As a potentially profitable opportunity presents itself, John will send you an alert with specific trade information as to what should be bought, when to buy it, and at what price. This is your chance to ?look over? John Thomas? shoulder as he gives you unparalleled insight on major world financial trends BEFORE they happen. Read more
As a potentially profitable opportunity presents itself, John will send you an alert with specific trade information as to what should be bought, when to buy it, and at what price. This is your chance to ?look over? John Thomas? shoulder as he gives you unparalleled insight on major world financial trends BEFORE they happen. Read more
While the Diary of a Mad Hedge Fund Trader focuses on investment over a one week to six-month time frame, Mad Day Trader, provided by Jim Parker, will exploit money-making opportunities over a brief ten minute to three day window. It is ideally suited for day traders, but can also be used by long-term investors to improve market timing for entry and exit points.
While the Diary of a Mad Hedge Fund Trader focuses on investment over a one week to six-month time frame, Mad Day Trader, provided by Jim Parker, will exploit money-making opportunities over a brief ten minute to three day window. It is ideally suited for day traders, but can also be used by long-term investors to improve market timing for entry and exit points.
While the Diary of a Mad Hedge Fund Trader focuses on investment over a one week to six-month time frame, Mad Day Trader, provided by Jim Parker, will exploit money-making opportunities over a brief ten minute to three day window. It is ideally suited for day traders, but can also be used by long-term investors to improve market timing for entry and exit points.
While the Diary of a Mad Hedge Fund Trader focuses on investment over a one week to six-month time frame, Mad Day Trader, provided by Jim Parker, will exploit money-making opportunities over a brief ten minute to three day window. It is ideally suited for day traders, but can also be used by long-term investors to improve market timing for entry and exit points.
Global Market Comments
November 18, 2013
Fiat Lux
Featured Trade:
(NOVEMBER 20 GLOBAL STRATEGY WEBINAR),
(MAD HEDGE FUND TRADER MELTS UP TO 56% 2013 PERFORMANCE),
(SPY), (IWM), (FXA), (TLT), (AAPL), (XLI), (C),
(THE YEN IS DEAD MEAT),
(FXY), (YCS), (DXJ), (TM),
(SELLING BONDS AGAIN), (TLT), (TBT)
SPDR S&P 500 (SPY)
iShares Russell 2000 (IWM)
CurrencyShares Australian Dollar Trust (FXA)
iShares 20+ Year Treasury Bond (TLT)
Apple Inc. (AAPL)
Industrial Select Sector SPDR (XLI)
Citigroup, Inc. (C)
CurrencyShares Japanese Yen Trust (FXY)
ProShares UltraShort Yen (YCS)
WisdomTree Japan Hedged Equity (DXJ)
Toyota Motor Corporation (TM)
ProShares UltraShort 20+ Year Treasury (TBT)
Last week, I begged you, pleaded with you, and even pounded the table to get you to increase your shorts in the Japanese yen (FXY), (YCS), and longs in the Japanese stock market (DXJ). I was certain that Japan?s beleaguered currency was about to break out of its tedious six month trading range and plumb new lows.
I turned out to be dead right.
My argument was that with the economy slowing, and Prime Minister Shinso Abe?s ?third arrow? economic reforms mired in the political muck, the Bank of Japan would have little choice but to accelerate its quantitative easing program. This would be terrible news for the yen and great news for stocks (DXJ), not just in Japan, but everywhere.
It turns out that while politicians are dithering, the central bank has little choice but to over stimulate on the monetary side to compensate. Haven?t I heard this story somewhere else before?
Take a look at the charts below, put together by my friends at Stockcharts.com. The (FXY)/(DXJ) inverse relationship is almost perfect. This is because a falling yen causes the profits of Japanese exports to rocket when they are translated back into their home currency. Look no further that Toyota?s (TM) fabulous 70% YOY profit gain.
Both charts are showing a major breakout for extended continuation triangles. The yen is telling you to load up on stocks, while stocks are telling you to sell the hell out of the yen. I say do both. In the global macro world it doesn?t get any easier than this.
If you want to peruse these matters in the depth they deserve, please click here for ?Doubling Up On My Yen Shorts? and ?The Party is Just Getting Started With the Japanese Yen?.
However, regarding the Currency Shares Japanese Yen Trust (FXY) December, 2013 $102-$105 in-the-money bear put spread we already have on board, we have already sucked this position dry. At today?s prices, we can realize 87% of its maximum potential profit, and that is still with more than a month to go to expiration. The risk/reward has swung against us, and it is not worth hanging on for the extra 13%.
Give me a yen rally to sell into, and I will be back into this position in a heartbeat, as I have already done with bonds (TLT).
The Yen is Dead Meat
You all know well my antipathy to the bond market, which I believe hit a 60-year peak on August 18, 2012 at 10:32 AM EST. I managed to catch the exact top of the one-month post taper bond market rally, and sent the Trade Alerts to sell bonds showering upon you. I quickly closed all of those out for nice profits.
We have since seen a $2.24 dead cat bounce in the (TLT) that took the yield on the ten year Treasury bond back down to 2.68%, off of the recent 2.77% top. That is enough for me to sell into.
Take a look at the chart below, and you will see that we are probably setting up an interim head and shoulders top that presages much larger moves lower to come.
The rocket fuel for this break will be the yearend selling where money managers attempt to minimize their bond exposure that appears in their annual reports so as not to appear too stupid to their customers. Then we have the ?Great Reallocation? trade out of bonds into stocks, which should get some real legs in 2014.
This all promises to take the (TLT) down from today?s $104.51 to $98 or lower over the next six months. If I am wrong on this, then we should hit major resistance for the (TLT) on the upside at $106.80, where you would expect the right shoulder formation to begin that will carry us safely into the December 20 expiration. This could be the trade that keeps on giving.
If you can?t do the options, you can buy the ProShares Ultra Short 20+ Year Treasury leveraged short ETF (TBT) on the dip. My very long-term target for this baby is $200, up from today?s $76.70.
Bonds Have Suddenly Become Unloved
?A high stock price is somewhat distracting,? said Tesla CEO, Elon Musk.
