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Friday, September 1, 2017


“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!



1 comment:

  1. Feel free to post a recording of your conversation with the LP. I'm always up for expanding my vocabulary of profanities.
    I'm glad for you that it at least had a (temporary) effect. The LP must have slipped a couple of bitcoins into HAL9000's digital wallet, as a good behaviour bond.

    Whilst perusing another blog I follow, armstrongeconomics, I happened upon a recent post about North Korea playing the markets by way of the missile threat card, which I thought was very interesting given that you yourself have eluded to this exact same thing (although perhaps somewhat facetiously).
    It depicted a photo of Kim Jong Un purportedly monitoring the financial markets in the midst of another missile test.
    I wouldn't necessarily frame this picture in itself as conclusive evidence, but it most certainly appears to be a very worthy candidate for the 'conspiracy theory turned fact' files.

    Enjoy your weekend vegas!