Posts Tagged ‘Forex’

Tempting Tuesday – Weak Dollar Props Up the Markets

UUP WEEKLYWhenever the manipulators need to boost the markets, they just crash the Dollar.  

And what a dive we've had!  As you can see from Dave Fry's Chart, the Dollar is down 7% since last summer and down 2.5% this year and that keeps stocks and commodities 2.5% higher – because we buy them with Dollars.  

Keep in mind, at the same time you are buying IBM shares for $200, someone is buying the same shares for 20,400 Yen and another guy is buying them for 340 British Pounds and yet another guy is buying them for 280 Euros.  

It's obvious that, if the value of the Pound or the Yen or the Euro changes, the price of IBM in those currencies will change to reflect the currrency valuation but Americans tend not to realize the same thing happens when the Dollar gets stronger or weaker too.  Once you do realize this – you have a huge advantage in trading the Futures (and we have a Live Futures Workshop this afternoon at 1pm).

SPX WEEKLYThe Fed's easy-money policies keep the Dollar weak (because we're printing another Trillion of them each year and, in this economy, no one is using them – ie. no demand) and that has goosed the market by 7% since last summer, when the S&P was about 1,650 – about 10% lower than it is now.  

That means that 75% of the gains in the S&P since last summer have been the result of a weak currency and have noting to do with a "strong" economy.  Now THAT makes sense, doesn't it?

"THEY" had to tank the Dollar to get us over the 1,600 level, which was a very key technical off our consolidated bottom at 800 during the crash.  It's no coincidence that we were hitting resistance there in May and pulling back to 1,560 and looking weak in July when, suddenly, the Fed went into a new round of crazy, which led to 6 months of fairly steady value erosion for every single Dollar you have worked for and saved your entire life.  

It's kind…
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Flip Flop Friday – 2% Up or Bust!

 

As the great John "Hannibal" Smith used to say: "I love it when a plan comes together."  

Of course Smith’s plans usually involved a great deal of mayhem culminating in things blowing up – very apropos considering the massive market blow up this week.  The plan in Monday Morning’s Alert to Members, which was titled "Cashing in Longs and Back to Cashy and Shortish" was pretty straight-forward:  

If you want to play this rally for more upside, you can still short the VIX (we did the Aug $19 puts on Friday for $1, now 1.20) or play gold down with the GLL Aug $22s, that are still .35 or the GLD Aug $155 puts at .72 BUT I’m not really believing things are fixed so these are SPECULATIVE plays to follow the rally – WHICH I DON’T BELIEVE IN.  Clear? 

What I do believe in is shorting the Dow with DIA Aug $119 puts at $1.20 or the SQQQ Aug $21/23 bull call spread at .85, selling the Sept $19 puts for .55 for net .30 on the $2 spread.  

USO Weekly $38 puts are .44, 20 of those in the $25KP for $880!  (longs are, of course off).

Let’s be straight about that, all the short-term long, including the ones in the Income Virtual Portfolio – are DONE.  This was the pop we hoped for and now it’s done and back to cash!  

The VIX puts are, of course dead with the VIX now at 31.66 but the Aug $22 GLL calls are still .15 (down 57%) and the GLD Aug $155 puts are now .95 (up 32%) thanks to that same rise in the VIX.  Not bad for trades I did not believe
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Rage against the machines… by building your own machine!

This is intended to be an introduction to the world of robotic Forex trading.  By the end of this you should be able to construct a working automated Forex trading robot.  These automated trading bots are called Expert Advisors, EA’s for short.  I am going to assume that you don’t have much FX trading experience and walk you through the whole process of setting up your first EA.

Step 1.  Download and install MetaTrader4.  This is the platform our EA’s will run in.  Once MT4 is dowloaded go ahead and start it up.  Just click cancel on any dialogs that show up.  We are not going to hook it up to an account yet, we are just going to set it up so that you can play around and backtest your EA’s.  Once MT4 is up and running you should see something like the following screen.

(click for life size version)

Click Tools then History center (or hit F2).  Now we should be looking at this.

Expand Forex then EURUSD then click on M1 (the one minute candles).  Hit download.  This will download some of the historical data.  At this stage we need to download some additional data which will fill in the holes.  Here is a file which contains data for all of 2010, EURUSD1.  Now we need to import this data into our program.

To import this data click on the M1 data for the EURUSD just like in the previous step.  Hit import.  You should see the following screen.

If you dont see the candles in the import box then just close the history center and open it again.

At this point we are ready to build and backtest our first EA.

Step 2.  Building our first EA.…
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Currency War

Currency War

Courtesy of Michael Snyder at Economic Collapse 

Are you ready for a currency war?  Well, buckle up, because things are about to get interesting.  This week Japan fired what is perhaps the opening salvo in a new round of currency wars by publicly intervening in the foreign exchange market for the first time since 2004.  Japan’s bold 12 billion dollar move to push down the value of the yen made headlines all over the world.  Japan’s economy is highly dependent on exports and the Japanese government was becoming increasingly alarmed by the recent surge in the value of the yen.  A stronger yen makes Japanese exports more expensive for other nations and thus would harm Japanese industry.  But Japan is not the only nation that is ready to go to battle over currency rates.  The governments of the U.S. and China continue to exchange increasingly heated rhetoric regarding currency policy.  In Europe, there is growing sentiment that the euro needs to be devalued in order to help European exports become more competitive.  In addition, exporters all over the world are already loudly complaining about the possibility that the Federal Reserve is about to unleash another round of quantitative easing. 

Virtually all major exporting nations want the value of the U.S. dollar to remain high so that they can keep flooding us with lots of cheap goods.  The sad reality is that our current system of globalized trade rewards exporting nations that have weak currencies, and many nations have now shown that they are willing to take the gloves off to make certain that their national currencies do not appreciate in value by too much.

Some nations have been involved in open currency manipulation for some time now.  For example, Singapore is well known for intervening in the foreign exchange market in order to benefit exporters.  Also, the Swiss National Bank experienced losses equivalent to about 15 billion dollars trying to stop the rapid rise of the Swiss franc earlier this year.…
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Media: Expanded Thoughts on Potential Currency Trading Bubble

Media: Expanded Thoughts on Potential Currency Trading Bubble

Courtesy of Joshua M Brown, The Reformed Broker 

Oil being poured into water, studio shot

I gave an interview to My Private Banker the other day. They wanted to take my discussion of the potential bubble in currency trading a step further. 

Enjoy:

Investing in currencies is all the rage in wealth management. Currency ETFs, ETNs and currency structructured products are springing up like mushrooms. Inspired by the Euro crisis many private investors in the EU have started investing in currency products. Wealth managers and bankers play also a big role as more and more products are pushed on to their clients. But does currency investing make any sense? We talked about this topic to Josh Brown, who is one of the best known global finance bloggers providing daily comments on The Reformed Broker. Josh Brown has been recently a vocal critic of the boom in currency investing.

MyPrivateBanking: Why do you see a bubble in currency trading – comparable to bubbles in stocks or house prices?

Josh Brown: With currencies, we are still at the stage where we’re talking "prospective bubble", but all the ingredients are there. This isn’t going to be a Price Bubble, it will be an Activity Bubble should the mania take over.

MyPrivateBanking:  What differentiates this bubble from “normal” investment bubbles?

Josh Brown: Normal investment bubbles require a certain backdrop of speculative fervor along with some exogenous encouragement to fan the flames (think innovative mortgages or freely available margin leverage). This one is more akin to the Texas Hold ‘Em craze of the mid-2000′s where all of a sudden all your friends and neighbors were poker sharks out of nowhere.

MyPrivateBanking:  Why do wealth managers increasingly recommend currency products to their clients?

Josh Brown: I think wealth managers are introducing ETFs that are currency-related because of what’s known as "reverse inquiry". The financial media has done a really terrific job of painting the currency markets as unstable and exciting, this has led to product introductions and marketing which has in turn led to inquiries from the public to their advisors – "How can we get in on this". The reality is that it’s foolish to "invest" in a currency from an asset management standpoint, unless we’re talking about swinging for the fences with the Iraqi Dinar or something. Currency is not an investment, it…
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Which Way Wednesday – Beige Book Boost or Bust?

Our last Beige Book was June 9th and we liked that one.  My comment to Members at that time was:

Wow, this is good stuff!  Ben was not BS'ing -  It's a slow, tedious recovery but a recovery nonetheless!  On the whole, a pretty good report!  Not enough to support $75 oil but a nice, not too inflationary recovery is in the works.   It's no quick fix though, as it will take 2 good Qs before corporations will be willing to add staff so I bet not much until next spring unless the government steps in (and they'd better)

At the time, the S&P was at 1,055 and we flew up to 1,120 on June 21st before the next market flip-flop, which we have just flip-flopped back from and yesterday we tested 1,120 again and here we are, back at the Beige Book.  So now, the market is about where it should have been based on the last BBook (and no government help so far).  I thought yesterday was too early to pop through ahead of the data and it turns out it was.  If anything, I'm a lot more worried that a deteriorating report tanks the markets this afternoon (2pm release). 

We'll get a clue this morning as we see Durable Goods at 8:30 and those are expected to be up 1% from down 0.6% in May.  Oil Inventories are reported at 10:30 and don't expect demand to be picking up and no one has even mentioned what a disaster this is during summer driving season (speculators are circling their tankers one more time as they pray for hurricanes to make their long bets pay off).  If we do survive the BBook this afternoon, we have a 10% upgrade to Q2 GDP to look forward to tomorrow morning (to 3% from 2.7%) along with Chicago PMI at 9:45.

We know that Leading Economic Indicators turned down 0.2% since the last BBook, the Philly Fed has dropped from 21 in May to 8 in June to 5.1 in July, Construction Spending fell 0.2% with Commercial far worse than Residential, ISM fell almost 6% with a 10% drop in orders leading the downturn and a very deflationary prices paid, Factory Orders in general were off 1.4% (which does not bode well for today's Durable Goods), Auto Sales
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Toppy Tuesday – LA “Out of Money” on June 30th?

Is Los Angeles unique or just the first?

City Controller Wendy Greuel declared an "urgent financial crisis" and said the only way to continue paying bills in the short term was to begin to drain the city's already limited emergency reserve.  Greuel said the city would need to pull money from its $191 million in reserve funds immediately to pay its bills next month. She expects the city to be out of money, and probably in the red, by June 30.  Some officials fear that using that money would not only leave the city without reserves in case of emergencies, it would also probably trigger another downgrade in its Wall Street credit ratings.

Cities all over the nation are scrambling to pay their bills and that's nothing compared to the disasters state budgets face.  A study released Monday by Stanford University estimates that California's three largest state-operated, public-employee pension funds—the California Public Employees' Retirement System, California State Teachers' Retirement System and University of California Retirement System—currently face a total shortfall of more than $500 billion.  Gov. Schwarzenegger warned Monday that pension-fund shortfalls could lead California, which faces a $20 billion budget gap in the coming fiscal year, to divert more funds from other state programs to cover pension costs.

Fortunately, for the dollar, we are by no means the most screwed-up economy on the planet.  The Euro is dropping to new lows this morning amid speculation that a plan for Greece to obtain European Union and International Monetary Fund help in cutting its budget deficit may falter (again).  The report that Greece “isn’t keen on the IMF being involved in any bailout would seem to throw the whole plan into question,” said Simon Derrick, chief currency strategist at Bank of New York Mellon Corp. in London. “As an investor, do you really want to hang around and see what’s happening next? The Greece story is definitely a negative for the Euro.”  

The Dollar is not doing so well against the Aussie Dollar, which rose to 92.14 this morning as the ACB raised their main interest rates to 4.25%, it's fifth rate increase in six meetings.  Even more shocking to most Americans is the Canadian "Loonie," which is now trading at $1.0008 to the dollar – almost on par to the dollar
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Faber: The Euro Has More To Fall, S&P Could Fall 20%

Faber: The Euro Has More To Fall, S&P Could Fall 20%

Courtesy of Joe Weisenthal at Clusterstock 

Marc Faber appeared on Bloomberg today to talk stocks and currencies. Not surprisingly, he’s negative on US equities, and though he thinks the euro could rebound in the short-term (because it’s so oversold) he says there’s nothing good about the currency and that it could fall a lot further.

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Which Way Wednesday – Fed Edition

What a great morning!

Well, if you are a futures bull anyway.  We keep telling you that's where the action is.  Last Thursday we gapped up 100, Friday another 50 and Monday another 50.  Wow, what a market right?  And where did we close a week ago Wednesday?  10,337.  And where did we close yesterday after 200 points of futures gains?  10,452.  So we LOST 80 points during real trading hours and gained 200 when no one was looking – yet no one is being arrested – go figure

I already made my skeptical note to Members this morning as the pre-market action tacked on another 50-point gain that pretty much started at 3am on the dot as the Hang Seng threatened to fail 21,500, which would have been a serious breakdown on a triple test over 5 days.  It still looks to me like the Hang Seng will be looking at a 10% correction in the very near future but the pump crowd aims to put off that day of reckoning for as long as possible.  

The Nikkei, on the other hand, had their own gap up, back over our 10,200 target (we went long on EWJ again yesterday) but failed to hold it and closed at 10,177, up 1%.  Once the Nikkei closed, the dollar was allowed to drop back to 89.5 Yen and the Euro was jammed up from $1.451 to $1.458 but that was nothing compared to the Pound, which went from $1.623 at 3:45 to $1.636 at 6:45 – a spectacular move that allowed copper to get back to $3.17 (up 1% from yesterday's close) along with 1% gains in Silver ($17.50), Gold ($1,135) and Oil ($71.50) all of which made great futures shorts at those prices.

Circular Economy Graphic

The dollar is being jammed down on whispers in Europe that the Fed will announce today that the US Economy is  much improved BUT they have no intention of raising rates in the foreseeable future.  This enables the burgeoning dollar carry-trade to continue and, as John Carney points out at Clusterstock, it allows the Fed to keep buying Mortgage Backed Securities from the Banks as fast as they can turn them over. 

The Fed can do this with confidence because the MBS's are, in turn, guaranteed
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The Future of Global Finance

The build-up of dollars abroad transformed the United States into a gigantic bank, and like any bank, it was vulnerable to a run.

It has long been recognized that the global financial structure — built as it is around the dollar as the world’s reserve currency — has a fundamental design flaw that makes it inherently unstable. The problem was first identified back in the early 1960s by the Belgian-American economist Robert Triffin, in “Gold and the Dollar Crisis.” Writing about Europe’s accumulation of dollars, he argued that the system carried the seeds of its own destruction. Foreigners could acquire dollars only if the United States ran current account deficits — that is, spent more than it earned. But lending money to someone who lives beyond his means has obvious dangers, and the same is true of countries.

Thus, the American deficits necessary to supply dollars to the world for international transactions simultaneously undermined confidence in the currency. It was only a matter of time, Triffin predicted, before the system would be hit by a crisis — which it duly was in the early 1970s.

In the wake of the 1997 financial crisis there, countries in East Asia set out to build up war chests of dollars as insurance against domestic banking runs or downturns in the global economy. At about the same time, China embarked on a program of export-led growth, engineered by keeping its currency artificially low.

 

Interpretations of what happened next differ. Some argue that to absorb these goods from abroad while avoiding unemployment at home, the United States very consciously stimulated consumer demand. The country, in effect, was forced to live beyond its means. Others believe that the Fed misread the fall in prices as a symptom of inadequate demand rather than for what it was — an astounding, once-in-a-generation expansion in the supply of low-cost goods — and kept interest rates low for an unusually long time, which provoked the real estate bubble.

In either case, the result was an enormous accumulation of dollars in the hands of Asian central banks. Those dollars, when invested in…
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Zero Hedge

China Responds To Trump's "Barbaric" Tariffs: Vows To Fight "Until The End" And Have "The Last Laugh"

Courtesy of ZeroHedge View original post here.

After Friday's blitz of reciprocal trade war escalations, which saw a furious Trump slam the two "enemies of the state", Fed Chair Powell and China president Xi, following China's widely expected tariff hike retaliation and Powell's uneventful Jackson Hole speech, and further raise tariffs on virtually all Chinese imports after stocks suffered another major selloff, we said that the next steps were clear.

And now China has to retaliate and so on

— zerohedge (@zerohedge) ...

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Phil's Favorites

S&P 500 Index Must Bounce Here Or Hold On Tight!

Courtesy of Technical Traders

The fragility of the markets can not be underestimated for investors at this time.  Our research has continued to pick apart these price swings in the US stock markets and our July predictions regarding a market top and an August 19...



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The Technical Traders

S&P 500 Index Must Bounce Here Or Hold On Tight!

Courtesy of Technical Traders

The fragility of the markets can not be underestimated for investors at this time.  Our research has continued to pick apart these price swings in the US stock markets and our July predictions regarding a market top and an August 19...



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Biotech

The Big Pharma Takeover of Medical Cannabis

Reminder: We are available to chat with Members, comments are found below each post.

 

The Big Pharma Takeover of Medical Cannabis

Courtesy of  , Visual Capitalist

The Big Pharma Takeover of Medical Cannabis

As evidence of cannabis’ many benefits mounts, so does the interest from the global pharmaceutical industry, known as Big Pharma. The entrance of such behemoths will radically transform the cannabis industry—once heavily stigmatized, it is now a potentially game-changing source of growth for countless co...



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Kimble Charting Solutions

Bearish Divergences Similar To 2000 & 2007 In Play Again!

Courtesy of Chris Kimble

Does history at important junctures ever repeat itself exactly? Nope

Do look-alike patterns take place at important price points? Yup

This chart looks at the S&P 500 over the past 20-years.

In 2000 and 2007 bearish momentum divergences took place months ahead of the actual peak in stocks.

Currently, momentum has created a bearish divergence to the S&P 500 for the past 20-months, as the seems to have stopped on a dime at its 261% Fibonacci extension level of the 2007 highs/2009 lows.

Joe Friday Just The Fact Ma’am; A negative sign for the S&P 500 with the divergence in play, would take place if support b...



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Insider Scoop

Earnings Scheduled For August 22, 2019

Courtesy of Benzinga

Companies Reporting Before The Bell
  • Hormel Foods Corporation (NYSE: HRL) is estimated to report quarterly earnings at $0.36 per share on revenue of $2.29 billion.
  • BJ's Wholesale Club Holdings, Inc. (NYSE: BJ) is projected to report quarterly earnings at $0.37 per share on revenue of $3.38 billion.
  • DICK'S Sporting Good...


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Chart School

Gold Gann Angle Update

Courtesy of Read the Ticker

Everything awesome? Gold over $1500. Central banks are printing money to generate fake demand. Germany issues first ever 30 year bond with negative interest rate. Crazy times!

Even Australia and New Zealand and considering negative interest rates and printing money, you know a bunch of lowly populated islands in the South Pacific with no aircraft carriers or nuclear weapons. They will need to do this to suppress their currency as they are export nations, as they need foreign currency to pay for foreign loans. But what is next, maybe Fiji will start printing their dollar. 

Now for a laugh, this Jason Pollock sold for more than $32M in 2012. 
 


 

Ok, now call ...



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Lee's Free Thinking

Watch Out Bears! Fed POMO Is Back!

Courtesy of Lee Adler

That’s right. The Fed is doing POMO again.  POMO means Permanent Open Market Operations. It’s a fancy way of saying that the Fed is buying Treasuries, pumping money into the financial markets.

Over the past 6 days, the Fed has bought $8.6 billion in T-bills and coupons. These are the first regular Fed POMO Treasury operations since the Fed ended outright QE in 2014.

Who is the Fed buying those Treasuries from?

The Primary Dealers. Who are the Primary Dealers?  I’ll let the New York Fed tell you:

Primary dealers are trading counterparties of the New York Fed in its implementation of monetary policy. They are also expected to make markets for the New York Fed on behalf of its official accountholders as needed, and to bid on a ...



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Digital Currencies

New Zealand Becomes 1st Country To Legalize Payment Of Salaries In Crypto

Courtesy of ZeroHedge View original post here.

Bitcoin and other cryptocurrencies have been on a persistent upswing this year, but they're still pretty volatile. But during a time when even some of the most developed economies in the word are watching their currencies bounce around like the Argentine peso (just take a look at a six-month chart for GBPUSD), New Zealand has decided to take the plunge and become the first country to legalize payment in bitcoin, the FT reports.

The ruling by New Zealand’s tax authority allows salaries and wages to b...



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Mapping The Market

How IPOs Are Priced

Via Jean Luc 

Funny but probably true:

...

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Members' Corner

Despacito - How to Make Money the Old-Fashioned Way - SLOWLY!

Are you ready to retire?  

For most people, the purpose of investing is to build up enough wealth to allow you to retire.  In general, that's usually enough money to reliably generate a year's worth of your average income, each year into your retirement so that that, plus you Social Security, should be enough to pay your bills without having to draw down on your principle.

Unfortunately, as the last decade has shown us, we can't count on bonds to pay us more than 3% and the average return from the stock market over the past 20 years has been erratic - to say the least - with 4 negative years (2000, 2001, 2002 and 2008) and 14 positives, though mostly in the 10% range on the positives.  A string of losses like we had from 2000-02 could easily wipe out a decades worth of gains.

Still, the stock market has been better over the last 10 (7%) an...



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Promotions

Free eBook - "My Top Strategies for 2017"

 

 

Here's a free ebook for you to check out! 

Phil has a chapter in a newly-released eBook that we think you’ll enjoy.

In My Top Strategies for 2017, Phil's chapter is Secret Santa’s Inflation Hedges for 2017.

This chapter isn’t about risk or leverage. Phil present a few smart, practical ideas you can use as a hedge against inflation as well as hedging strategies designed to assist you in staying ahead of the markets.

Some other great content in this free eBook includes:

 

·       How 2017 Will Affect Oil, the US Dollar and the European Union

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About Phil:

Philip R. Davis is a founder Phil's Stock World, a stock and options trading site that teaches the art of options trading to newcomers and devises advanced strategies for expert traders...

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