The Neverending Story

Everyone is talking about Draghi and his newly minted and never ending ECB bond buying plan. As a born German who now resides in Spain I have my own opinions on the subject. But whatever this may mean on a macro economic or political scale it has not changed a single thing in what various charts were telling us yesterday.

Look – after four years of ‘crisis management’ on both sides of the Atlantic you must realize that this is now the new normal. Better get used to it and accept some inherent facts. Someone is benefitting from this mess – and chances are it’s neither you or I. No matter what we say, think, or do (or who we vote for apparently) will make any difference in terms of averting this slow motion train wreck we’ve been witnessing since the beginning of this century.

I ask you this – if today’s announcement was such a big deal for the European Union and thus their precious Euro – how come the EUR/USD has been gyrating sideways? Yes, a lot of movement on the hourly but if you look at the daily then you realize that our long setup from yesterday remains intact.

As a matter of fact most of the FX setups I proposed over the past few days are behaving exactly the way suggested. Case in point – the AUD/JPY which approached support yesterday and promptly bounced today. Coincidence? Maybe…

Here’s the USD/CAD which proceeded to its 25-day SMA and bounced back today, once confirming upside resistance where you would have expected it. Draghi Shmaghi! (by the way I forgot to post this one yesterday – my bad)

Here’s yesterday’s entry on the NZD/USD – at its NLBL today. You can take partial profits but I would keep a few lottery tickets in the running here as we may resolve higher after a little shake out. Was that push from our support line higher coincidence? Maybe?

CAD/JPY – what a nice entry the other day (there was another at the 100-day SMA earlier) and if you held long you are at your first target range today. Coincidence? Maybe.

AUD/USD – perfect entry yesterday and we got rewarded today. Same deal here – lighten up and keep lottery tickets in play. Yes, maybe this one was pure coincidence as well. But we seem to get lucky often around here.

Crude – barely budget and our long entry from yesterday is resolving nicely. Since equities are going gangbusters today wouldn’t you expect crude to follow suit? A stronger EUR (due to more printing?? humorous!) and a weaker Dollar would rise crude/gasoline prices right? Well, neither of them painted more than a little swing today – coincidence? I think not!

Not everything we touch behaves the way we expect of course. Here’s the 10-year futures contract which has been running in circles lately. In any case – that’s a rather weak response after today’s announcement. Not a tiny candle by any means but very comparable with recent gyrations we’ve learned to loath.

Bottom Line: I am pretty proud of the fact that our little group here has continued to not only stay ahead of the curve but consistently bank solid coin in a market enviroment that is defined by rumors, innuendo, headline news, currency interventions, market manipulations, you name it. This is supposed to be a market dominated by high frequency trading bots and secretly steered by Fed or ECB committees. How come then that our basic setups continue to work so effectively?

Short the news and buy the setups. Ignore all the rest. Focus. You’ll sleep better and you may actually come out ahead.

Cheers,