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Monday, July 2, 2018


“Vacation Day in Hong Kong … party on!”

Of course you knew … today is, not the day “of”, but the day following, “Hong 
Kong Special Administrative Region Establishment Day”! “and I didn’t even 
get anybody any gifts or nothin’, it was such a surprise to me … oh well, there’s 
always next year’s celebration … get out the party hats, and get the “Tsingtao 
beer” icy cold, cuz it’s time to party like it’s 1999”!

All of this means, of course, that both futures and CFD’s in the Hang Seng are 
closed today … and given the literal bloodbath in other Asian equity markets, 
no doubt due to the continued devaluation of the Yuan and Reminbi [offshore 
Yuan] into territory that’s gonna raise the blood pressure of the Trump 
administration, tonight’s open in the Hang Seng is gonna be “interesting” to 
say the least … “fasten your seatbelt Skippy”!

It’s always interesting to look at “correlations” in world markets, and try and 
glean valuable information from other markets and apply it to the market 
you’re mainly interested in … the problem, of course, is that nobody sends you 
an email telling you the correlation isn’t gonna work today, and so you ignore 
it, only to see it coming back again the next day. On the “Pacific Rim”, the 
offshore Chinese Yuan, a/k/a the “Reminbi” is gaining in importance & 
influence as time moves forward … the sheer gargantuan size of the Chinese 
economy really demands it, and while it isn’t “tick for tick” by any stretch 
with the Hang Seng Index in Hong Kong, there is a general correlation you 
need to be at least aware of when trading.

The “Reminbi” trades USDCNH, so like USDJPY it is inverted, and when 
USDCNH is going up, that means the value of the Reminbi, and by deault the 
Yuan, is going down. Flip it around, and when USDCNH is going down, the 
Reminbi & Yuan are going up versus the USD. One of the “nuclear options”  
the Chinese have in there ongoing trade wars with the U.S., is to devalue their 
currency, thus making goods cheaper to foreigners, and lessening the impact 
of any tariffs the U.S. places on them. In short, this isn’t seen as “friendly” for 
equities, especially equities in the “home country”, or for that matter , the 
entire region. Directly below, the USDCNH daily candlestick on the left, and 
the Hang Seng daily candlestick on the right.

Clearly, you can see the inverse correlation on the daily candlesticks … does 
the “tail wag the dog” or does the “dog wag the tail” … from day to day, it’s 
hard to say which leads and/or lags, but I’m guessing by the sheer numbers in 
FX versus the Hang Seng, it’s the Reminbi leading the way here … and as long 
as trade wars, tariffs, and devaluations are in the MSM financial news, I’d 
expect this inverse correlation to last and be very strong.

There is no trading today, as the Hang Seng futures markets is closed … by 
default, that simply means there is no means for hedging risk in the CFD, so 
the Turnkey CFD [H33HKD], as well as others across the globe, are closed as 
well. Things start the week tonight at 9:15 EST., and things will get plenty 
interesting quickly given the explosion lower in the Reminbi. Make no mistake, 
China is sending President Trump a clear message, that any tariff action is 
gonna be met with appropriate devaluation in order to protect their export biz 
“may you live in interesting times”!

Yesterday, I posted the new “Hang Seng Force Volatility Algorithm” … I want 
to be clear here, that there are only two [2] markets in the world that this 
algorithm will be highly effective in; 1) the Hang Seng, and 2) the 
FTSE MIB40 {Italy) … all other markets, from time to time, as they go from 
normal above average volatility to “meth addicted, clinically insane, volatility 
vampires”, will see the algo work in those markets … however, drawing that 
exact line from one to the other and then back again is literally impossible, 
and the net result is the algorithm won’t be very effective … so, my point is, 
don’t use it for anything else. As for the MIB40, it would be nice to see a good 
CFD, but unfortunately nobody in Europe really wants to make a CFD with a 
genuine tradeable spread [4 points or less] … they’re only interested in 
ripping people off with bullshit products that enrich the LP bank’s and leave 
customers with losses … currently, most houses offer the MIB40 with a spread 
from 10 - 20 points, and anybody that trades that is nuts.

There is a critical application procedure in the new algorithm, that the math 
software picked up on, and quite frankly if left up to me or other humans 
working in a group, probably either would never have been noticed or would 
take about 500 human years of calculations to figure out … that procedure is 
the “filtering” of “false positives” and the relationship between 2 or more 
momentum fields [indicators] to weed out moves in price that are “fake outs”  
… or more simply put, scumbag LP bank stop hunts with their BFF’s, the 
large hedge funds, with the net result proving my premise that the function of 
markets is to get “small money” to freely give their money to “big money”,  
without ever figuring out they’ve been manipulated worse than Pavlov’s dog!

And while not perfect, simply cuz nothing ever is, it does do the job … which 
begs the question of, “OK, how is this filter being paid? … cuz as we all should 
know by now, you don’t ever get somethin’ for nothin’ in trading”. And it’s  
“paid” with the moves that prove to be NOT false positives … you don’t take 
the trade, and it proceeds to move 150 points in 8 minutes. The problem here is 
one that is psychological … taking trades that have many “false positive”  
signals, means your going to come face-to-face with losing streaks that nobody 
knows how long they can be in duration & scope. There is NO bell curve 
random distribution to these streaks, and just because you’ve lost 4 trades in 
a row to “false positives”, doesn’t logically imply either 1) “well, I’m due for a 
winner here”, or 2) there are 16 more losing trades in a row coming Skippy!

Of course, on the very next “false positive” you skip the trade… BOOM! 
… there it goes in your profit direction, and you miss the entire thing and want 
to kill somebody … so, you either have to take ALL of the “false positives”, OR 
take none of the “false positives” … there are simply no other alternatives. And 
in my book, weeding out losers is far more important than the occasional 
winner that might or might not pay for them.

I also touched, very briefly in the manual, on the overall slope of the “Kumo 
Cloud” itself … from screen edge to screen edge, it’s important to keep an eye 
for Clouds that are going “nowhere”, meaning flat … cuz when shit stalls, 
everything collapses in on itself and nothing means anything; the signals 
become “gibberish” … more often than not, this phenomena happens much 
more frequently in the “night session” [5:15 A.M. EST. to 11:45 A.M. EST., 
and then the day is over until the new day starts at 9:15 P.M. EST.], than the  
“day session” … be aware of it, and just back away if/when you start to see it, 
cuz all that is gonna happen is false breakouts that go nowhere … sure, 
eventually one of them will force the market to make a nice move, but which 
one, the 7th or the 17th?

The thing about “meth addicted, clinically insane, totally bat shit crazy vampire 
markets”, is that they very much resemble ancient lore of the “Sirens”.  
Odysseus [Greek] or Ulysses [Roman] faced the “Sirens” in Homer’s epic tale 
the “Odyssey”, where he had his crew tie him to the mast so he could hear the 
Sirens beckon him to shore, all the while his crew had wax in their ears and 
were oblivious to their influence. No man could deny the “pull” the “Sirens”  
had on him, and ships would anchor in the rocky waters and go ashore 
… their ships were destroyed by the rocks, and the men trapped forever in the 
grip of the “Sirens”.

And so, this market will “sing to you” as you watch it move and trade it, all the 
while whispering in your ear the “easy money” to be made in these huge ranges 
“c’mon Skippy, hop aboard and get long now! … oh man, you waited and now 
it’s 30 higher still! … what are you doin’? … get in here and pick up some of this 
cash just layin’ here”!! And so you buy the 100 point rally, and you know what 
happens next. “Thank you Sirens for yankin’ my chain”!

I don’t make this move to the Hang Seng lightly … as I said before, if I had 
known months ago this spread was available, I’d have switched markets 
instantly. Those readers/clients who have been with me for years now, know I 
have written before on my desire for a FTSE MIB40 [Italy] market with a 
decent tradeable spread that makes sense … sadly, it comes and goes with the 
wind over the years, as some LP’s try it, and then give it up either cuz nobody 
will trade it and it becomes uneconomical, or their hedges blow up in their face 
and they lose money, and then decide to throw it all away. Neither is good, but 
it’s what we’re faced with today, as the reality is nobody but nobody has a 
decent CFD spread in the index. 

Ditto over the years with the Hang Seng … “what does it say about the general 
state of the trading biz, when a house like Turnkey can offer the CFD with a solid 
2-3 point spread, and the next nearest competitor is over 100% away at 7 points 
[and a higher commission rate]? … not to mention, the scumbags who offer the 
CFD at 16+ points? … somewhere, Vito Corleone is rolling his eyes and 
mumbling, “we were in the wrong biz the whole time … what were we thinkin’? 
… Fredo, go open a brokerage house for cryin’ out loud”! … if only he had 

In the background of all of this, you can’t ignore the potential impact the Yuan 
dominated crude oil futures market is having now in China … it opened in late 
March, and already volumes there are over 250,000 contracts traded per day. 
I’m not suggesting trading in Europe & the U.S. is going away tomorrow, only 
suggesting the future of trading is headed to the “Pacific Rim”, and its 
influence in world affairs is gaining, while Europe & the U.S. stagnate. Given 
the wonderful reputation of Wall Street giants Citi, JPM, & 
Vampire Squid [GS], it’s a wonder they even talk to us from the other side of 
the globe.

So now, much to my delightful glee, we have one of two markets I’ve always 
wanted, since electronic trading began in earnest around 2001 … quite frankly, 
I always thought it would be the MIB40 that would come around first, but in 
the final analysis it doesn’t really matter … two for two and I’d be in trader 
heaven; one for two is plenty good and all anybody really needs. It’s taken far 
too long for the trading industry to get “its act together” and bring these 
markets to the fore … “for too long we have gotten  the same old manipulated, 
horseshit FX “hairballs”, along with spread heavy crude oil CFD’s that … let’s 
face it … STINK … and thrown in for good measure stock indices CFD’s that 
suffer the same problems as FX & crude oil … slippage that is “criminal”, stop 
hunts where LP banks hunt their own clients, and “mystery ticks” nobody has a 
snowball’s chance in hell of getting close to for a fill … no, that’s for the 
scumbag LP bank, not for you! … well screw that! In a “bat shit crazy, meth 
addicted, criminally insane vampire market”, the market isn’t gonna let anybody 
be their “friend” … not the LP, not the brokerage house, and not any of the retail 
spec crowd that trades it … it hates everybody, takes no prisoners, and shows no 
mercy to anyone or anything … and it is this behavior, IMHO, that tells the 
“Pacific Rim” LP’s, “hey, maybe we should just make a fair market, take our 
spread cut, and move on to the next trade microseconds later, and forget the 
games … cuz this market shows no favorites”! … something to think about mi 

As I said in an earlier blog post, “if they were gonna cut me up via slippage and 
horseshit fills, they’d have done it already when I traded my personal account in 
the Hang Seng… why would they show any restraint from one account to 
another; if you’re gonna steal money, what difference does it make which account 
it came from”?

What this means is simple: “we got a market that moves and moves big, and we 
have the best & lowest spread in the world, and the ever present games being 
played by the Western LP’s in the traditional markets, that crucify us and benefit 
the scumbag LP banks, are largely absent here … not cuz I think these Eastern 
banks aren’t as greedy, simply cuz the market won’t let them, and mistreats them 
as it would anybody … and given that, why take the chance your bank is the 
market’s next victim? … instead, make a fair market and reap the rewards of 
higher volumes and more customers without any of the risk … am I wrong here? 
… I don’t think so”.

Markets reopen tonight in Hong Kong, and won’t this be interesting? In any 
event, I’m very much looking forward to concentrating on implementing the 
algorithm, and leaving LP issues behind us … they have cost us dearly, but it’s 
water under the bridge; time to move on, cuz there isn’t anything anybody can 
do about it … it’s taken far too long to get the markets I’ve always wanted to 
trade, but the reality is now one of them is here and ready to go … I’m ready to 
go as well, and I know you’re gonna like what you see from the Hang Seng 
market! … and with that, I’m outta here for some lunch and then a nap before 
tonight’s trade opens up … until tomorrow mi amigos … “the future’s so bright 
for us in Hong Kong, I gotta wear shades in the Caribbean at night to block the 
glare”! Onward & Upward!!

Have a great day everybody!!




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