Sunday, July 14, 2013

Just Go With IT!

Hope everyone enjoyed the weekend, a bit soggy here in South Florida. I really was upset about Ben Bernanke last week but it is time to move on and just go with the flow. I have said all along that the idea that the FED would taper their bond purchases was utter nonsense, now that the markets sent Big Ben into a panic and he pulled one of his tricks out of his magic hat this past Wednesday, let's start to focus on the US dollar. The night before he had come out and made his comments, I of course wrote a blog on how the only market I was interested in trading was shorting the US equity markets, there is a saying- DON'T FIGHT THE FED. If you want to fight them you will most likely end up in a really pissy mood and just may end up not only losing money but also missing out on many other opportunities. Please go back to my post from last Tuesday and take note how even I stated that the Euro look horrible and I could not come up with any reason for it to reverse course. Well, Thank YOU Mr. Bernanke for making sure that the US $ would stop rising. Let us take a look at the WEEKLY charts to give us a better picture on what shape the currencies are in. First here is the US $
Ben certainly did put a halt to the dollars rally for the past 3 weeks. After watching the action for the rest of the week and looking ahead to this week, I have to favor shorting the US $. Ben will be testifying on the economic outlook this coming Wednesday and Thursday just so you know! Now let us take a look at the EURO.
You can clearly see that the Euro has traded off a TRIPLE bottom. The second time we traded near 128 back in late May, I was confident that it would turn and I called for 135 some time this summer. Pretty good call but I was simply astonished at how fast it unraveled to sub 128. I admitted last week to be confused at what I was seeing with these markets but now that Ben has put the TAPER TALK to bed for now, we may just see the Euro head back up to the 135 area or even higher.

I am going to put the weekly charts of the CAD and Aussie together because in all likelihood they will trade with the same direction as the US equity markets.

Am I in love with either of them? I would have to say no, however the Aussie has had the tar beaten out of it over the past couple of months falling from 105 all the way down to the round number of 90. The Cad, I have always liked, if OIL continues marching higher and the $ does fall, the CAD may just be a great way to capitalize.

My view right now is based on low risk and much better reward. Tonight we will have 2nd Quarter GDP released out of China, there was rumblings last week that these numbers may disappoint the markets, my opinion is that this may be factored in to the markets by now especially seeing that the US equities did not make new highs last week with very little follow through after Wednesday nights post Ben Bernanke stimulating comments. The Aussie and the Cad are going to be sensitive towards the global growth story and this may be why the Aussie, especially gave back almost all of its gains from Wednesday evening. Bottom Line- Euro holds 130, give or take 50 pips, you gotta believe it is going higher! The Cad looks like it bottomed near 94 and the Aussie just may be due for one heck of a bounce. I would not buy the Aussie or Cad until after China's number is released, if the number is bad and global equities panic, all bets are off! If the equities love the number, I say YOU JUST GO WITH IT!

Should be in store for an interesting week, I'm ready and I hope you are too. Remember, if you are going to trade, be quick and nimble- meaning DO NOT be afraid to take a loss or a profit, these markets are certainly frustrating but they do offer us opportunities.

Good night and good trading.
Martin


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