USDX Holds Range, US Equities Make New Highs Nov 19, 2014
S&P 500 Closes Above All Time Highs
The all time highs in US equities dont seem to have a limit now as some are calling for a run to 2250 on the S&P before any correction happens. At that point they are calling for more of a crash but I wouldn’t hold my breath on that either. The last couple weeks did show some signs of slowing the push north like they seemed to be running out of buyers. However as we can see now they were just waiting to make sure nothing drastic was coming down the pipe before they continue to chase yield again. I admit they really have no choice as long as things continue on the same path and to be honest the course forward is the only choice if the political class is to retain their jobs and more importantly the ill gotten gains they have reaped over the last several years.
Of course we all know the further they push the harder the fall will be eventually but as I have stated before this has potential to last a very long time. I have also noted several potential tipping points that could cause the big reset but most all of them have been proven able to smooth over so far with the exception of one that hasnt been tested yet. Civil unrest.
This leaves the ball in the peoples court and will remain there until they really start to see things for what they are in this “biggest wealth transfer in history”. What is most disturbing is that in most of the west the number of people surviving on government handouts outnumbering productive members of their economies leaves me thinking that the people will be sitting on the ball for potentially a very long time. In short, rest assured we will keep on seeing all time highs in US stocks until the people have had enough, which wont happen until governments cant afford to make their survival payments. Having said that, when governments can just print the money to make those payments it becomes a never ending circle jerk or whats better known as the Ponzi scheme. As long as the base keeps growing the Ponzi continues to run and with unlimited amounts of money to print the base will never stop growing. Cool huh? Again all will be well, the rich get richer taking from the poor while keeping them happy printing money to support them. The markets may NEVER correct.
EUR/USD Closes Above 1.2500
The pushes on the EUR/USD are slowing down hovering closer to the ADR yesterday while still closing above the important 1.2500 level. Again I wont be having a clear bias on this pair but the daily close above the contested 1.2500 does make it a good level for the potential long today. The distance from the Asian highs is good as well but they will need to push a bit lower during Asia and run the breakout traders to be that convincing. Otherwise I will be open for the short at the 1.2545 daily high with a stop run but will be cautious of any conviction above meaning they will test the 1.2571 level. I admit I would prefer to be long but we will need help from the risk trade and since they haven’t shown any real conviction after the run Friday last week, direction is questionable at best.
GBP/USD Still Weak But Holding
Its too bad we got whipped out on the better than expected CPI data from the UK yesterday as price movement is showing we had the direction right. For those that took the next set up and held through the NY open are doing well however the safer course of action was to close before the NY open and only those that got a great entry would have survived the stop run just before the drop. This is why we always want to protect our trade before the opening of the next session. They do this sort of thing all the time.
Right now they are showing potential conviction during Asia looking to test the lows at the 1.5600 psych level. Depending on the reaction we get during London the 1.5620 level has potential for the short with a clean set up but I prefer to see them push deeper during Asia and test the overall lows before showing the trap there. Otherwise I will be open for the long with a stop run to the lows or some clear signs that they wont let it drop below.
EUR/JPY Testing Multi Year Highs
The daily level the EUR/JPY tapped and got rejected from this morning goes all the way back to October 2008 but is such an insignificant level its almost bound to be broken. However there is a daily breakout level just above at 147.07. As I have said many times, I dont put much weight on breakout levels until they hold so it just may have a decent pullback after the test but if they do push higher this week showing a daily close above 147.07 then it opens the door for a much further run all the way to 156.43. Of course it will need help from the USD/JPY but with many calling for 120 or 125 on the UJ it has a darn good chance as long as the risk trade keeps driving the EU up as well.
Today I will be bias for the next push up considering the 160 pip move yesterday just breaking the 150 pip ADR. If they are going to start the push in Asia then they will go from the current Asian lows of 146.34 although the set up looks questionable. However the UJ and GJ are much cleaner. Just waiting for my entry now. Otherwise if I miss the long and they cant break above the recent highs I will look for the retest and trap during London. If they do break to the upside early I will look for the backside entry and continuation. I will still be open for the short at the Asian highs later today but will need to be convinced they wont let it pass 146.78.
Forex News Today
The calendar starts off with the BOE Meeting Minutes and vote counts. I have my doubts the Minutes will effect much unless the vote has changed. The higher probability for a miss considering the way the UK economy is going is for one voting for a hike changing their stance. However the probability for the vote remaining unchanged is better.
Later the US has the Housing Data and Fed Meeting Minutes after London closes. Housing is expoected mixed so there most likely wont be much movement unless one or more misses big. Otherwise they will wait for the Fed Minutes to see if there is any increase in more QE. With the US holding fairly steady and no real surprises from Fed speeches lately there is only a slight chance they surprise today.
Tomorrow Aussie traders need to be aware of the Chinese HSBC Manufacturing PMI. An improvement should strengthen the AUD while a miss below 50 will be much more negative.
STILL NO JOY ON GETTING MY SKYPE ACCOUNT BACK. I WILL ANNOUNCE WHAT CHAT SERVICE I WILL BE MOVING TO AT THE BEGINNING OF NEXT WEEK IF ITS NOT RESOLVED. NOT LOOKING GOOD SO FAR.
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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