Put it this way... If it takes you 30 days to run an exercise sample size of 100 and you improve your understanding of market structure in a specific area by 20%, you are much further ahead than if you are to take random trades that cost you $2000 drawdown resulting in no deeper understanding of market behaviour. Think about it. Although some workshop attendees took a few profitable trades immediately following the class, this will probably not be sustainable as the information is shallow in your my and internals. Stay the course and develop methodically. System thinking. Structure. Exercises. Stay the course. Read More...
It was great to see you all at last weeks live webinar on Market Inefficiencies and Volatility for scalpers and day traders. The recording is now available in the free members area. We are working on getting the discussion with Maria into the recording.
Our workshop in London is going to be unmatched. It is truly a one of a kind event with Chris Lori, Ashraf Laidi and Steve Winiarski.. an amazing cast at a very fair price, which includes all online training.
We are unwilling to offer directional bias early this week due to the barrage of events this week, including FOMC, Elections, MPC, ECB and NFP, which could cause a shift in the tide of the financial markets. There remains the likelihood of a continuation for ‘risk on’ across the asset classes. The primary impact and outcomes to look for are the magnitude of QE and the election results. A less than expected QE program strike some USD short covering as asset classes adjust valuations. Should the Republicans win the midterms, we could see an initial USD rally, but follow through would remain in question. Read More...
With AUD most vulnerable to move the most during bouts of risk aversion while the JPY is primary safe haven currency, the AUDJPY will fall most aggressively should equities weaken, as we expect. JPY has outperformed USD as JGB's rate advantage over US Treasuries sustains.
The RBA minutes and RBA Governor Stevens' speech helped boost AUD temporarily. But then the dollar clawed its way back largely due to stops and lower equities. The latest stress test results also tempered investor enthusiasm. Dow futures are about -82 and looking for a lower open of NY session following a mixed Asian session. Q2 earnings season picks up with over 20 S&P 500 constituents reporting, with several financial institutions in the mix. We get the latest housing starts and building permits data. The expiration of the homebuyer tax credit will likely result in mixed data at best. Sentiment will remain choppy ahead of stress test results but US data on expectations could help the dollar benefit on pullbacks in risk sentiment.
For in-depth analysis and price levels, fundamental shifts and trades we're taking - Join Pro Traders Club.
AUD/USD has hit a significant resistance level at .8660 and NZD/USD has hit resistance into the same fractal. We see upside on risk as limited from current highs. Although we could see higher levels, we see current levels and higher as opportunities to sell.
Even as US equities closed 3% higher, long-term oriented investors appear to be steering clear of equities, particularly with the risk of further rising risk aversion with the approaching earnings season. Q2 earnings could disappoint lofty investor expectations and keep risk-seeking at bay, which could dampen the recent support for the euro. UBS FX flow data also suggests that structural outflows from the Eurozone continue and we hold the view that euro rallies should be sold, particularly versus the dollar and the yen. Looking at 1.2700- 1.3000 area for selling depending on how technicals unfold.
We have accurately anticipated the decline in risk that has taken place the past several weeks, as proven in previous issues of Forex Notes. We were far more specific in the accuracy of the price levels and turning points discussed in Pro Traders Club and had the opportunity to capitalize on the movements. We anticipate modest risk recovery before another round of selling in the coming weeks. On the institutional side, we saw short EUR holders get caught in a short squeeze during thin holiday trading. Another leg up on EUR is likely before buying eases off.
On April 1, the yen looked poised to weaken significantly. Policy rates in Japan and the rest of the G10 were beginning to diverge, led by an aggressive RBA tightening campaign which eventually saw the cash rate hiked six times in seven meetings. Furthermore, and more significantly, the market anticipated a wave of yen selling as Japanese life insurers looked set to begin their annual overseas investment program.
Yet since then, USDJPY has fallen steadily from 93.44 to close at 87.75 on Friday. The decline was interrupted only by a brief episode of political uncertainty surrounding the resignation of former Prime Minister Hatoyama. Market participants could legitimately wonder if life insurers have switched tactics this year, preferring instead to invest closer to home? No!
Japan's life insurance companies have been just as keen to invest overseas this year, and their foreign bond holdings have increased by approximately ¥1 trn during the months of April and May.
Last weekend I issued to Pro Traders Club members a warning of the potential onset of risk aversion through the summer months. For your continuing education, I strongly recommend viewing this Bloomberg video address by George Soros, the worlds most notable currency speculator.
Leading into Fridays trading, we saw a host of institutional orders stacked on AUDUSD .8540 and above. Efforts to move above .8540 were weak showing limited buy flows. We expect more sellers, as we are, at levels above .8500 on AUDUSD and the corresponding levels for AUDJPY. Running tight correlations, we are watching equities patterns for signs of withdrawal.
After the turmoil across markets in May, the week ahead is a good test to see if fundamentals come back into focus. But it still might be premature for backward-looking data to help the Eurozone. US labour data is expected to remain strong and though the RBA will likely remain on pause, the BoC decision will be much closer. G20 finance ministers and central bank governors meet in Korea and we think financial sector regulation will dominate the conversations, with Eurozone worries and Korean Peninsula tensions serving as the backdrop.
With much investor focus still centered on the euro, we occasionally get questions as to what can reverse the recent decline. It is a difficult question as it is much easier in the current environment to identify what policymakers can do to exacerbate, rather than improve, the situation, and we still think the euro remains a sell on rallies.
In a recent UBS Multi-Strategy Asset conference call, chief UBS economist and strategist, Larry Hatheway, said there are two opposing forces to the macro backdrop. There are negative concerns emanating from insolvency issues and growth worries while on the positive side, the global economic backdrop is still somewhat robust. Another positive factor he identified was that the recent decline of the euro should confer trade benefits to the Eurozone. Data of Euro Area 16 exports to the rest of the world does show a marked pick up in export volume amid the euro's recent decline. Though we do not have a dollar or euro figure on how much of an effect the weaker euro is having on trade, the improving trade should mitigate some of the negative concerns on the Eurozone.
It is no surprise to Pro Traders Club members that full scale risk aversion has taken root, as the negative outlook for risk has been shared well in advance by its host. We are choosing our trades carefully on AUDJPY strategies as we wait for market's to re balance. I anticipate that this may take a few months. In the meantime, we will adjust our models to accommodate the increased vol. The overall market pullback is a welcome event we have been waiting for and I believe some very good opportunities will result in the risk class. This correction is a result of the weak foundation and deflated life preservers thrown at the market following the 2008 crisis. We have said in countless PTC episodes that risk on such weak footing is not sustainable. Our job as traders is to trade based on how we anticipate the market will perceive information flow.
I love this market because everyone has the ability to find their niche. We have outperformed PHD economists and are proud of it. I have to say that the views shared in PTC have been quite accurate over the years. We miss a few trends, but we can't see everything. The EURUSD for example; post crisis, the pair was trading at 1.2500 to 1.3000 and we were bearish because we felt the EMU and it's constituents were beginning to disintegrate with weak and non producing regions being weighed down by the impact of the crisis. It never made any sense to us. We missed the EURUSD rally to 1.5000+ and the fundamentals we anticipated finally set in and have taken us to where we are today, so we were right on our fundamental view, but wrong on timing. We can live with it, since we we called a long AUD against a basket when AUDUSD was at .6500.
At the subsequent press conference, Eurogroup Chairman Juncker revealed that the finance ministers are now in agreement that if enough signs of progress towards deficit reduction are not visible by March 16, additional fiscal measures could be imposed on Greece. He said Greece has agreed to this.
He declined to describe the detail of any financial bail-out mechanism that may be in preparation on the grounds that "we do not think it would be wise to have a public discussion of such instruments". He added that the vigour of the Greek reaction to the crisis would likely make such instruments unnecessary in any event. Read More...
Come Bobsledding with World Cup Champion, Chris Lori!
My old teammates and I rent the Calgary Olympic bobsled track for a few hours and have a blast. We take the opportunity to take down our friends who have always asked if they can have a ride down. You won't sleep for 3 days after this experience! It is entirely a non profit cost sharing event. The cost is $75 per ride. Public rides on any other track are at least $250 and not nearly as intense. This is the closest you will ever come to the actual athletic experience of being in a World Cup or Olympic competition. Make sure you have your mommy's permission!
We will be joined by a few FX guys, as well, so pull yourself away from the charts and come join us!
Date: Feb 9, 2010
Time: 2pm - 4:30pm
Location: Canada Olympic Park, Calgary, Alberta
Other details: We will be hanging out in beautiful Banff, Alberta the night before. Most of our group are staying at the Buffalo Mountain Lodge.
Please email: firstname.lastname@example.org for more details. This has only been made possible due to cancellations, so there are only a few spots available. First Come First Serve!
Todays Forex Notes:
RBA Rate Hike Surprise?
UBS looked at a select number of global equity
indexes and look at the "currency effect" where
they roughly take the difference between the
return in dollar terms and the return in local
currency terms. In 2009, Brazil and Australia
benefited greatly from currency gains but so far
things are not shaping up as clearly. This is yet
another signpost that selectivity will be key for
currency investors and risk-seekers overall in
the months ahead.
I'm sorry I have been out for a while. Last weekend was our Charlotte, NC workshop and it was a barn burner. We continue to see a growing number of traders quit their jobs to trade full time, as they learn real strategies from a professional on how the market really works and move away from internet marketing hype.
I want to thank Angie "Sunshine" Crisp for the excellent job in organizing the workshop at an excellent facility and arranged to get attendees great Hilton rooms for $89! I would also like to thank Greg Crisp for his professional expertise and valuable contributions to the class. Finally, to the attendees who continue to inspire me and allow me the great pleasure to interact with your unique and motivated minds.
Please contact us if you would are interested in any of Chris Lori's educational products.
I just finished the weekend seminar with Chris Lori and I wanted to let you guys know that it was excellent.
Chris is extermeley knowledgeable, and can communicate his information and experience effectively.
Course content was complete, pertinent, well put together, and was a true value for the money.
Great Workshop! Well worth it
Hello, I just got back from "Chris Lori's" Charlotte, NC workshop. This is by far the best 2&1/2 days of forex training class I've attended in my forex trading career. Chris's simple, easy to understand coaching approach( created from his vast knowledge & expertise in the forex field) really was an eye opener for me. I've learnt more in this short 2 1/2 days then my entire two years of forex arena. I was frustrated, ready to leave from this trading business, but Chris's true & real live teaching gave me hope that even though I have a long way to go, I will make it. I was fortunate to attend his workshop and hope to continue my journey with him.
Thank you "Chris" for what you've done for us, especially for me.
I just wanted to share that I attended Chris Lori's workshop in Charlotte this weekend, and found it to be fantastic. Chris puts a lot of time and effort into the workshop, and you definitely get your money's worth. Chris over-delivers on everything he does.
We went a full 2 1/2 days and it was a very extensive and in-depth look into strategy, tactics and the psychology needed to become a successful full time trader, or to just take your trading to the next level.
There were quite a few people there who have been to Chris' workshops before and I think it's a testimony to the depth and strength of the program he puts on. It's no wonder traders from all over are in attendance.
I would highly recommend a Chris Lori workshop to anyone who is serious about currency trading. You just will not find this information anywhere else.
I just want to take a minute and thank you for this past weekend. The information you shared with us was outstanding. I also wanted to congratulate you on your tremendous success as an FX trader. Since retiring most of the US bobsledder I stayed in touch with have not gone on to the same level of success they had in the sport. Mainly because they didn't use the tools they learned from bobsledding apply them into a successful career like you have so hats off to you.
On another note I hope I wasn't to much of a pain in the a-- for asking a lot of questions. I went into the class thinking I'm not sure when I'll get to see Chris teach again, so I going to ask as many questions as I can and hopefully learn from his answers. I am hopeful that based on our similar past sports experiences that with your assistance I can achieve a successful FX trading career as well. I look forward to speaking with you soon.
The workshop this weekend was more than expected. I am on my way to becoming a Fibonacci Trader!
Chris is an excellent teacher and everyone was so friendly and willing to help and offer advice.
Thanks so much for your help. Have a great day!
Have been listening to PTC videos on the way home this morning. You asked for feedback on the review of bank reports. Yes, please keep reviewing. Your reviews are teaching me how to think from the perspective of the markets and will positively impact my trading.
See you Sunday.
"Stress Test's" Released Delicately - Remain Cautious
The final results from the stress test were released with little fanfare as results had been previously leaked. The Fed said ten firms required a cumulative $74.6bn of additional capital and the largest needed amount is $34bn for one of the major banks. Several banks had already begun announcing equity and debt offerings in order to raise the additional capital from the private markets ahead of the official release. Fed Chairman Bernanke said the results should give the public "considerable comfort" and helps investors distinguish relative strength among the firms. With the stress test results final here, investors now turn their focus to the labour market. Labour market data has been better than expectations recently, with initial jobless claims and ADP employment data showing less weakness. While it is still too early to call a turn in the labour market, the data has been encouraging and UBS economists are looking for a below consensus -550k on non-farm payrolls but is in-line with consensus on unemployment at 8.9%.
Please listen to this 5min video clip from John Mauldin on his view about Eurozone bank risk, which i have been discussing in Pro Traders Club and via information from the banks noted in the blogs.
My view is that as the "Eurozone Bank Risk" story unfolds, this will weigh heavily on the EUR vs the crosses and we will likely see lower levels for EUR in the longer term. Furthermore, the Eurozone is behind the curve in shifting monetary policy and implementation of Quantative Easing to stem the short term impact of the crisis.
I also recommend that you subscribe to John Mauldin's newsletter "Thoughts from the Frontline", the link is available in the text of the page via this link .
Good Luck with Your Trading and Be Careful Out There!
For some time, I have been addressing the issue of Eurozone member risk and bank risk related to large having the capacity to carry the risk of the small.
In this Bloomberg interview, Nouriel Roubini, one of the worlds foremost economist's, clearly explains the imminent bank risk in Eurozone and global circumstances.
This supports my view that the Eurozone is behind the curve in stemming the crisis and has greater exposure to bank risk than other regions. This will continue to weigh on the EUR in the longer term, regardless of global risk appetite and USD sentiment. We have been selling cash EUR on rallies. There is a risk of a larger retracement rally in the near term, which should present the opportunity to sell more or resell a percentage of the reduced holdings (that which has been bought back in the recent sell off).
Here is the Bloomberg/Roubini link:
For more information on our analysis, views and strategies, join Chris Lori's Pro Trader Market Reviews at www.protradersclub.com
CTA, FX Fund Manager
Investors gave a lukewarm reception to the government's new plan to stem housing foreclosures even though the plan was more ambitious than originally anticipated. President Obama outlined a program that will include $75bn to assist struggling homeowners who are at risk of foreclosure and those who have difficulty refinancing mortgages because of a drop in the home value. The program will encourage loan modifications through lower interest rates and incentive payments and relax lending standards by the GSEs for mortgage refinancings. We're not sure how this will play out in the end and I doubt we will see a material impact, overall. He also said the government would extend an additional $200bn of backing to the GSEs in order to ensure credit availability. Economists believe that while this plan is not likely to lead to immediate success and will not prevent all foreclosures, it will likely be more successful than previous efforts to date, as it includes incentives for both borrowers and lenders. The plan is expected to take effect on March 4 and additional details on the guidelines will be published then. The plan comes on the back of more weak housing data, as housing starts missed expectations (466k vs. consensus 529k, prior 550k) and building permits were also down (521k vs. consensus 525k, prior 549k). In other news, the Fed took the new step of announcing longer-term economic projections, including a long-term inflation goal of 1.7-2.0%, with the latest FOMC minutes. The inflation goal is a step towards inflation targeting, though it represents more of an informal target. In separate comments, Fed Chairman Bernanke said he still expects "extraordinarily challenging times" for the economy and the Fed, which is consistent with ongoing credit easing and no change in the funds rate for some time.
Please review the document in the free members area titled "UBS Perspectives - Risk Aversion Still Key"
This document will provide you with an excellent insiders analysis of what is driving the foreign exchange market, at present. The importance of studying the review is to expand your knowledge of this market and enhance your ability to pick up on specific market drivers and identifying important factors influencing price, trends and volatility.
Good Luck with your trading and be careful out there!