I had hoped / assumed the USD strength would have subsided a little earlier in the week – but it appears that we have a daily “swing high” here as of today. I would expect that we get several days of continued USD weakness and the inverse of course – higher prices in equities.
If this goes as I imagine – this may very well be the last “blast” up ward in equities, and final “dip” in the USD before we’ve got an official top in place and an actual “change in trend” established. I also imagine this is where things are going to get tricky.
One could consider “getting long risk” here later today / possibly tomorrow morning – but with such headline risk in front of us ( ie……the ridiculous U.S Government’s fumbling of the sequestration) it is difficult to “assume” markets will just continue moving higher. News often plays a role in market dynamics and movement – and this could be considered a “wopper” as I have come to understand it. I don’t think the U.S general public and business community are going to be very happy if / when this program goes through – regardless of how ridiculous I think it is.
Unfortunately – I will be sitting on my hands for the most part, but will be more than ready to jump on a continued run up in “risk”, keeping in mind it will likely just be for a quick trade. My call on EUR/USD at 1.3170 is now in play – but I can’t say I’ll take the trade until I see more.
How can there be risk-off and a ‘blow-off top’ in equities with $85B coming in per month? What would be the catalyst for it? I can only think of high oil prices that can put a brake on rising equities, but even that should cause a stall rather than a ‘blow-off top’. What am I missing?
Well…..as I see it – 85 billion a month really isn’t doing anything for the U.S short of propping up equities…..and even that – only to a point.
Everyone is easing…..and the 85 billion more or less just sits in the hands of big bankers and Ben’s buddies on Wall Street – I think more and more market participants are aware of this, and also aware of the “ponzi” in play. It obviously can’t go on forever so…..when do you see the effects wear thin? – I see it happening soon.
Looking at it globally ( and not from the U.S looking “out” – which I would caution anyone against) – even “mandatory cuts” are somehow being worked around, and the message is clear – the U.S will continue to spend far beyond its means – and print it’s way directly into oblivion.
With stocks as “inflated” as can be – the question really begs – How far “further up to ridiculousness” do you possibly think it can go?
Im looking for a huge “rush” by the last of the retailers…..a huge “pop” in equities ( and likely oil)………. and the fleecing to follow.
ok, I see where you are coming from. And I think I agree with your prediction, EXCEPT that I think we will have the top in 2-3 months, not 2-3 weeks (mid-March) as you say.
But I will keep my eyes open just in case you are right.
And please……I’m not making “predictions” – as you are just as likely to be correct with your time frame. This is ALWAYS up in the air as to “how long” any of this takes (take the correction in the PM’s for example ). I trade “what I see” – period….and frame my longer term trading on a pretty solid grasp of the fundamentals.
Timing is always up for grabs….so lets both keep our eyes peeled!
Let’s put it this way…….if you honestly think within the next 3 months equities are going to go “soooo much higher” – then all power to you. For me……3 months from now……lower prices “possible” – higher prices??? – not likely.
Im not suggesting that the market is going to “crash overnight” – only that ( as a fundamental trader ) I will not be pushing the “long side” past this (assumed) final push higher.
“Sidways action” is near impossible to make money in (I absolutely hate it with a passion) – so…….if I’m not “long risk” then I am flat/out of the markets OR – when the turn is made – I get short.
I see no reason to let money sit tied up in something for “months on end” with no return – and 2013 looks to me to be flat / down at best.
I can understand why you may not like trading sideways markets (as big moves do not occur during them), but I have to disagree that they’re “near impossible to make money in”, as I find them to be very beneficial and profitable for a short term (day trader). For example, the last couple of days range trading in the GBP/NZD and EUR/JPY crosses have been great.
I bring this up b/c as I know you’re well aware, the markets will trade sideways more often than not. It’s a great opportunity to “nickle and dime” profits (they add up surprisingly fast) while waiting for the trend break-out.
I agree with you David – as most certainly profits can be made “range trading”.
I like to keep my money under my pillow for those periods of time ( and spend more time at the beach / outdoors ) and then “hit it” – when opportunity presents itself.
Its a matter of choice for sure…..and the trading “experience” is different for everyone. What matters most is finding a trade style that best suits you and your individual personality….and it sounds like you’ve found it!