot
4) Why has the market overreacted? Partly because the so called Chinese slowdown is clouded by the data releases this week happening from responses collected during Chinese new year – imagine a bunch of hammered PM’s sending their data through after yum cha. It will likely show recovery next month, especially if its necessary to show it for market stability – anyway they just report what they want
5) The FED doesn’t really care about the em’s (especially the Argies), blindly believing that a strong US will lead them to the promised land
6) The FED won’t be concerned about a 20%+ correction in stocks, which would constitute a classic and overdue value adjustment.
My two cents worth. As for trading this – its the classic long USD setup in the medium term. Cheers.
Love it Deano.
The classic long USD keeps you and I “on the same side” for now!
He he he….for now Deano! For now!
Buhha ha ha ha ha ha ha!