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Monday, October 16, 2017

I SURVIVED MARIA

Well, that was fun. Just got phone service back, and internet is spotty, and I'm expecting internet via mobile app within about a week. I will start trading then. This hurricane nightmare was worse than I ever thought it could be, but it's time to get back to business again. I only have a few minutes, so I'll post again soon. Onward & Upward. Have a great day everybody.
-vegas

Tuesday, September 19, 2017

MARIA IS BAD NEWS

Winds easily over 120 MPH, and how I got phone service with internet I don’t know. Hopefully this post makes it through. One trade today early in GBPUSD for some profit; would have traded more but internet service is “iffy” and don’t want to get stuck in something … you know how that works out! When I get back to trading [whenever power & internet come back, most likely first via phone] I’ll have some statistical stuff on Cable for everybody; bottom line is it trades better than USDJPY and more like the Swiss Franc from back-in-the-day from the pits of Murder, Illinois. Don’t know when I’ll be back up, but this Hurricane Maria is a monster; heard Dominca got literally destroyed from short-wave radio. Simply put, there isn’t gonna be a “high season” this year in the Caribbean unless you go way south to Trinidad or something like that. It’s gonna take years to recover from this; this place is a mess. My prayers for Puerto Rico & Dominican Republic where this thing is headed tonight and tomorrow. I’ll be back soon amigos! This too shall pass; Onward & Upward!

Have a great day everybody!

-vegas


OUR TURNKEY FOREX “PAMM/MAM” IS NOW OPEN AND OPERATIONAL; SEE “PAMM/MAM MANAGED MONEY PROGRAM” IN “DOWNLOAD LINKS” SECTION IN RIGHT HAND COLUMN FOR DETAILS [VIEW ONLINE AND/OR DOWNLOAD] AND START YOUR JOURNEY FROM WHERE YOU ARE AT TO “ESCAPE TO SUCCESS”!

Monday, September 18, 2017

HURRICANES EVERYWHERE!

“Learn to accept what you cannot control.”

Let me simply add to the world’s greatest list of understatements; “that was some storm … huh”? First off, I’d like to thank all of you who emailed me from Tuesday, September 5th, and over the subsequent week, with well wishes and support; thank you everyone, it means more to me than you will ever know!!

Wow … I mean, pretty much a whole week being “Castaway-ed” [thank you Tome Hanks for a brilliant performance]; no TV, no internet, no phone, most had no electricity, which meant no air conditioning in the sweltering heat of the Caribbean summer with not a hint of wind on the backside of the hurricane. Sure, the hurricane itself is something to behold, but the real horror starts the next day if you’re not prepared in advance. Cuz, simply surviving now becomes the issue with fresh water, food, medical care if you need it, and a safe place to stay ‘till things get sorted out. “Forget the modern luxuries of TV & internet; nothing means more than “ICE” & AIR CONDITIONING” when SHTF and you don’t have either”!

“Prepping” as they call it, is made fun of in certain circles … I’m pretty sure the cultural elites get a “giggle” at the suggestion of emergency supplies and “preparedness” inside the DC cocktail circuit, being permanently enjoined at the hip of the big government “nanny state”, whose power knows no bounds and can cure every ill … except when it can’t. Would you know what to do for 5 – 7 days [at a minimum] with literally nothing? It doesn’t matter where you live, cuz you’re not immune!! How do you generate power for electricity? How do you keep food from perishing and where is your supply of clean water? You can go a very long time without food, but you absolutely need water within a day or two, or you dehydrate and die. How do you get air conditioning when it’s 105⁰ in the shade, or heat when it’s -10⁰ below zero as the high for the day? Can you survive hypothermia or heat exhaustion before help arrives? “I just lived through a week of pure hell, and if not prepared, I don’t want to think of the consequences”. Sure, things are back to “semi-normal”; water and power has been restored, communications at every level are back, and supplies are returning to the stores … gradually, but give ‘em another week and it’ll be back to normal. And this is all great and good, but if you weren’t prepared, how did you stay alive for 2 weeks? So, my message to all of you is simple: “I don’t care where you live; 1) you absolutely need an emergency generator for power … the type and kind with various options is up to you; most cost between $200 - $400 and will run on about 2-3 gallons of gas per day … get one, CUZ WHEN YOU ABSOLUTELY NEED ONE, THERE WON’T BE ONE FOR SALE AT ANY PRICE ANYWHERE NEAR YOU! 2) store clean bottled water if you can’t have your own cistern … you need about 2-3 gallons per day per person in your family for about 2 weeks at a minimum … do the math, and protect your family! 3) lay in a good supply of emergency food that can last at least 2 weeks. Finally, 4) go to any camping store [Pro Bass Shops, etc.] and get yourself a “sterno can- fueled grill” to cook. They’re relatively cheap, and the food tastes great and the sterno cans will last forever”.

I’m not the same person I was a month ago … the storm changed me in subtle ways. It’s not often you get to see how people react under very stressful and in some cases life threatening situations; I can’t say enough good things about the police and emergency first responders, including medical professionals, that were there at “clutch time” helping those stranded by the hurricane … on the other hand, it breaks my heart to see people selling bags of ice for $20 to those in need. Don’t get me wrong, I’m very much the “capitalist”; but there is a “time & place” for everything, and this is neither. I simply don’t know how you look into the mirror and rationalize this in the context of human suffering and then put a price tag on it for profit… what the hell is wrong with you?

And it’s not as if this is the only “hurricane”, metaphorical or not, that’s hitting the world! … “can the world just step back a little and take a deep breath before committing suicide”? Nowhere is this more profound than in the financial markets, specifically USDJPY & gold, where the 1) stop hunts, 2) outright manipulation, and 3) geo-political shenanigans have spiked intraday volatility exponentially. And through it all, it appears to me to be a very “arranged” affair; “cuz, if you ask me, Kim, Xi, & Vlad are making literal fools of the U.S. and the west in general. Has it occurred to anybody in the MSM financial press to start asking questions as to who it is that is profiting off every missile launch via Kim and who are the banks on the inside doing the trades and “piggybacking” for themselves as well?” Oh … wait, I forgot; we’re not supposed to ask questions like this cuz it’s “cynical” and demeans faith in government and its “fearless leaders”. WTF.

During my weeks’ worth of hurricane financial blackout, I posited a premise I worked on in quiet moments of the following; “what if it’s NOT correlation between financial markets that matters, but ANTI-CORRELATION? I don’t mean, in the sense of being “inverse” correlated, I mean other markets not having any significance at all on trading action up or down … in other words, is there a financial market that exhibits such characteristics of “traditional trading” [before the era of central bank trading control] that falls outside of the “risk on – risk off” paradigm we find ourselves trapped in by central banks? And if such a market or markets exist, do they have 1) enough intraday volatility, 2) enough liquidity and volume, and 3) enough world-wide interest to make it matter?”

I literally went through the entire MT4 platform, market by market, and applied the above three criteria; what I found surprised me a little. First, though, some thoughts on the various other markets; 1) right now, and most likely for the foreseeable future, the major world stock indices are a joke. Manipulated beyond belief by various “Plunge Protection Teams” until they aren’t, overnight mystery upside vapors, and “zero” trading action in New York all make for very lousy trading conditions … you simply can’t trade them and expect them to move enough to compensate you with reward for the risk that you take in any position. 2) That leaves oil, interest rates, precious metals, and FX. They don’t call crude oil the “widow maker” for nothing; interest rates are more manipulated than stock indices; precious metals are “sell side” manipulated by the FED & BIS through JPM & HSBC, your risk is ALWAYS greater than any profitable reward via a position by a factor you can’t begin to tell me. Ok, that leaves FX, and there is only one pair that meets the criteria.

Before I mention which FX pair, let’s not kid ourselves; ALL MARKETS ARE MANIPULATED TO SOME EXTENT BY THE CENTRAL BANKS. There isn’t a single market anywhere they don’t have their fingers in to some extent … over the past 20 years, the BOJ has led the way. The question is, which has the least? And that would be GBPUSD. Take away Brexit, and you’re looking at a market that has almost zero correlation with gold, Yen, and stock indices that matter [SP500, Dow30, DAX30, & even FTSE100]. In a financial world that is “hyper-ventilating” over geo-politics and every 10 cent move in gold and wondering if the latest 30 second $1 up move in gold means WWIII in 5 minutes, GBPUSD doesn’t give a crap … it sings its own tune, and is subject to its own internalized manipulations from Bank of England [BOE] Apparatchiks and political hacks, to the trading desks of “master manipulators” Barclays, & Deutsche Bank, which have assured us after paying hundreds of millions in fines for “rigged pricing in GBPUSD”, that they won’t do it anymore … promise … Scouts honor!

Too be sure, lately GBPUSD has had its “moments” … forget Brexit, I’m talking about BOE forecasts for higher interest rates “sooner rather than later”, and inflation picking up at the same time; it’s all a volatile mix, and “Cable” has reacted with bigger ranges and a more volatile trade. The key point, though, is a more volatile trade in the “traditional trading” sense rather than some knee-jerk reaction to a correlated market going bonkers [a/k/a gold versus USDJPY]. So, the $64,000 question is, which is better; Cable or Yen? One is highly correlated to “risk on – risk off”, the other isn’t; they both have roughly the same “net cost” to trade, with Cable very fractionally higher, and slippage is about even for both.

And while I would love to be trading simply the stock indices, it is almost impossible to trade them, thank you very much FED … all you can do is “position” them, and that carries its own set of risk parameters I don’t want to touch cuz it’s toxic as nuclear waste and you don’t want to go there. The U.S. indices lurch at the “speed of light” and then it’s “crickets”; the DAX30 is a “Flying Wedge of Death” invitation to disaster, with the big money that used to run stops in the SP500, now trading the German blue-chip market and running stops that commuter trains set their clocks to in Berlin. Gold, for its part, as illiquid a market as you can find … and I can assure you, no stop [buy or sell] is safe from being filled $5 - $20 per OZ. away from your stop price. It’s not a question of “if”, only “when” it’s your turn to get hit. And while USDJPY and the SP500 & Dow30 correlate over the medium term, blatant FED manipulations make short term correlations “iffy” at best. As I said before the hurricane hit in a previous blog post; “we are all gold traders now”!

The manipulators leave us with few decent choices to trade; one I haven’t mentioned here today is EURJPY. On paper, everything here looks good, but the slippage on fills and stops is horrendous … much worse on average than either GBPUSD or USDJPY, and on an hourly basis more “mystery ticks” than grains of sand on a beach. It’s primarily the reason I have backed away from this market … that bid/offer you see is pure “phantom fantasy”. Which brings us back around to either the correlated “risk on – risk off” market of USDJPY or the “sing your own tune” GBPUSD; which is consistently better? Given the choice between 2 hurricanes, when I’m in the middle of one or the other, how am I supposed to determine which one is “kinder”? Going forward from here, I’ve decided to put GBPUSD & GBPJPY back into the mix of tradeable markets and delete EURJPY; if USDJPY, GBPUSD, and GBPJPY aren’t moving, then there isn’t anything moving anywhere else either.

Turning to today’s markets … it’s late Sunday afternoon, and I’m wondering before the week starts here in a few hours if the “jig is up” for gold, and this week sees sub 1300, especially after the FED meeting decision on Wednesday; that means nothing for GBPUSD, but for USDJPY it should spell 112.000 – 113.000. The question is, how fast does it “Thelma & Louise”, and what happens under 1300? Cuz my message to Kim is simply this: “you’re losing credibility … either hit something with your toy missiles or STFU and go away into the sunset … every missile you fire now means less than the one before, and markets have turned a deaf ear to your bullshit rantings. Fish or cut bait. In the unlikely event you do “stupid shit” and do hit something, I hope you like ruling over a glass parking lot and life underground in a very deep bunker suites you”. It very much appears to me that 1340 – 1350 is the manipulators “line in the sand” for gold, and unless people start dying en masse via missile strikes, gold has had it for now … cue the music of Bocelli & Sarah Brightman singing “Time to Say Goodbye” as gold gets monkey hammered yet again by the “Rally Protection Team” at the FED, and the TBTF banks led by JPM clean up from the price plunge … or, I’m full of bat guano; who knows? We’ll see.

Holiday [again] in Japan, so overnight flows have a good chance to be very muted and slow. Once again, though, here in the early A.M. hours of Monday, the upside “vapors” are at it again in the SP500 & Dow30; what are these Twits at the FED afraid of, they can’t let the U.S. indices retrace even a very small amount? With every indicator on earth pointing to deteriorating economic conditions both here and abroad [read China], the fact that the SP500 sits over 2500 as I write truly astounds me … either investors have become that stupid that they actually believe the FED, or they believe Repubs in congress can actually get tax reform, healthcare, & immigration done … good luck with the premise regarding both.

Another day of what has become all too frequent … either greased lightening with price action so violent 10 PIP moves come in seconds, or paint drying on a wall where you’re lucky to get out of the USDJPY 0.002 spread within 5 minutes. Europe has punted the entire day to New York, where we most likely will sit and do absolutely nothing but wait [yet again] for the clueless faculty lounge Twits at the FED to bless us with wisdom on Wednesday … seriously, is the traveling circus hiring?

This just hitting the wires; BOE Carney says no quick interest rate increases … doesn’t want the market to think things will be proceeding too fast; things will go “slow”. Well, X-Mas in September for the TBTF LP banks, since most likely they are crying mightily over last week’s 4 handle rise in GBPUSD and are short … nothing like some “help” from a central banker who will retire someday to Squid or some other devil’s den at a 6 digit salary, who now throws a lifeline to GBPUSD shorts [banks], in the fervent hope that someday they will remember what he did today. Do we get this privileged service as a retail spec? To ask the question is to answer it … frickin’ scumbags top to bottom.

Mid-afternoon, and the trading action is simply pathetic; “paint-the-tape” gold trades dominate FX flows in USDJPY & GBPPJPY. The last 8 hours of trading has seen about a 15 – 20 PIP effective range in USDJPY; tomorrow looks worse, cuz of course everybody is waiting for Wednesday’s FED Pie Hole Twits with their ‘balance sheet” restructuring plans. You know the drill, it’s “hurry up & wait” time.

Ok, another major hurricane headed my way; Hurricane Maria [CAT 4?] expected to “bullseye” us tomorrow sometime. I don’t know if the Caribbean can take another major hurricane within 2 weeks; the “high season” is already completely “shot out of the water” for a lot of islands, and this one set to rub salt into the wound. Like before, I have no idea when I can post next … I’ll trade the PAMM when I can … we got plenty of water, food, etc., so it’s “hunker down” time once again … not expecting to have to rescue anybody this time around, simply cuz nobody has travelled down here since Irma hit and the place is pretty empty. I don’t like this one damned bit, but we will be OK. This too shall pass. The PAMM spreadsheet will be back when I post again, after this latest hurricane passes. Onward & Upward!

Have a great day everybody!

-vegas

OUR TURNKEY FOREX “PAMM/MAM” IS NOW OPEN AND OPERATIONAL; SEE “PAMM/MAM MANAGED MONEY PROGRAM” IN “DOWNLOAD LINKS” SECTION IN RIGHT HAND COLUMN FOR DETAILS [VIEW ONLINE AND/OR DOWNLOAD] AND START YOUR JOURNEY FROM WHERE YOU ARE AT TO “ESCAPE TO SUCCESS”!

Tuesday, September 12, 2017

I Survived Irma

I made it through and all is well ... Kinda. Just got phone service with some internet. Trading app works. Look for post on Monday ... Maybe, cuz this place is a disaster.

Tuesday, September 5, 2017

FACING ARMAGEDDON

“I wish it were this simple!”

Hurricane Irma, now a CAT 5 hurricane, and we’re right in the middle of it here in the Eastern Caribbean. I was hoping to get Part 2 of the correlation analysis done, but with disaster preparations here at the hacienda, it’s been an ongoing workathon since very early this morning. “This is gonna be ugly mi amigos … very ugly”. It’s already started with the light rain, so it only gets worse from right now until Thursday.

We got plenty of food and water, and generator power … sadly, phone and internet will be down until only God knows. For everybody in the PAMM, I’ll be trading until internet goes out and then switching over to phone. At some point, there will be a down gap as phone, and internet via phone comes back on line. More than likely, I won’t be able to post until power is restored … again, how long that takes is anybody’s guess … couple of days probably, but who knows.

There are over 5,000 visitors stranded here, and I have neighbors who will need assistance as well … mi casa will be one big hotel before the night is out and into tomorrow … I don’t know how this is gonna shape out other than provide whatever I can to those who get into serious trouble cuz of this storm. I’ll try and do some trading, but these next 3 days are going to be living hell and then into the weekend … I’m prepared for it, I can handle it, and whatever happens I can deal with it [the dog will freak out, I’m sure]. If you don’t see any trading in the PAMM, it’s simply because I have no internet either by traditional means from the cable provider or via telephone, and the entire island is on “Robinson Crusoe lockdown”.

One trade today, early on that didn’t provide much in terms of profit … USDJPY not doing much. I got to go, the Mrs. already rescuing people with babies and small children and they’ve just hit the front door … may we all live in interesting times and have our Christian faith tested … “I have a feeling this might be one of them”. Onward & Upward.

Until whenever this is over; don’t worry, this too shall pass. Be back soon everybody!

Have a great day everybody!

-vegas

OUR TURNKEY FOREX “PAMM/MAM” IS NOW OPEN AND OPERATIONAL; SEE “PAMM/MAM MANAGED MONEY PROGRAM” IN “DOWNLOAD LINKS” SECTION IN RIGHT HAND COLUMN FOR DETAILS [VIEW ONLINE AND/OR DOWNLOAD] AND START YOUR JOURNEY FROM WHERE YOU ARE AT TO “ESCAPE TO SUCCESS”!

Monday, September 4, 2017

USDJPY VERSUS GOLD: CORRELATION PART 1

“Hey, the math never lies!”

This is part 1 of some correlation analysis I have done over the Labor Day weekend regarding the relationship between XAUUSD [spot gold] and USDJPY; part 2 will be here tomorrow. First some preliminary thoughts.

Does gold run USDJPY or does USDJPY run gold? On the surface, it would appear obvious that the deeper, more liquid, market of USDJPY would run things; my observations, however, are that it’s exactly reverse. Gold moves much quicker than USDJPY, although both can put in eye-watering moves, and that certainly doesn’t imply one is either slower than the other or faster than the other, cuz at times they both have their “moments”. That said, though, generally speaking it is usually USDJPY that is “safer” in a relative sense than XAUUSD … simply look at how stops are treated in the gold market and I rest my case.

With the Labor Day weekend here in the U.S., I want to start by looking at the long term relationship of USDJPY versus gold over the last approximate 10 years, and then after that, take a look at gold on a short term trading level covering last week.

Since 2008, there have been 3 large moves in gold; 2 bull markets, and 1 horrific bear market. The first bull market started in the week of 10/18/2008, when gold bottomed at 681.40, and lasted to the week of 9/3/2011 when it topped out at 1920.91, for a gain of $1239.51 per Oz. That equals approximately 12,395 PIPS, since 1 PIP in gold is considered $0.10 per Oz. Directly below, the weekly XAUUSD with commentary covering that period.

[Click to enlarge for all charts]

At the same time, covering the same period, USDJPY was collapsing [Yen strengthening] to unprecedented levels in the mid-70’s. USDJPY topped out the week of 10/18/2008 at 102.390, and the low the week of 9/3/2011 was 76.69. That represents a move = -2,570 PIPS. Directly below, the weekly USDJPY with commentary covering that period.


This represents a negative correlation of approximately 21%, which is low, and there are 2 very big reasons for this; 1) the financial world for upwards of 15 years prior to 2008, had been using Yen as the “carry trade” instrument for easy money, and 2) because of this, the Japanese government stepped in and intervened in the market, “jawboned” the market, and did whatever it took from day-to-day to see to it the Yen did not strengthen further. They finally “drew the line in the sand” at the 75 level, and in no uncertain terms let the FX market know that USDJPY was not going to be allowed to go below 75. At the time, some traders didn’t believe them, and learned the very hard lesson of what happens when you fight a central bank. [Umm, you lose.] So, the conclusion to be drawn from this 3 year period, is that it is an aberration in the market due to the BOJ’s aggressive intervention efforts to resist in the strongest way possible to not allow the Yen to strengthen, and not some fundamental shift that says the negative correlation is in danger. It’s simply a historical anomaly.

That brings us to the bear market in gold [bull market in USDJPY] that topped out in the week of 9/3/2011 at 1920.91 and ran all the way to the week of 11/28/2015 at 1046.62, for a loss of $874.49 per Oz., or approximately -8,745 PIPS. Directly below, the weekly gold chart with commentary for that period.


During the same time, USDJPY bottomed the week of 9/3/2011 at 76.69, and topped out the week of 11/28/2015 at 123.669, for a gain of approximately 4,798 PIPS. Directly below, the weekly USDJPY chart with commentary for that period.


Between the 2 markets this correlates to approximately -55%, meaning simply that if gold goes down $1 per Oz. [10 PIPS], USDJPY rallies 5.5 PIPS on average.

This brings us to the start of a new bull market, which is ongoing; this started with gold bottoming in the week of 11/28/2015 at 1046.42 and at the close of trading this last week the high for the week was 1329.04, a gain of $282.62, or approximately 2,862 PIPS. Directly below the weekly chart with commentary for this latest period.


During this period, USDJPY the week of 11/28.2015 topped at 123.669, and the low this last week of 8/27/2017 was at 108.265. That’s a move of – 1540 PIPS. Directly below the weekly chart with commentary for this latest period.


Between the 2 markets this correlates to approximately -54%. So, from the bear market to the new bull market, without the direct intervention efforts of the BOJ, the 2 markets correlate roughly the same at around the 50% level. Ok, this is the longer-term correlation; what about shorter, trading type periods? Do these correlations still hold? SHORT ANSWER: Yes, they do.

I looked at the week just concluded of 8/27/2017. I took M15 intervals from each day of the week [M-F] starting at the European open [7:00 Turnkey server time]to about an hour from the Wall Street close [19:00]. In total, this is 240 M15 time periods for each market; what I measured is the close of each time period for each market, and then took the difference in PIPS from one M15 to the next. I put the data from each market for the exact period, and correlated the data into a “plot graph”. Directly below, the correlation of USDJPY and XAUUSD over short periods.


The red line is the approximate path of linear regression of the data, and the means of each period fall closest to this line. As you can clearly see, the 2 markets negatively correlate along the 2nd and 4th quadrants of the Cartesian graph, with a negative slope of approximately 50% [45⁰]. The graph below highlights the general nature of the data according to a very simple linear relationship.


The negative “B” coefficient will make the line move somewhat over many data points, with the linear relationship always going through the “X” & “Y” axis.

There isn’t much data that falls in the 1rst or 3rd quadrants of the “plot graph”; this would imply a “positive relationship” between USDJPY and gold. The data that does fall into these quadrants is very close to the “X”, “Y” axis at 0; the reason for this is simple. When the markets slow down, it’s not at all unusual to see gold up $0.15 at the close of an M15, and USDJPY up 0.8 PIPS, or something on this order of magnitude. Simple random order flow, and/or the individual dynamics of each market can be in play here over the very short term, and you shouldn’t infer from these instances that the correlation is positive. What you don’t see from the data in the “plot graph”, are data points in the first or third quadrants that are far away from the X,Y=0, because that would most definitely signal positive correlation between the 2 markets.

In general, I’m not crazy about trading correlations in markets; however, having said that, unless the BOJ is pulling strings somewhere, the correlation has a history that is relatively stable around -50%, meaning USDJPY is opposite gold by about half in terms of PIPS, and the correlation holds up short term as well as long term; what’s not to like? Knowing this, and the fact that gold moves a few seconds faster than USDJPY [it’s deeper, with larger volumes that need to be adjusted … that takes a few seconds] is something I’ll explore tomorrow.

Markets are closed today for the Labor Day Holiday, and of course the news of the Norks going thermonuclear has upset overseas markets starting last night [Sunday], at the week’s opening; rather muted I would say given the level of the threat. However, the world has been dealing with this Nork nutjob and his family for almost 60 years now, so the bombastic rhetoric and shows of force are nothing new. Still, you never know what a crazy guy will do, and that has propped gold up and put a ceiling on USDJPY [for the moment].

A very quick selloff in Europe to start the day, but 23 minutes into that and a 40+ PIP drop, and there’s your range for the entire day, as once again it’s “speed of light trading … crickets” thanks for coming. And since then it’s been a mind numbing Holiday atmosphere “Flying Wedge of Death” [FWD], aside from the mini $5 “flash crash” in gold that saw the low of the day there [so far], and sell stops taken [again] to the woodshed for a beating; a move which saw USDJPY do totally zero in response. By the time the first hour is over in Europe … “that’s all folks!” … and there isn’t a damn thing to do but wait for Asia tonight and the start of Tuesday trading. Such are Holidays, so no trading today, and even though there were a couple of algorithm signals, they don’t mean much in context of Holiday trading.

I wanted to get this correlation analysis done before Hurricane Irma hits here in the Caribbean, and with Part 2 tomorrow, more than likely I’ll be posting early, cuz I don’t know how long internet will be up and running either by traditional means or via my phone. At some point it’s all gonna get shut down, and I have no idea when it comes back … a day, 3 days, a week? Down here, nobody knows when anything gets done. To that end, I delayed working on the “Open Office” app, and more than likely the PAMM spreadsheet will be up tomorrow. I think it’s important that the correlation analysis be a part of your trading plan, and while not “officially” part of the algorithm, it’s something to very much keep your eye on as you trade … that’s why I wanted to get it done and posted. Onward & Upward!

Time for the beach … the dog & I are outta here … until tomorrow.

Have a great weekend everybody!

-vegas

OUR TURNKEY FOREX “PAMM/MAM” IS NOW OPEN AND OPERATIONAL; SEE “PAMM/MAM MANAGED MONEY PROGRAM” IN “DOWNLOAD LINKS” SECTION IN RIGHT HAND COLUMN FOR DETAILS [VIEW ONLINE AND/OR DOWNLOAD] AND START YOUR JOURNEY FROM WHERE YOU ARE AT TO “ESCAPE TO SUCCESS”!

Friday, September 1, 2017

WE ARE ALL GOLD TRADERS NOW

“Is gold manipulating USDJPY, or USDJPY manipulating gold?”

Now that the stock indices have become a total manipulative joke, subject only to central bank “whims & fancies”, the correlation between USDJPY and the SP500 has broken down somewhat. Yes, they still broadly correlate via medium term trend, but the correlation to watch and pay attention towards is USDJPY versus XAUUSD [spot gold], “cuz we’re all gold traders now whether you like it or not”. You tell me; directly below, first the USDJPY M1, and then below that the XAUUSD M1. There is a very high inverse correlation between the 2 markets, and most of the time they go almost tick-for-tick.

“You want to know where USDJPY is going? Simply watch gold.”

Remember, they are inversely correlated; when gold goes up, USDJPY goes down; when gold goes down, USDJPY goes up. Simply put, Yen strength and gold strength correlate very high.

Today’s action a perfect metaphor of what financial markets have morphed into; Dow30 & SP500 do almost nothing into and after the NFP stupidity, where once again the entire world goes bat guano crazy over fairy tale numbers, and everything else is admitted into an insane asylum. For its part, USDJPY once again the preferred agent of “financial terrorism”, plummeting to new lows, then racing upwards in psychotic gaps with an eventual complete 25 instant PIP rush to a mystery “tick & fill” high almost 100 PIPS from the low … “well folks, there’s your “speed of light”; now comes crickets” … and now, in late morning as Europe closes, it’s the Friday before Labor Day, and don’t expect any volume or activity out of New York cuz every trader on the East coast is out the door for the proverbial 3 day weekend.

Even after all my years and decades of trading, it still amazes me anybody pays attention to the Bureau of Unicorns & Fairy Tales job numbers; totally made up with assumptions, that if you actually knew what they were, you’d be on the floor laughing they are so stupid and filled with error. But, it’s a great excuse for dealers and LP’s to rape customers and line their own pockets, and so they tell you the “numbers” are important.

I have always hated trading on NFP Friday, for the very simple reason it is usually a totally insane mess… I rest my case with today’s USDJPY action, which if you didn’t show patience and discipline, there is almost no way you made a nickel …  First the blast down 50-60 PIPS on the “disappointing” 156K jobs, expected to be 180K; from that only a minute or two before gold gets blasted lower off its highs and goes on a $10 straight waterfall, which unleashes a blistering USDJPY rally filled with price gaps, the final “lurch” a 25 point ‘in a second’ move from the 20’s to the mystery tick high of 110.496; that lasts all of a millisecond, as the market is immediately in the low 30’s, and from there it’s back to the middle.

So, what do we call this clusterfark debacle? Why it’s our old bud the “Flying Wedge of Death” [FWD], where you too can sell near the low … get shot in seconds … then buy near the high; get shot in seconds … and now back to the middle where you’ll be lucky if it trades ±5 PIPS the rest of the day. “Thanks for playing, have a nice day & come again”! Rarely does an NFP Friday go smoothly or in one direction, which is the main reason I usually avoid them. And even though we’re a few hours from the close, a quick glimpse at the daily candlestick chart will show the day to be a “doji” … “speed of light trading … crickets” … sorry, you lose. So, don’t ever look to see me do a lot of trading on any NFP Friday.

Of course, days like today give LP’s and dealers the excuse they need to plunder retail specs … not just in USDJPY, but other markets as well. Immediately after the NFP report, price action was so hectic and insane, you had no idea where any fill would be inside a 7 PIP range … world’s most liquid and deep market; except when it isn’t.

I did one trade today … and lo & behold after my “pleasant” conversation yesterday with the LP, actually received very good fills on my orders … probably a coincidence don’tchaknow … anyway, got up on the trade but it came back and took me out with a small profit; not surprised really, with the nutty action going on and gold completely insane and running things.

Another trading day that sees reversals, FWD’S, crazy spikes up and down, phantom fills at the high and low, and of course slippage all over the place; I can see the slippage right in front of me, watching bids/offers go up/down in 2-5 PIP increments, and I know doing anything is a losing proposition whether you buy or sell. Next week starts September trading, and more than likely conditions deteriorate into total insanity as the budget, debt ceiling, tax plan, healthcare, the Norks, and all 3 G3 interest rate decisions coming up; I’m going to wait for the market to do “stupid shit” and then pounce on the trade using “The Tunnel Method” techniques and dynamics, and shouldn’t have a problem with fills and slippage. We’ll see what next week brings, but it should be very active to say the least.

In all my years of trading, I can’t ever remember a time such as the last few months where I have seen so many major daily reversals, FWD’s, “doji’s” on the daily candlesticks, and as “wicked” action at times with nothing afterward. It’s simply unprecedented in modern financial trading; no doubt Pols & central bankers the usual culprits, but there are fundamental shifts in capital flows that make the entire world available to markets instantaneously, and the resultant dislocations from extremely large sums of money being put to work at the “speed of light” can be blamed as well. It’s one thing to catch a move, it’s quite another to avoid getting whacked. So, hurricane Irma headed right for me notwithstanding, I’m looking forward to next week’s trading. Onward & Upward!

I’m still having problems with Open Office via the PAMM spreadsheet, and hope to have it updated by tonight; once I get it done, I’ll attach it to the blog post.

Time for the beach … the dog & I are outta here … until Monday.

Have a great weekend everybody!

-vegas

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