Equities Stumble, USD Erases NFP Gains Dec. 9, 2014
Stocks Slide As USDX Gives Back All NFP Gains
Its no wonder why equities across the board have hit a top for now. If one is to believe the Fed mouth piece, Jon Hilsenrath, then the Fed will be expected to re affirm its intention of raising short term interest in rates in 2015 at the meeting next week. Although this is probably true I am pretty sure that they will not actually do so in 2015 or 2016 for that matter. The reason as I have stated before is they simply cant along with the fact that the big boys running up stocks wont let them. If that is the case then they will surely be testing the Feds resolve with a sizable market correction. On top of that we have Fed members saying things like Lockharts comment of “not in a rush to drop the considerable time from the Fed Statement” meaning there is no real interest in raising rates in his mind at least.
I should also mention oil again with its drop down to $63 yesterday. While low oil prices are seen as good for some its not for others. We also have to consider the reason for the drop. While there are theories from putting a hurt on Russia to the Saudis putting a hurt on US shale, it could be as simple as a supply/demand issue as well. The world economy is slowing and demand just isnt there for the supply. Naturally when that happens price drops. The reason I bring this up is not really the oil factor but the fact it shows that the recovery everyone is talking about is really not happening and this is more so the real market (where oil is concerned) showing the weakness. Considering most all data is massaged in some fashion to make it look better than it truly is we have no choice but to look at such moves in commodities as a warning that something isnt right. Think of it this way. Even Chinese officials have admitted that they dont look at GDP data for China to get an idea of whether or not the country is growing. They look at electric consumption to get more accurate data because they know the “official” data is rigged. Its no different in the US or anywhere else.
EUR/USD Holds Daily 1.2268 Level
With the EUR/USD getting a false conviction below the 1.2268 level and ensuing intraday push up yesterday, it does lower the probabilities for the next push down so I will be more open on direction today. What is interesting is it couldnt test the next level at 1.2241 before getting the push to the upside, meaning they had no desire to run stops before the move adding to the probability that they need to push out more shorts before a break along with close the inefficient move during NFP from Friday. Although I remain open on direction I would prefer the short from yesterdays highs or the current Asian highs if they can widen the range to the downside this morning. Otherwise I will be open for the long from 1.2270 if there is no entry short but prefer to take a clear stop run at 1.2241 if I go long this pair. If they are going to break it down it has a roughly 100 pips to the next daily/monthly level down.
GBP/USD Runs Back To Chop
As I suspected yesterday the weak Euro held up the GBP/USD but since the USD was also weak the GU had a great day moving 138 pips back into last weeks chop. Even though this qualifies as a first push its best to keep open on direction due to where it pulled back to along with the fact that technically the first push down don’t confirm failure until it breaks and shows conviction above it. Today I will be open for the short, preferably from yesterdays highs but if they widen the Asian range to the downside the current highs at 1.5660 are valid with the confluence of the hourly 200 sitting there. While the 1.5617 is valid for a long today the level is weak to say the least so I will be cautious if there is a set up there. If any USD strength comes back it will break and if so I hope to be short looking to take profit around the 1.5566 daily level.
EUR/JPY Holds Off On Third Push
The EUR/JPY couldn’t make the third push yesterday but it still has a higher probability for doing it without the technical failure of the second yet. The intraday push down is concerning and does lessen the bias for the third push so I will be cautious if I get an entry at the Asian lows this morning. It also has some small conviction above the NY/London overlap highs yesterday but its not all that convincing. I will be open for the short at the Asian highs during London today but will need to see the EU and UJ have good potential to help to take away the small long bias.
Forex News Today
The only significant news releases, baring any tape bombs, are for the GBP today. Starting with Manufacturing and Industrial Production and finishing during the NY session with the NIESR GDP figures. The production data are expected to drop slightly on both but being rather close to the zero mark a drop below would be GBP negative. Of course any improvement would be the opposite but the release should be above the last print in order to create a sustained move and would most likely be moving the EUR/GBP more. The same applies to the GDP data. I have my doubts it will drop below zero but its possible. With data weakening lately the probability for an improvement is low I think.
Chris Martensen, Mike Maloney interview
I hope you all liked the video posted yesterday even though Im sure it was somewhat scary. However the purpose wasnt to scare anybody but to start an awakening because although the reality is staring us right in the face, most are unaware of what we can do. This gives us options.
Here is another interesting interview Chris did with Mike Maloney. I know several members have already read much of Mikes material but its always interesting when he talks with Chris. Enjoy.
MY APOLOGIES FOR THE BROKEN VIDEO OF INSIDE JOB IN THE COMMENTARY. I DIDNT THINK I WAS COPY WRITE INFRINGING WITH AN ITALIAN VERSION ALREADY ON YOUTUBE. HOWEVER YOU CAN STILL WATCH IT AT THIS LINK. STILL A MUST SEE!
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