Author Archives: Chris

Economic Clearing – Am I A Zombie?

Arena-Amaz-nia-014

Arena da Amazônia

 

The other day Marc Chandler wrote "Negative Interest Rates: Capital's Reproduction Problem"  - I loved the piece but something jumped out at me and I asked to Marc-> "what if the natural clearing of uneconomic capital investment is factored in instead of supported ?" and he responded back to me with "I don't think anything about markets, property or clearing is natural. All social constructs." -> This nagged at me a little while riding my bike today.. I'd like to expand on what I meant.

I come from a point of view of operations.. And in the best functioning companies operations are by definition economical..meaning the moving towards the most production for the least price..with the best resulting product.. that means politics maybe drives decisions with a weighting of 10% to a maximum of 20% (these %'s are a guess for the purpose of understanding the idea as I usually think in percentage terms)

Take Apple Computer .. politics drives very little of their operational decision process.. which has allowed them to grow, innovate and dominate in the last 15 years. I believe that any company that strays to far from a healthy operational process moves towards bankruptcy. I don't believe a healthy operational process can be to heavily weighted with politics, management corruption or management error.

The accepted penalty for poor operational management used to be poorly performing bonds, stock and or bankruptcy.. today in the US that penalty has been deformed in part by Central Banking, and in part by the politics of the day ..so that what I called the natural clearing, bankruptcy .. and the loss of capital has been postponed or altered so that a part of the economy is functioning on a non-economic basis .. what % of the economy is functioning like this and how systematically deep it runs.. is subject to debate...and too big a question for this post.

I have experienced wide spread financial crisis in the past first hand, in Mexico, Argentina, Russia, Ukraine, these cultures ignored a healthy operational process in the past ..and this is a road filled with daily senseless misery for the populations of these countries.. it is not something you can feel or truly understand reading about it or watching a TV show..if you live in those cultures and experience "the heavy hand of government design" making daily life...un economic.. you are filled with frustration.

And as for now, more recent examples we have Venezuela, Spain, Italy, Greece, Portugal and of course Argentina again, the really startling aspect is parts of the EU are starting to remind of the breakup of the most extreme example of governmental heavy hand..the USSR in the past.

As a very real present example look at Petrobras today.. and Brazil.. none of the popular economists and journalists, so excited about the Brazilian miracle of the "Lula policy era" can seem to connect the dots or want to discuss the horrible results of his management or that of his hand picked successor, Dilma.. for the Brazil economy and a once proud company, Petrobras.

And these same short term memory economists and journalists who wrote glowing wonderful half baked propaganda selling Lula's wonderful programs will write excuses..who could have seen "China slowdown" .."oil breakdown" or "who expected the FED to signal an end to the easy money cycle" and these same seemingly can't make the connection how those policies they championed then.. created the dire consequences these countries populations have to live with now, nor do they have to face any responsibility for helping create the environment of non-economic beliefs.

The most pressing problem in Brazil now..imo.. no water.. in one of the world's largest cities, Sao Paolo .. Lula strong armed FIFA for 12 stadiums instead of the originally proposed 6 .. so now Brazil has 4 useless and 2 semi useless stadiums... with an economy threatened by drought to its largest producing region...which the cost of those 6 additional stadiums could have went a long way to address ..add in the huge Petrobras corruption scandal, weakening bonds and currency. All brought by ignoring natural economic forces..

Social constructs aside.. no company, person or government can function for long without being operationally economic.. a simple example .. you don't draw water from a well going the long way.. or with too small a container..

It is preferred by me and others who are operationally focused that the system is not contaminated beyond repair from unhealthy political and corrupt operational practices of our governments, banking systems and corporations.

In my opinion, government's extreme involvement in the "attempted planning of economies " has the same results as drug addiction.. feels good ..but when the drug wears off ..you wake up in the middle of a crowded opium den wondering, ..."Am I a Zombie? "

 

EURUSD – This Aint That – Updated

This EURUSD chart shows why I think ..11650 is in the cards for the pair.. which coincides with 2005 lows

euraint

 

UPDATE: Jan 15 2015 -> $EURUSD has crashed thru target 11650 on this original post above ..unfortunately ..looks like it will still go further as SNB confirms EURO value is a moving target built on quicksand.. read an idea that the biggest BULL capitulated (SNB) ..so a bottom is near.. well thats creative contrarian thinking..but a bad bet ..imo ..going lower.. and I think this is runaway train.. who knows the value.. or what other CB's step in to slow it down ..and how or when.. but certainly this EURO is mispriced until the political situation.. then the economics are worked out with more than guess work.

bein groovyeuwkly

 

 

AUDUSD Daily – Short Long Short

So, Im not convinced the $USD run is over.. I think the Euro looks like BEARS want 11650 area 2005 low imo..we'll see.. although very oversold here.. last two big bottoms 2010 2012 came in summer.. Euro will dictate the dollar bloc and Aud will go with it.. yes we have reached some temporary extremes.. but the run aint done..imo

so here I spitball some ideas as to what AUDUSD may do ..and how she will do it .. the aqua rectangles are levels I think are important to watch.. so this is tricky.. prone to failure but my best guess..

aud daily87

UPDATE -> January 15 2015 Here is $AUDUSD -  2/3 done .. break higher here - then one more short? ..pushing our luck..who cares set your stops off good setups..play the game

audsls

 

USDCAD – trade video

One thing I'd like to mention which I missed clarifying in the video was I had no idea if the trade would work..and more importantly.. I didn't care..zero emotional attachment..Why?

I'm very comfortable with my trade selection ability (practice) to know that I can win 50% of the time.. also Im comfortable with my risk reward parameters ..Risk 1 to receive Reward 3 .. if ..or IF.. I can live within those parameters (win rate /risk reward) I have an edge.  Then I only need enough trades so this edge can kick in.. so if this is one trade of 50 for the month ... it has no great emotional or psychological importance. That... all together is my strategy.

Have a great holiday season ..all!

USDJPY – Beware Of Sweeping Generalizations

Update 10/04/2013 -> this is purely a technical look based on simple candle patterns, levels and trendlines.. so obviously if some huge govt body makes big news this can get skewed..

as of now.. this week looks BEAR.. (candle closes Sunday night) ..and I'd expect the oversold on DAILY to test up into this weekly BEAR and fail..

wklyjpyzzz

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Friday Keith McCullough mentioned the USDJPY and Bernanke destroying the USD ..ect ect ect .. I’d like to offer a different POV .. positioning .. if you believe like I do that the market is always looking for balance..and the nature of extreme leverage in the market ..makes for extreme imbalance..this can also affect our POV of value and the nature of what is meaningful in price discovery. I’d put forth that price discovery now is alot like chasing your shadow.. your shadow moves and seems to describe you..but has little real relationship to your state of being.

… a couple charts

1) 2005 low USDJPY with 2007 Top .. a ton of room there to make what seems to be factual statements about value ..but in reality are just shadows.

2) Whats happening now and how this triangle looks alot like the 2005 triangle.. I expect a retrace but one that has little to do with Bernanke buck burning and more to do with leveraged shadows.

USDJPYwklyx

usdjpywklyxx

and of course whats really important ..finding balance with your girl

Tandem Surfing

GBPUSD – What It Takes For A Top..Time

GBPUSD 10/09/2013 update - This went higher than expected but doesn't matter if traded right meaning taking small losses on 240 set ups as top forms. Here's Updated look at Daily coming into trend line, with 2 sets of fibs. I expect a bounce and an entry near the trend line..screws the most traders if it breaks trend line then bounces back UP the other way. No matter watch the 240's.

gbpqqq

And here is the weekly - held below the BIG line .. like a champ .. 15700 and 15500 about as far as I'd go with expectations..

gbpwklyqq

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Daily - another new high would not surprise.. but I'm building short entries on 240 chart - this has 100 risk : 500 reward and yet if it goes wrong can still make money ..I like that .. so plan is sell pops on 240 chart..expecting larger time frame's to rollover.

gbp cc1

Weekly - each of the RED top's took time ..but they rolled and rolled big. The red wedge line on top has held since Aug 2009 top. I see a minimum retrace of 300 pips and probably more than 600 pips into next month.

gbpcc2

My world view could be upside down ..but don't bet on it.

VLUU L100, M100  / Samsung L100, M100

 

AUDUSD – DAILY

This chart has two possibilities .. he he ..up or down..no seriously today's BEAR candle gets tested UP or closes low and completely breaks down. I like the pair for a retrace and maybe more. The market was positioned for RBA rate cut.. that hasn't appeared .. yet.

It's coming.. big data day tomorrow..Friday.. I'll look for an opportunity to enter short. The stops are easy enough to see and there is a chance this goes thru the lows.. 88 target.

anyway thought I'd share

audxxx

 

 

This woman on the other hand ..has many possibilities..

kate