All At Once

This past week we had major barriers broken in the Yen, Aussie and Euro. At the same time we got the Dow Jones closing above the 15000 milestone for the first time in history. We did see some volatility in the US Bond markets and the Stock Markets this week as well, but I believe some of the swings we did witness was because of the action we saw in the currency markets. For those readers who do not deal in the markets, I would like to point out that the currency markets are the largest markets in the financial world, I believe the currencies trade in excess of $5 Trillion dollars on a daily basis. You all know that I believe the markets are heavily manipulated, the currencies are harder to manipulate simply because of the enormous size. You will see the currencies moved on JAWBONING from government officials but that typically does not have a long lasting effect. If you are trading and not watching the markets all of the time, Jawboning could cost you and your trading account in a very huge way, if you are on the wrong side of course!

The main focus of this weekend writing, is the moves I see taking place in the currency markets. First I would like to say that several commodities were really taken down hard on Friday especially Gold, Silver and Oil. Stocks were helped by that Invisible Hand again in the last hour of thin trading volume and closed positive again, now that's a shocker! With this  action at the end of the day, Gold and Oil rebounded rather significantly. For one Gold crashed through that 1440 level I have been watching for the past couple of weeks, made a low at 1418 and in the closing hours finished the week around 1448. Oil rebounded more than $2 off of its lows, watch these markets to start the week but most importantly watch the US Dollar!

I am going to give you weekly charts here because they are better to use when you want to get a larger perspective of what is taking place with these markets. At this time we need a good review. Lets start with the US Dollar

Please click on the charts and you will be able to see what I am pointing out with each of these currencies. It should be known that I am a Bear on the Dollar but I have made some bullish calls in the past few months, but typically my best trades come when the Dollar is falling. We are above 83 on the dollar index with a weekly close, it has some momentum going here, however it is pushing up against resistance that has kept it in check for the past few years. If it can get above 8380 and hold it, looks like we may be headed to 89. Here is my thoughts on this, the only way the dollar clears 84 and does the trip higher to 89 is if Stocks start CRASHING and the whole world goes into panic. Could this happen, sure, anything is possible but I just do not see that happening right now. You know I have been DEAD WRONG about Gold and the Stock Market especially, so I am just about ready for anything. All you can do is BE PREPARED!

Next is the only currency that I see weakening against the US dollar is the YEN, the G7 just gave the BOJ their nod of approval to weaken the YEN over the weekend. Take a look at this chart, I knew this would be a trade of a lifetime and I was trading it just shy of 130. I made some decent money a couple of times but unfortunately I turned my attention elsewhere and I think you know I am referring to GOLD. Look at this chart, this thing will be trading in the mid 80's before you know it! I am not trading in the YEN, I just want you to see what has been happening.

Now I will take a look at the Euro. Back below 130, my opinion we will head up from here and again I am glad to be able to buy below 130 again. You can trade off 12940 and 12880, if it trades below the latter, most likely it is headed a few more handles lower. It is my opinion that the Euro will trade 135+ sometime this summer.

My favorite currency is the Cad which has outperformed all the major currencies as of the past couple of months. We dropped below 99 late this week on lackluster job growth out of Canada but nothing that would keep me from having a bullish stance on this LOONIE currency, as it is often referred. From these levels I say we can trade off of Fridays lows around 9850. As you can see, the Cad is not as volatile as the other currencies, if you want to stick with a trade without having to lose your hair from worrying, the CAD would be a great fit.

Last is the Aussie, yes it broke parity and you may start to see more volatile swings in this currency, so BE CAREFUL with this one for now, maybe it would be smart just to watch for the next couple of weeks and see how it behaves.

Bottom line, we are at a major inflection point with the financial markets. I do not see the US dollar rallying from here based on the fact that we are printing $85 billion per month with no end in sight and there are already stories surfacing about the DEBT CEILING in September. If I am wrong from these levels, I know my risk and I can live with that from these levels discussed here today. I leave you with this, THEY are keeping the ILLUSION going and I do not know how long they can pull this off, what I do know is that I see through all the BS and I truly hope you are taking advantage of these sale prices in the precious metals. NOT TRADING- PHYSICAL OWNERSHIP.

Thanks,
Trader Martin

Enjoy Mother's Day!