Old School Correlations – Late Night Thoughts

I’ve been watching the market like a hawk these past 2 days.

I’d spotted the weakness in USD, then in turn the Japanese “Nikkei” pushing up to its prior level of resistance…then it’s rejection, discussed the likelihood of the Japanese Yen (JPY) taking on strength in times of “risk aversion”, and just in the last few hours suggested that commodity currencies are under pressure.

I’ve taken on the “insanity trade”, and have been actively posting just about everything I can ( here and via Twitter, Google+, Linkedin and Facebook) over the past 48 hours as to what I’m looking at – and what I’m up to.

So what the hell ¬†– here’s another nugget.

I’ve exited all “USD short” positions, and am currently looking at “risk off” type positioning via “long JPY” ideas, as well a couple other “crafty variations on risk” short AUD as well NZD.

The one variable I’d not really not “nailed down” this time around, was weather or not USD would “fall along side risk aversion” ( as it has several times these past 2 quarters ) OR if the old school correlation of “risk off = USD up” might rear its ugly head once again.

Global “risk aversion” WILL have USD as well JPY shoot for the moon as “safety is sought” on a macro / awesome / unbelievable / nut bar / chaotic / monumental level – while “risk is sold” in equal fashion.

I’m pleased to be free of any USD related trades, and almost hate to say it but…….we “could” ( and I do say “could” ) be close.

Kong “debating¬†long” USD.

JPY pairs are most certainly rolling over here as suggested with Nikkei making it’s daily “swing high”. Commods look weak so that’s pretty much a given trade. What remains to be seen is where we fit the good ol US of D. My “hunch”? – We’ll have to wait a day for that.

7 Responses

  1. Hedgehog September 11, 2013 / 10:24 pm

    F/K: Have you been selling and buying risk all this while. I do recall most of last year, the correlation was really out of whack. Love yout houghts on this.

    • Pot Stock Watch September 11, 2013 / 10:38 pm

      As my analysis starts with the macro , and then works down ( currently I am short humanity, and long interplanetary space travel but don’t expect the trade to pay for a while) “you get my drift” – I ALWAYS consider “risk on vs risk off” – no matter how “sneaky it may appear”.

      Yes AUD broke correlation some time ago….and gold and it’s relation to USD etc….then this…then that….yes , yes….

      In markets as manipulated as these…you’ve got it “it’s outta whack” BUT!

      “Finding’em in real time” may just define you as a gorilla….as I’ve been hitting the turns pretty consistantly these days.

      Short of Alien influence, humans and the mining of gold…..I then look to East vs West type stuff with U.S and China, then get into currency, then specific countries, then monetary policy etc….

      I digress….but do always try to include “risk appetite” in my analysis yes.

  2. Warren September 11, 2013 / 10:27 pm

    Thursday will be the day of reckoning for the USD. You called it last week and it looks to be true again.
    Is it too early to go long(for medium term) USD, since obvious ‘no taper’ will mean further USD weakness?
    I understand the JPY long and commods short, for the next few days, but still think USD long is a bit early.

    • Pot Stock Watch September 11, 2013 / 10:40 pm

      Exactly Warren.

      100% exactly right on the money.

      Kong “debating / considering / waiting / watching ” long USD…..not “doing”.

      • JSkogs September 12, 2013 / 12:50 am

        Kong. Probably early but probably on the trail of the next right trade. No taper would probably just delay the long usd entry by a bit but I agree its the likely trade in the near term. Always like the blog Kong. Good job. Thanks for the input

      • Warren September 12, 2013 / 6:59 am

        I’m trying to think about what the market will do to USD in the short term post FED next week and I think it will send it lower for a few days to retest the support zone at 80.70, probably breaking below to knockout weak hands, then will turn and go much much higher. So just based on fundamental news I think we have one more week of dollar weakness and then the highly anticipated dollar long will be the right trade.
        Staying nimble and placing orders outside of support/resistance zones so momentum picks them up.
        Thanks Kong, I will be trading full time all next week because I have a week vacation thanks to ‘Fiestas Patrias’ or Chile’s independence week.

        • Pot Stock Watch September 12, 2013 / 7:13 am

          Sounds great Warren.

          In just going over a number of USD related pairs this morning / last night – I “do” see several (GBP/USD perhaps) looking ready for a turn….but could just as easily push on / hang here / trade sideways.

          I’m out, and will look to enter on my short term indicator – coupled with “whatever we get” here fundamentally.

          Some time mid / late next week sounds pretty much right on the money.

          Hey! – I’d have to say…..it sounds like your trading is going really well. You’ve got a great outlook man! Great work!

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